HC Deb 15 February 1989 vol 147 cc297-8
1. Mr. Sean Hughes

To ask the Chancellor of the Duchy of Lancaster if he will make a statement on his policy towards shareholders' controls over company donations to political parties.

The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Tony Newton)

The law requires a note of donations to political parties to be shown in the directors' report for a company and for the report to be circulated to all members of the company before the annual general meeting. Shareholders may then comment on the donations and put down resolutions on them in the same way as they can for other aspects of the management of the company's funds. The requirement to report political donations in this way was introduced by the then Labour Administration in the Companies Act 1967.

Mr. Hughes

Does the Minister not see even the tiniest inconsistency in the fact that whereas this Government have legislated for trade unions to ballot on the question of political donations, even though trade unionists have the option of opting out, when it comes to political donations from companies they have not legislated because shareholders have the option of opting out? Is not that inconsistency more to do with the fact that most of the shareholders' money goes to the Conservative party?

Mr. Newton

It has rather more to do with the fact that the hon. Gentleman's analogy does not stand up. It is much easier for shareholders to change the placing of their investments than for trade union members to change their union.

Dame Elaine Kellett-Bowman

Will my right hon. Friend do nothing to discourage donations from the British School of Motoring Ltd. to the Social Democrats so that the saner half of the alliance may continue to survive?

Mr. Newton

I am not sure that I would wish to intervene in other people's sorrows in quite the way that my hon. Friend suggests.

Mr. Ron Brown

Is it not unethical for Scottish and Newcastle Breweries, for example, to hand over large sums of shareholders' money to the Tory party, especially at a time when the company expects the people of Scotland, who are mainly Labour supporters, to back it in its struggle against Elders? Is that not an important issue of principle on which the Government should make their position known?

Mr. Newton

I described the position in my original answer. It is open to shareholders to raise such matters along the lines that I described.

Sir Geoffrey Finsberg

Does my right hon. Friend agree that it is perfectly simple for shareholders who object to seeing their companies paying political donations to sell their shares, whereas trade unionists caught in a closed shop would lose their jobs if they acted in the same way?

Mr. Newton

My hon. Friend puts with his characteristic vigour the point that I made somewhat more delicately a few moments ago.

Mr. Gould

Will the Chancellor of the Duchy of Lancaster give a clear assurance that the Government will not try to overturn a clear decision on the subject in another place? Will he accept that any attempt to do so would give the lie to the Government's protestations about shareholder democracy and reveal it to be no more than a cynical sham being manipulated by the Tory party for crude party advantage?

Mr. Newton

The hon. Gentleman mentions a point which has no doubt been in the minds of many—the fact that these matters have been the subject of consideration in another place. That consideration is not complete and I certainly would not wish to trespass on their Lordships' discussions.

Mr. Harry Greenway

Does my right hon. Friend agree that the Conservative party is the only party which truly supports free enterprise, that it is entirely in the interests of free enterprise firms to donate money to the Conservative party and that the present rules are perfectly adequate to safeguard the interests of shareholders?

Mr. Newton

Obviously, I have a good deal of sympathy with what my hon. Friend has said. It is a matter for companies to make judgments and for shareholders to raise matter if they wish to do so.