HC Deb 18 May 1988 vol 133 cc953-69 3.45 pm
Mr. John Maxton (Glasgow, Cathcart)

I beg to move amendment No. 10, in page 2, line 13, at end insert (7) The Secretary of State shall, after consultation with the appropriate trade unions, nominate to the board of the successor company two directors in the employee interest.'.

In Committee, my hon. Friend the Member for Great Grimsby (Mr. Mitchell) moved two new clauses to ensure the appointment to the board of the new company of directors selected by the trade unions who represent workers in the steel industry. The new clauses tried to obtain a large representation for such directors on the board. I believe that one of the new clauses tried to establish that one fifth of the board should be worker directors or appointed by the trade unions. The new clauses were rejected by the Government, with their Tory majority, one because the Government claimed it was otiose, and the other on a matter of principle.

This amendment is more modest. It does not suggest that the appointment should be made by the trade union movement. It proposes that the Government should appoint two directors to the board of the successor company after consultation with the appropriate trade unions. So in theory, if not necessarily in practice, the directors may not be members of the trade union. They may not work in the steel industry or even be the people suggested by the trade unions. We know that all Governments, and particularly this one, do not necessarily accept the advice of those they consult. To be honest, there is no reason why they should. Consulting does not necessarily mean taking the advice given.

The only clear criterion that we are seeking to lay down for these two directors is that they should be appointed to represent the interests of the employees. Obviously, our amendment had to be different for procedural reasons. If it had been the same as the new clauses I doubt whether it would have been selected for debate. We hope that our more limited proposal will attract the support of the Government. It meets at least some of the objections that the Under-Secretary made during his rebuttal of our new clauses in Committee. He referred, as did my hon. Friend the Member for Motherwell, South (Dr. Bray) to the problems that arose when worker nominees were appointed to the steel board after nationalisation in the 1960s. In this case, however, the Government have the right to veto trade union nominees and to suggest their own names.

During the debate in Committee the Under-Secretary of State, the hon. Member for Preston—

The Parliamentary Under-Secretary of State for Industry (Mr. Robert Atkins)

South Ribble.

Mr. Maxton

I apologise.

The hon. Member for South Ribble (Mr. Atkins)—I thought that was a bus company—said: I hope seriously that the Committee will not consider my next remark as patronising, but I am aware from experience in my own large and industrial constituency"— the Minister kept claiming that he was a powerful trade unionist— that workers do not want to be directors involved on a daily basis with the management of the company. I have spoken to employees in Leyland Vehicles, British Aerospace and BTR. Employees want to make certain that their views can be heard. The complaint has always been about the channels of communication rather than about active participation in the direction of the company. That is exactly what our amendment seeks to do. It does not seek, as the new clauses sought, to put on the board worker directors appointed by trade unions. It says that we need two directors who will listen to the problems of the workers and will put those problems to the board. It meets exactly the point made by the Minister in Committee and creates a channel of communication between the employees and the board of directors. I hope that the Minister will note that.

I accept that the amendment does not overcome the Minister's more basic objection, that the Government do not wish to put statutory restraints on a new company. That brings us to the basic philosophical divide between the Government and the Opposition. In Committee, the Minister said: a director's responsibility is, first and foremost, to the company collectively … rather than to a specific electorate".—[Official Report, Standing Committee D, 28 April 1988; c. 815-17.] He was trying to suggest that all directors would maintain an interest in the employees of the company and that there was no need to appoint special directors for that purpose. I think that it was my hon. Friend the Member for Motherwell, South who told the Minister that a company is defined in law as the shareholders. Thus the sole responsibility of directors is to the shareholders and not in any way to the employees or to the community in which the company is based.

The Government and their supporters believe that a company must be run to ensure the maximum profit for those who invest in it. They have little or no concern for the work force or for the rest of the community in which a company is based. If profits can be increased by so-called rationalisation, which as we all know is the polite word for closure, or if losses can be minimised by such a move, it is the interests of the shareholders which will be taken into account by the board of directors. They will not take account of the interests of the work force, those who have invested their labour, time and effort in the company. If profits can be increased by keeping down wages or by altering the conditions of employment, the directors have a responsibility and a duty to ensure that that happens. That is because their first responsibility is the profit of the shareholders.

Employees who have perhaps given their whole working life to a company have a much greater investement in it than do some shareholders who have moved money in for profit and will move it out without a thought if that is the best way to get an increased return. They will sell the shares to whomever will give them the biggest price, whatever the nationality of the purchaser or his motives for buying.

The work force has more right to a say than the shareholders, because the very livelihood of workers depends on the success of the company. Directors from the work force may have a great deal more expertise about the running of the company than some non-executive directors. Such directors may he appointed by an insurance company or other institutional shareholders whose only interest is in ensuring profits for the company and who may have no knowledge whatever of the steel industry.

In Committee, the Minister suggested that the right to purchase shares that the Government would give employees would give them the stake in the company that we are seeking, and that would lead to the appointment of worker directors. However, the Government's proposal for shareholdings for employees is so limited that it is highly unlikely that, even if all employee shareholders were to vote en masse, from top management down to labourer, they would have a voting share large enough to ensure a director on the board. I shall have further questions for the Minister about that.

The Labour party does not believe that this modest amendment will give the work force any real power. In Committee, we repeatedly made it clear that we are opposed to privatisation, and that we believe that the steel industry would be best left in public hands, perhaps with changes that would give the work force a greater share and a greater say in how the company is run. Privatisation is bad for the British economy and for those who work in the steel industry. However, given that the Government majority will push it through, as well as opposing the Bill, we have a responsibility to ensure that if it becomes law, the employees in the industry are protected as best we can in difficult circumstances.

Our two directors might be outvoted when the board suggests closure, but at least there would be someone to give the views of the workers and obtain some concessions from the board. Perhaps I am being over-optimistic in thinking that the Government might accept the principle of this proposal, but I live in hope.

Mr. Michael Fallon (Darlington)

It would be churlish of the Conservative party not to recognise that the amendment is at least much more moderate than that tabled in Committee, and that the Labour party has come a long way from the days of Bullock and worker directors—the direction in which we were heading in the late 1970s. Although it is modest, the amendment is as flawed as the previous one because it assumes that the employees' interest is necessarily distinct and separate from the interest of the shareholders or the interest of the company as a whole.

The hon. Member for Glasgow, Cathcart (Mr. Maxton) gave the game away when he said that the other directors would be interested only in profits. That is a misleading view of the duties, responsibilities and interests of the directors of a public company. A director of a public company is interested not simply in profits but in the success of that company and that enterprise, and that embraces the well-being of those who work for it.

As well as being fundamentally flawed in principle by its reference to "employee interest", the amendment, if it were carried, would be defective in practice. Far from strengthening the channel of communication, as has been suggested, it would cut clean across it. For example, what would be the relationship between the two directors and the local steel union convenors, or the national trade union committee, when it came to putting forward the employee interest? Who would be speaking for the employees—the trade unions or the two worker directors?

Secondly, the amendment is defective in practice because it assumes, through its reference to "employee interest", that different directors have different interests and that there can be a specialist director—not simply one who is in a full-time or part-time capacity or is an executive or non-executive member, but specialist in the view that he takes of the duties of a director. It seems to me that those in the new category of worker director would be placed in the impossible and invidious position of weighing their general duties to the company and their general obligations to the shareholders against the particular interest that they should have in regard to their employees. I believe that that would place them in an impossible position and would be no recipe for the smooth running of an important public company. For those reasons, the amendment should be resisted.

4 pm

Mr. Barry Jones (Alyn and Deeside)

Notwithstanding the cogency of the argument of the hon. Member for Darlington (Mr. Fallon), he will not be surprised when I say that I support my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton), who made a very reasonable case.

I consider that the British Steel Corporation work force, which is highly successful and co-operative, deserves extended rights to information, consultation and representation. I do not consider that any work force should be kept in the dark, especially because individual workers in the steel industry often devote their whole working lives to the industry. My hon. Friend, in proposing the amendment, made a strong case for a channel of communication.

Ordinary working people should be involved at every level—on the shop floor through their trade unions. Certainly, the leadership of the trade unions at BSC Shotton would acknowledge that. The work force has earned the ability to get to the heart of the company now proposed. The steel industry has suffered closures, cuts and almost perpetual demanning. Throughout the 1980s, the work force of BSC has broken records and has given the company exemplary co-operation and immense loyalty. It deserves the facility proposed in the amendment.

The amendment does not ask for a great deal. At a major turning point in the history of the industry in Britain, it will help to dispel suspicion and to promote co-operation. I recollect the worker-director scheme as it operated in the 1970s. At divisional level, the worker director of BSC Shotton, Mr. Jack Leonard, played a heroic role, and was the means of expressing the shop floor's views to the managing director. At main board level, the status of the director in the employee interest was very considerable. He could relate directly to the TUC's iron and steel committee and each union then disseminated information to its menbership in each steel works throughout the country.

I urge the Government to accept this modest amendment, given that their proposals represent a turning point in the history of the industry.

Mr. Elliot Morley (Glanford and Scunthorpe)

If the Government are serious about involving employees in any industry, they should accept the amendment, which relates to worker directors. We have heard about the valuable role of such a position in steel companies and how it has been a link between the work force, giving their trade unions a direct say on the board.

If we are to make progress with industrial democracy, we should include such measures which have been pioneered by BSC and not go backwards, which is what the Government are doing, by throwing out of the window all the work in industrial democracy that has been done within BSC. The amendment would allow the reformed company to become a modern, progressive company, striving to compete in the steel market, and trying to set a model for industrial democracy and the involvement of its work force.

If the work force is meaningfully involved in decision making, as well as the end product, the company will work better and more efficiently and the work force will have a greater commitment to it if the employees feel part of the company and their views are heard and taken into account.

I have worked in industries where much of the manufacturing plant was designed as a result of suggestions from the work force, the people at the sharp end of production who often see ways of making production more efficient, cheaper and more cost-effective. Such progress is best brought about by direct involvement which does not give people a few pounds as a reward for their suggestions, but gives those who work in the industry a real say in decision-making and genuine involvement.

Mrs. Margaret Ewing (Moray)

In supporting the amendment, I reflect the views of my party, which firmly believes in employee participation as being a vital factor in improving industrial relations. The amendment concerns the steel industry, a vast, complex and significant industry for economic and social life. The vastness and complexity of the industry produces even stronger arguments for ensuring that employee directors are appointed to the new board. That would ensure that no part of the industry was seen in isolation from the rest of the industry and that there were clear channels of communication from the work force to the management, ensuring that full information about decisions is disseminated and fully comprehended by everyone. That would be a sounder basis for progress.

The hon. Member for Darlington (Mr. Fallon) put forward rather a strange argument when he suggested that employee directors would in some way be at odds with other directors. It seems to me that they would have interests very similar to those of other directors. After all, employee directors would be concerned about the success of the steel industry, as they would be only too well aware that on that success hinged the future security and work prospects of a vast number of people. Therefore, they would participate fully, and would make sure that their views were heard and that any decisions would be to the advantage of everyone in the industry.

This modest amendment gives the Government an opportunity to show the work force in British Steel, and those who will be employed in the steel industry after privatisation, that there is genuine concern to ensure that all aspects of the industry are explained and discussed by all those who consider that the industry will have a vital impact on their future. That future surely includes the employees, and the Government have an ideal opportunity to express their commitment to the work force.

Mr. Stuart Bell (Middlesbrough)

The hon. Member for Darlington (Mr. Fallon) said that this was a modest amendment compared with what the Labour party and the Labour movement had in mind in the 1970s with the Bullock report. I well remember the report of Mr. Bullock, which was a great venture to bridge the terrible gap that had existed for a century between capitalism and labour. The ideas in the Bullock report originally came from General de Gaulle, who, from his lofty vision, wanted to find some way of achieving worker participation. He believed that workers ought to participate in the affairs of their companies, other than simply by selling their labour.

In the 1970s, my right hon. Friend the Member for Chesterfield (Mr. Benn) pointed out that a working man invests most of his time, apart from his sleeping time, in the factory or the firm in which he works, and that that investment should have some return, other than simply a wage. De Gaulle had the idea of worker participation, which was taken up by Mr. Bullock in the 1970s and for which we had great hopes at that time.

I remember a conversation with Lord Callaghan who was the Prime Minister of the time. We were discussing ways of getting the Bullock report on to the statute book. He pointed out that with no majority in the House it was impossible. Following the election in 1979, events turned away from the concept of involving workers in their factory other than through the sale of their labour.

When General de Gaulle introduced worker participation, he also introduced a system in France with two sets of books. One set was for the workers on the board and one was for the other directors. When the Italians introduced worker participation, they had three sets of books—one for the directors who were not workers, one for the workers and a third for the tax man. That shows how things were done differently in Italy and France from the way we envisaged worker participation in Britain.

I remember an incident in the 1970s when there was a worker participation experiment in Birtley. A trade unionist on the board of a company in Birtley went to a meeting with the management and came back at 5 o'clock with the management proposals. He told the workers that those proposals ought to be accepted by the workers. The workers tied him to a chair an kept him there all night. They said, "That is what we do with those who come here as worker directors with proposals from the management." Therefore, that experiment came to a sorry end and again we failed to convince the work force that there was an interest for them in having proper participation.

As the hon. Member for Darlington said, this is a modest amendment and one which reflects the fact that the Opposition are unable to make progress other than by way of persuasion. We cannot take on the massed battalions of Tory Members in the Division Lobby. Therefore, we are seeking to persuade the Government that it is an appropriate amendment, worthy of consideration and acceptance.

We must bear in mind the long tradition in the steel industry of worker directors. In the 1960s the steel industry pioneered the idea of worker directors. A series of worker directors over many years were successful in linking the work force of BSC with the management in the best interests of the company and the country. Therefore, we have seen successful worker participation in the steel industry and that is why we have tabled the amendment, however modest it may be. We wish to see continued involvement of the work force at board level with BSC or its successor company and prior to privatisation.

I make those comments in the interests of my constituents on Teesside who work within the British Steel Corporation. In 1979 there were some 25,000 workers in the steel industry on Teesside and that has been reduced to about 7,000. Many thousands receive a British Steel Corporation pension and they were rudely surprised to learn that under the new social security measures introduced by the Government they were net losers. Taking into account their BSC pension, they were to lose some of the state benefits to which they had become accustomed prior to the change in legislation. As my right hon. Friend the Member for Chesterfield said, those men and some women—although not many—invested their working lives in the steel industry and now see their pensions cut by the Government. That is a great disappointment to those people, as it was to others, who had seen the steel industry as a bastion of the economy on Teesside.

We do not wish to see a privatised steel industry without the worker participation that we desire. We do not wish to see the links between workers and management cut so that they are adrift and we return to a society of "them and us".

The 7,000 or so who continue to work in the steel industry on Teesside look forward to the future of British Steel on Teesside in their interests as workers and as part of the local economy. They wish to see their representatives on the board of the company. We do not know whether the massive takeover of BSC will be followed by the setting up of regional boards with regional input, but if that happens there may be directors on those boards. Certainly, the workers want an opportunity to have their voices heard through worker directors. We ask the Government to take the amendment seriously and to consider it in the best interests of co-operation between labour and capital in the future.

4.15 pm
Mr. Atkins

The substance of the debate is reminiscent of the "them and us" mentality that has characterised the Labour party's industrial relations policy for many years. In many respects, it harps back to the days when that sort of tokenism caused some difficulties. Labour Members, particularly as the party is presently constituted, always assume that the Government and the Conservative party are somehow anti-union and opposed—[Interruption.] As the House will recall, at the previous election and the election before that a substantial number—in the 1983 election, a majority—of trade union members voted Conservative rather than for the parties represented by Opposition Members. In those circumstances, Opposition Members have to be cautious in making the assumption that the Government are anti-union.

Far be it from me to remind the hon. Member for Glasgow, Cathcart (Mr. Maxton) that, like him, I am a member of what was the Association of Scientific, Technical and Managerial Staffs and is now Manufacturing, Science, Finance. I suspect that I have done as much work in my union activities as he has. I also suspect that that work has been more effective, as I am in government and he is not. To that extent, I am not unfamiliar with or unsupportive of trade union activities. The hon. Gentleman will know that, as we discussed the matter in Committee.

The experience of the past, as represented by the difficulties experienced by Sir Charles Villiers and others, with worker directors was that the divisions caused within the trade union movement and with the worker directors was such that they did not want to continue to do the job with which they were faced. I can do no better than repeat what I said in Committee: directors have Companies Act responsibilities, as well as moral and industrial responsibilities for their employees' quality of life—for example, concerning pension funds, industrial relations and so on".— [Official Report, Standing Committee D, 28 April 1988; c. 819-20.] The hon. Gentleman will know that Jack Eccles, who is on the board now, does a remarkable job. He does so because of his experience, knowledge and understanding and not simply because he is a trade unionist, albeit a distinguished one.

It is worth recording that the Government and, more especially in this context, the company recognise the important contribution that has been made by the trade unions in the British steel industry over the years, particularly through the trying and difficult times that it has experienced in recent years. They respect trade unions and understand their requirement to represent their members' interests. They wish that to continue after privatisation. I have no reason to suppose that the excellent relationships between the chairman and the various trade unions representatives as well as other members within the company will not continue to be as good as they were in the past.

The directors of the successor company will be appointed by the company in conformity with the provisions of the Companies Act. The Secretary of State will have a role in that process to the extent that he is a shareholder. As I have said, such matters are governed by the Companies Act and it is not our intention that the Secretary of State should have any additional powers of the sort proposed by the amendment. The successor company should not be subject to any more statutory intervention than other Companies Act companies. It will appoint directors on their merits and it would be inappropriate to provide for statutory intervention by the Secretary of State.

Mr. Maxton

As the Minister said, the Secretary of State will be the only shareholder in the company when it is first set up. Does he intend to appoint two trade union representatives to the board at that stage? If the Minister was prepared to say that, it might make some difference to our vote.

Mr. Atkins

The Secretary of State may or may not appoint various people, but he will appoint individuals on their merits, and not because they are trade unionists or anything else.

Mr. Bryan Gould (Dagenham)

It is relevant.

Mr. Atkins

Of course it is relevant; the hon. Gentleman makes the point that he made in Committee. Of course trade unions have a part to play. I speak as a trade unionist myself, and I understand the contribution that trade unions have to make. However, as my hon. Friend the Member for Darlington (Mr. Fallon) put it so eloquently, we do not believe in tokenism, because we believe that the time for that has passed.

The issue of worker directors was discussed at considerable length in Committee, and we had a particularly interesting debate on it. We concluded that there was a philosophical divide. I emphasise that, at least on my part—and I suspect on that of my hon. Friends who served on the Committee—there was no anti-trade union bias. There was simply a difference of attitude. Conservative Members believe that management should manage and trade unions should represent the interests of the employees.

Mr. Gould

As the Minister said, we had an interesting debate in Committee. On that occasion, he appeared to take the view that the fact that a person represented the work force disqualified him from having the objectivity that might be required of a director. Is that still his view?

Mr. Atkins

As I recall, I said that all directors had a Companies Act responsibility for everything that went on in the company, which includes matters related to employees. If a group of people were elected or selected—whatever phrase we use—directors to represent a particular interest, that would, by definition, conflict with their Companies Act responsibility, which is to represent interests wider than those of a specific group. That is why it is vital that directors should be selected on their merits rather than specifically to represent a particular group of people.

Mr. Maxton

I find that slightly surprising. Is the Minister saying that, if one of the banks finishes up with a major shareholding in one of the companies, that bank will not insist on having a nominee on the board to represent its own interests rather than those of the whole company?

Mr. Atkins

Not necessarily. I do not see how the hon. Gentleman's question conflicts with my last point. I emphasised that we select on merit. I have already said that someone like Jack Eccles—[Interruption.] That does not destroy the point. Hon. Members must not make sedentary interventions that disprove their own point. I have emphasised that Jack Eccles, with his experience and expertise, has contributed greatly to the affairs of the board and the company. He was selected on merit and I hope that that policy will continue, rather than the tokenism that Opposition Members persist in advocating merely because they believe that they are the only people who represent the trade union movement, which is clearly not the case.

Mr. Morley

Part of the problem in the past was that on occasions worker directors were used to apologise for hostile company action threatening the work force. However, the amendment could be used to take a new and imaginative direction in industrial relations. For example, in the share offer the total equity given to the work force could be 25 per cent. The Government could hold a 50 per cent. golden share and 25 per cent. could be sold on the open market. The work force would then have a direct involvement and we could have radical and progressive attitudes to industrial democracy rather than what is in the Bill.

Mr. Atkins

I do not agree that the approach is new and imaginative. As I said, I think that it is a very old-fashioned approach, which has been tried in part and did not work. Our belief in employee participation is based largely on the fact that we believe that employees should be owners of their companies in the sense of being shareholders. Many trade unions have already suggested that they believe that they can exert pressure on the direction of the company—guiding the board of directors—by virtue of having a portion of the shares to give them the right to influence events and as shareholders. That is what we would prefer.

I emphasise yet again that it is a mistake for Opposition Members to think that the amendment would protect the interests of trade union representatives and employees. We believe that argument to be fundamentally flawed.

Mr. Morley

The Minister may have missed what I said. Although the share issue has already been announced, the percentage has not been announced. I suggested that the amendment could be linked to giving 25 per cent. of the total share issue to the work force, which force would then have not only a direct involvement through the share issue but a more meaningful involvement through the worker director arrangements.

Mr. Atkins

Employees will have the chance to buy shares under what will be one of the more generous schemes in the privatisation process with which the Government have been associated. I can speak only from personal experience. I have a semi-industrial constituency and I know people in companies such as Leyland, British Aerospace and others who are actively involved in the day-to-day running of large concerns. The view of my constituents—except those whose politics are extreme in either direction—is, broadly speaking, that management is there to manage and trade unions are there to represent employees' interests. That view is also held by many trade unionists.

Communication is the most important aspect of the day-to-day running of a company. Much of the criticism arises not because employees want someone on the board to represent their interests but because they would prefer to know what is going on on a more regular basis so that they can participate through their negotiating procedures and through the structure of the trade union as it is involved in pay bargaining, conditions of employment and so on. Employees would prefer not to be involved as directors in the day-to-day management of the company.

There was a philosophical divide on that between Conservative and Labour Members in Committee. I urge the hon. Member for Glanford and Scunthorpe (Mr. Morley) to read the relevant debate. While he is clearly more likely to agree with his hon. Friends, I think that he will find the debate interesting. I return to the point that I have been making all along. The directors are there to look after the interests of all those involved in the company. The Government are not hostile to trade unions, because we believe strongly that they have the right to exist, to negotiate and carry out their day-to-day activities on behalf of their members. However, we believe that tokenism as represented by the amendment is an old-fashioned process rather than a modern one.

Mr. Gould

The Minister is being characteristically generous in giving way. It is important that we should get on record the essential divide between us. As I understand it, the Minister is saying that whoever the shareholders are and however temporary and short-lived their interests, they are entitled to have those interests represented and protected on the board and therefore to have control over the direction of the enterprise. The work force, whose members are so much more closely involved, as their lives and livelihoods depend on the enterprise, are apparently disqualified by that fact alone from representation and from having their interests protected. Is that what the Minister is saying?

Mr. Atkins

We share the desire to ensure that employees are represented in the day-to-day running of the company. However, it is a legal requirement of the Companies Act that a director should have at the centre of his decisions and concern the interests of all those in the company, whatever their involvement. We do not believe that worker directors are necessary, and such arrangements have failed in the past. In those circumstances—as I have tried to indicate on a personal basis if no other—my understanding and experience suggest that most people involved in a company's day-to-day activities prefer to get on with the job in hand. They want to know what the company is about and to understand through communication and a variety of other ways where the company is heading and to know of its successes and problems.

They also want to know what the future holds and how they may best improve their work processes, and so on. However, they do not want to be involved at board level. If the hon. Gentleman asked many people working in industry, he would find that such a view is generally held. Perhaps it is not held by trade union activists, who may wish to become members of the board and are probably prejudiced.

4.30 pm
Mr. William Powell (Corby)

It has been suggested to my hon. Friend that shareholders may have only a short-term interest in the company whereas an employee is likely to have a long-term interest. Will he confirm that a shareholder is just as likely to have a long-term interest as an employee, and that an employee is just as likely to have a short-term interest in the company as a shareholder?

Mr. Atkins

My hon. Friend, who is an authority on these matters, speaks with considerable truthfulness. He represents a steel constituency, and he understands the work force at Corby, albeit residual, better than most. He is in a position to speak knowledgeably. Many trade union pension funds are involved, on a day-to-day basis, in share ownership. Opposition Members may themselves be shareholders in that way.

We have explored this issue at great length. Opposition Members have tried to suggest that the Government are opposed to trade unions and are not prepared to accept the amendment because we want to do trade unions down yet again. I have demonstrated, at least to the satisfaction of my hon. Friends, that such is not the case.

Mr. Gould

What there are of them.

Mr. Atkins

It is an indication that they are unconcerned by the threat which the hon. Gentleman purports to present, as would seem to be the case among Opposition Members, given the paucity of numbers on the hon. Gentleman's own Benches during the passage of what is, by the Opposition's own standards, a highly controversial Bill. This matter was explored at length in Committee, in a debate which was worth hearing arid reading. I reject the essence of what is being proposed in the amendment and urge my hon. Friends to do so.

Mr. Maxton

I am not surprised at the Minister's reply. I commented at the end of my opening remarks that I live ever in hope and that I am one of nature's born optimists—or so my wife is always telling me. However, obviously, I was wrong. It was inevitable that the Government would make their argument about token trade unionists. If we are to speak of tokenism, the Minister is clearly the Government's own token trade unionist on the Front Bench—there are not many others. As to his membership of ASTMS, now the MSF, to which we both belong, it actively campaigned to have me elected to the House, but I am not sure that it did the same for the Minister. I am rather convinced that it did the opposite.

Mr. Atkins

The hon. Gentleman should be careful in suggesting that I am a token trade unionist. If he examines any of the records of Members' interests, he will discover that many Government Members are trade unionists. More important, an even greater number of Government Members were elected by the majority of trade unionists in their constituencies voting Conservative.

Mr. Bob Cryer (Bradford, South)

Most of them are directors who are lining their pockets as fast as they can.

Mr. Maxton

I shall not respond to my hon. Friend's sedentary intervention, but I shall sit down if he wishes to speak.

Perhaps those on the Government Front Bench would like to declare their trade union membership—except for the hon. Member for South Ribble (Mr. Atkins). They might be rather pushed to do so—I do not imagine that Lloyd's is a trade union.

The Minister made a smooth reply—I believe that one of my hon. Friends called it a smarmy reply—and made great play of his trade union membership and of the Government's belief in trade unionism and he spoke of the Government's wish to see active unions getting on with the job, yet they accuse us all the time of tokenism. We cannot win this argument. In Committee, we tabled a strong new clause suggesting that one fifth of the board should comprise trade union members appointed by the unions. We were then accused of extremism and of going over the top. When we make a more modest proposal, we are accused by the hon. Member for Darlington (Mr. Fallon) of backing off from our commitment to worker participation.

We accept that the Tory party is the Government and that we have to work within their bounds, however much we may dislike them. That is why we made a reasonably modest proposal for trade union participation. Our commitment to involving the work force in company decisions is not token. It is not tokenism to have as members of a board people representing the trade union movement. Far from that being a backward step, it is a step forward. The backward step is that being taken by the Government in suggesting privatisation in the first place. It is the Government who are attempting to return industrial relations and the ownership of companies to the conventions operated in the 19th century, let alone the 1960s or 1970s.

It is astonishing that any Conservative Member should say that he supports unions and that the Government have not spent the past seven years attempting to destroy the trade union movement, when that is the Government's aim. The trade union movement is, quite rightly, linked to my own party. The Prime Minister has said that it is one of her prime objectives to destroy Socialism. In my view, that can only be achieved by destroying trade unions as well.

In replying to the amendment, the Minister raised a number of interesting points. It is clear now that, once the Bill is enacted and the new Companies is established under the Companies Acts, there will be only one shareholder, the Secretary of State. Speaking in terms of the present Government, it will be the Chancellor of the Duchy of Lancaster who will be that single shareholder. It will be he who appoints the board of directors. Our view is that at least two of the directors, the Chancellor of the Duchy of Lancaster having discussed this matter with the steel unions, ought to represent the industry's workers and all the employees—not just those who work on the shop floor.

The Minister has stated that he will appoint to the board people with appropriate qualifications. We have a right to know—and have not been told this at any stage—what qualifications will be required, who the Minister has in mind, and from what source those directors will be drawn. I presume that British Steel's present chairman, Sir Robert Scholey, and Jake Stewart may be among them, but who else?

Mr. Atkins

Wait and see.

Mr. Maxton

That is the trouble. That was the Minister's answer to almost every question put to him throughout the whole of the Committee stage. This is an enabling Bill designed to give the Government carte blanche to do whatever they damn well like with the steel industry once it has been privatised. That is what is wrong with the Bill. We do not know who will be on the board of directors that is to run the country's steel industry.

What will happen when the flotation takes place? Will the new shareholders necessarily accept the board of directors appointed by the Secretary of State? Perhaps, although I consider it very unlikely. The employee shareholding will be such that the employee shareholders will say, "Hey, we are not accepting this board of directors. You can get rid of him, or her, for a start. We want our director in his place." What would be the Secretary of State's answer to that? Will a new board of directors be appointed immediately after flotation?

I am afraid that the Minister is wrong. It seems highly likely that one of the big institutional investors will gain a large shareholding, as I do not believe that the average punter will buy many shares. If the company is to be sold at all, it will be sold to the big investment companies and share institutions, because that is the nature of the industry. If Barclays bank, the Bank of Scotland, the Royal Bank of Scotland or an insurance company obtains a large bulk of shares, it will probably insist that one of the directors represents it on the board, which is normal, standard practice in business. That person is there not to represent the whole company and look after its interests, but to represent that particular institution and ensure that its shareholding is looked after. He is interested in one of two things: either a high return in profits, or boosting the share price so that he can sell at a good price and get out of the company altogether.

Mr. Atkins

Why do the hon. Gentleman and many of his hon. Friends think that profit is a dirty word? Profit, after all, is the lubricant that makes the company expand, which is to the benefit of all those working in it—particularly the employees.

Mr. Maxton

We do not believe that profit is a dirty word. We do, however, believe that profit generated by an industry should be used properly for the benefit of both the industry and the employees within it. That is not the track record of free-market capitalism, either in the past or in the present. We cannot guarantee that the unbridled profit motive will allow proper attention to be paid to the interests of employees, or the community in which industries are based. The company is interested primarily in making a profit for the shareholders. That is the law as it stands, and the Government have reinforced it continually. The shareholder is the company, and the interests of the shareholder—the profit of the shareholder—are inevitably the major concern of a company once it moves into private hands.

Dr. John Reid (Motherwell, North)

I have always understood, with my lack of economic knowledge, that in general terms profit is a return to an investor on a capital investment. Given that the thousands of millions of pounds invested over the past 10 years have been invested by the taxpayer, will my hon. Friend ask the Minister when the profit will be returned to them over the next five years, now that British Steel is in a healthy condition?

Mr. Maxton

We asked that question time and again in Committee, and the Minister never gave us an answer. He may yet have an opportunity during the evening, or perhaps the Chancellor of the Duchy of Lancaster, as he was not on the Committee, may take the opportunity to answer it on Third Reading.

However modest this proposal, I consider that it is realistic and would serve the interests of the work force. It is not tokenism, but a genuine attempt to ensure proper communications between work force and management, in which we believe. It is not we who believe in the "them and us" view of our industries; it is the Government, who have reinforced that attitude and made it worse over the past eight years. We believe in genuine co-operation, and good management in this country knows that such co-operation is the best way of achieving higher productivity. It is a great pity that the Government do not believe in it as well.

I ask my hon. Friends to support the amendment.

Question put, That the amendment be made:—

The House divided: Ayes 192, Noes 244.

Division No. 310] [4.44 pm
Abbott, Ms Diane Bell, Stuart
Allen, Graham Benn, Rt Hon Tony
Anderson, Donald Blair, Tony
Archer, Rt Hon Peter Boateng, Paul
Armstrong, Hilary Boyes, Roland
Ashley, Rt Hon Jack Bradley, Keith
Banks, Tony (Newham NW) Bray, Dr Jeremy
Barnes, Harry (Derbyshire NE) Brown, Gordon (D'mline E)
Barron, Kevin Brown, Nicholas (Newcastle E)
Battle, John Bruce, Malcolm (Gordon)
Beckett, Margaret Buchan, Norman
Beith, A. J. Buckley, George J.
Caborn, Richard Janner, Greville
Campbell, Menzies (Fife NE) John, Brynmor
Campbell, Ron (Blyth Valley) Jones, Barry (Alyn & Deeside)
Campbell-Savours, D. N. Kaufman, Rt Hon Gerald
Canavan, Dennis Kennedy, Charles
Carlile, Alex (Mont'g) Kinnock, Rt Hon Neil
Cartwright, John Kirkwood, Archy
Clark, Dr David (S Shields) Lambie, David
Clarke, Tom (Monklands W) Leighton, Ron
Clay, Bob Lestor, Joan (Eccles)
Clwyd, Mrs Ann Lewis, Terry
Coleman, Donald Livsey, Richard
Cook, Frank (Stockton N) Lloyd, Tony (Stretford)
Cook, Robin (Livingston) Loyden, Eddie
Corbett, Robin McAllion, John
Corbyn, Jeremy McAvoy, Thomas
Cousins, Jim McCartney, Ian
Cox, Tom McFall, John
Crowther, Stan McKay, Allen (Barnsley West)
Cryer, Bob McKelvey, William
Cummings, John McLeish, Henry
Cunliffe, Lawrence McTaggart, Bob
Cunningham, Dr John Madden, Max
Dalyell, Tarn Mahon, Mrs Alice
Darling, Alistair Marshall, Jim (Leicester S)
Davies, Rt Hon Denzil (Llanelli) Martin, Michael J. (Springburn)
Davies, Ron (Caerphilly) Martlew, Eric
Dewar, Donald Maxton, John
Dixon, Don Meale, Alan
Dobson, Frank Michael, Alun
Doran, Frank Michie, Bill (Sheffield Heeley)
Douglas, Dick Michie, Mrs Ray (Arg'l & Bute)
Dunnachie, Jimmy Millan, Rt Hon Bruce
Dunwoody, Hon Mrs Gwyneth Moonie, Dr Lewis
Eadie, Alexander Morgan, Rhodri
Eastham, Ken Morley, Elliott
Ewing, Harry (Falkirk E) Morris, Rt Hon A. (W'shawe)
Ewing, Mrs Margaret (Moray) Mowlam, Marjorie
Fatchett, Derek Mullin, Chris
Faulds, Andrew Murphy, Paul
Fearn, Ronald Nellist, Dave
Field, Frank (Birkenhead) O'Neill, Martin
Fields, Terry (L'pool B G'n) Orme, Rt Hon Stanley
Fisher, Mark Parry, Robert
Flannery, Martin Patchett, Terry
Flynn, Paul Pike, Peter L.
Foot, Rt Hon Michael Powell, Ray (Ogmore)
Foster, Derek Primarolo, Dawn
Foulkes, George Radice, Giles
Fyfe, Maria Randall, Stuart
Galbraith, Sam Redmond, Martin
Galloway, George Rees, Rt Hon Merlyn
Garrett, John (Norwich South) Reid, Dr John
Garrett, Ted (Wallsend) Richardson, Jo
Gilbert, Rt Hon Dr John Roberts, Allan (Bootle)
Godman, Dr Norman A. Rooker, Jeff
Golding, Mrs Llin Ruddock, Joan
Gould, Bryan Sheerman, Barry
Graham, Thomas Sheldon, Rt Hon Robert
Grant, Bernie (Tottenham) Short, Clare
Grocott, Bruce Skinner, Dennis
Hardy, Peter Smith, C. (Isl'ton & F'bury)
Harman, Ms Harriet Smith, Rt Hon J. (Monk'ds E)
Hattersley, Rt Hon Roy Soley, Clive
Haynes, Frank Spearing, Nigel
Healey, Rt Hon Denis Steel, Rt Hon David
Heffer, Eric S. Steinberg, Gerry
Henderson, Doug Strang, Gavin
Hogg, N. (C'nauld & Kilsyth) Straw, Jack
Holland, Stuart Taylor, Mrs Ann (Dewsbury)
Home Robertson, John Thomas, Dr Dafydd Elis
Hood, Jimmy Thompson, Jack (Wansbeck)
Howarth, George (Knowsley N) Vaz, Keith
Howell, Rt Hon D. (S'heath) Wall, Pat
Howells, Geraint Wallace, James
Hoyle, Doug Walley, Joan
Hughes, John (Coventry NE) Wareing, Robert N.
Hughes, Robert (Aberdeen N) Welsh, Andrew (Angus E)
Hughes, Roy (Newport E) Welsh, Michael (Doncaster N)
Illsley, Eric Wigley, Dafydd
Williams, Rt Hon Alan Wray, Jimmy
Williams, Alan W. (Carm'then) Young, David (Bolton SE)
Wilson, Brian
Winnick, David Tellers for the Ayes:
Wise, Mrs Audrey Mr. Allen Adams and
Worthington, Tony Mr. Adam Ingram.
Adley, Robert Fox, Sir Marcus
Alexander, Richard Franks, Cecil
Alison, Rt Hon Michael French, Douglas
Allason, Rupert Gale, Roger
Amos, Alan Gardiner, George
Arbuthnot, James Garel-Jones, Tristan
Arnold, Jacques (Gravesham) Gill, Christopher
Ashby, David Goodhart, Sir Philip
Atkins, Robert Goodlad, Alastair
Atkinson, David Goodson-Wickes, Dr Charles
Baker, Nicholas (Dorset N) Gorman, Mrs Teresa
Batiste, Spencer Gorst, John
Beaumont-Dark, Anthony Gow, Ian
Bellingham, Henry Gower, Sir Raymond
Bendall, Vivian Greenway, Harry (Baling N)
Bennett, Nicholas (Pembroke) Greenway, John (Ryedale)
Benyon, W. Griffiths, Sir Eldon (Bury St E')
Biffen, Rt Hon John Griffiths, Peter (Portsmouth N)
Biggs-Davison, Sir John Grist, Ian
Blackburn, Dr John G. Ground, Patrick
Blaker, Rt Hon Sir Peter Grylls, Michael
Bonsor, Sir Nicholas Gummer, Rt Hon John Selwyn
Boscawen, Hon Robert Hamilton, Neil (Tatton)
Boswell, Tim Hannam, John
Bottomley, Mrs Virginia Hargreaves, A. (B'ham H'll Gr')
Bowden, A (Brighton K'pto'n) Hargreaves, Ken (Hyndburn)
Bowden, Gerald (Dulwich) Harris, David
Bowis, John Haselhurst, Alan
Boyson, Rt Hon Dr Sir Rhodes Hawkins, Christopher
Braine, Rt Hon Sir Bernard Hayes, Jerry
Brandon-Bravo, Martin Hayhoe, Rt Hon Sir Barney
Brazier, Julian Hayward, Robert
Brittan, Rt Hon Leon Heathcoat-Amory, David
Brown, Michael (Brigg & Cl't's) Heddle, John
Bruce, Ian (Dorset South) Hicks, Mrs Maureen (Wolv' NE)
Buchanan-Smith, Rt Hon Alick Hicks, Robert (Cornwall SE)
Burns, Simon Higgins, Rt Hon Terence L.
Butcher, John Hill, James
Butler, Chris Hogg, Hon Douglas (Gr'th'm)
Butterfill, John Holt, Richard
Carlisle, John, (Luton N) Hordern, Sir Peter
Carrington, Matthew Howard, Michael
Carttiss, Michael Howarth, G. (Cannock & B'wd)
Channon, Rt Hon Paul Howell, Ralph (North Norfolk)
Chapman, Sydney Hughes, Robert G. (Harrow V/)
Chope, Christopher Hunt, David (Wirral W)
Churchill, Mr Hunt, John (Ravensbourne)
Clark, Sir W. (Croydon S) Hunter, Andrew
Clarke, Rt Hon K. (Rushcliffe) Irvine, Michael
Conway, Derek Irving, Charles
Coombs, Anthony (Wyre F'rest) Jack, Michael
Coombs, Simon (Swindon) Janman, Tim
Couchman, James Jessel, Toby
Cran, James Johnson Smith, Sir Geoffrey
Currie, Mrs Edwina Jones, Gwilym (Cardiff N)
Davis, David (Boothferry) Jones, Robert B (Herts W)
Day, Stephen Jopling, Rt Hon Michael
Devlin, Tim Kellett-Bowman, Dame Elaine
Dickens, Geoffrey Key, Robert
Dorrell, Stephen Kilfedder, James
Douglas-Hamilton, Lord James Kirkhope, Timothy
Durant, Tony Knapman, Roger
Dykes, Hugh Knight, Greg (Derby North)
Evennett, David Knight, Dame Jill (Edgbaston)
Fallon, Michael Knowles, Michael
Farr, Sir John Knox, David
Favell, Tony Lamont, Rt Hon Norman
Fenner, Dame Peggy Lang, Ian
Field, Barry (Isle of Wight) Lawrence, Ivan
Finsberg, Sir Geoffrey Lennox-Boyd, Hon Mark
Fookes, Miss Janet Lilley, Peter
Forth, Eric Lloyd, Peter (Fareham)
Lord, Michael Renton, Tim
McCrindle, Robert Rhodes James, Robert
Macfarlane, Sir Neil Ridley, Rt Hon Nicholas
Mac Kay, Andrew (E Berkshire) Ridsdale, Sir Julian
Maclean, David Roe, Mrs Marion
McLoughlin, Patrick Rossi, Sir Hugh
McNair-Wilson, M. (Newbury) Rost, Peter
McNair-Wilson, P. (New Forest) Rowe, Andrew
Madel, David Rumbold, Mrs Angela
Major, Rt Hon John Sackville, Hon Tom
Malins, Humfrey Sainsbury, Hon Tim
Mans, Keith Shaw, David (Dover)
Maples, John Shaw, Sir Michael (Scarb')
Marland, Paul Shelton, William (Streatham)
Marlow, Tony Shephard, Mrs G. (Norfolk SW)
Marshall, Michael (Arundel) Shepherd, Richard (Aldridge)
Martin, David (Portsmouth S) Sims, Roger
Mates, Michael Skeet, Sir Trevor
Mawhinney, Dr Brian Smith, Tim (Beaconsfield)
Maxwell-Hyslop, Robin Soames, Hon Nicholas
Meyer, Sir Anthony Speller, Tony
Mills, lain Spicer, Michael (S Worcs)
Mitchell, Andrew (Gedling) Squire, Robin
Moate, Roger Stanbrook, Ivor
Monro, Sir Hector Stern, Michael
Moore, Rt Hon John Stevens, Lewis
Moss, Malcolm Stewart, Andy (Sherwood)
Moynihan, Hon Colin Summerson, Hugo
Mudd, David Taylor, John M (Solihull)
Nelson, Anthony Taylor, Teddy (S'end E)
Neubert, Michael Temple-Morris, Peter
Newton, Rt Hon Tony Thompson, D. (Calder Valley)
Nicholson, David (Taunton) Thorne, Neil
Nicholson, Emma (Devon West) Thornton, Malcolm
Onslow, Rt Hon Cranley Townend, John (Bridlington)
Oppenheim, Phillip Townsend, Cyril D. (B'heath)
Page, Richard Trippier, David
Paice, James Waddington, Rt Hon David
Patnick, Irvine Wakeham, Rt Hon John
Patten, Chris (Bath) Walker, Bill (T'side North)
Patten, John (Oxford W) Walters, Dennis
Pattie, Rt Hon Sir Geoffrey Warren, Kenneth
Pawsey, James Watts, John
Peacock, Mrs Elizabeth Wheeler, John
Porter, David (Waveney) Widdecombe, Ann
Portillo, Michael Wilkinson, John
Powell, William (Corby) Wilshire, David
Price, Sir David Wood, Timothy
Raffan, Keith
Raison, Rt Hon Timothy Tellers for the Noes:
Rathbone, Tim Mr. Richard Ryder and
Redwood, John Mr. Kenneth Carlisle.

Question accordingly negatived.

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