HC Deb 25 October 1989 vol 158 cc884-914

`The following section is inserted in Part VII of the Companies Act 1985

"234B. The directors' report shall be approved by the board of directors and signed on behalf of the board in so far as it relates to the matters specified in section 234 above and Schedule 7 to this Act, except for political purposes. Such contributions shall be reported as an annex to the directors' report such annex to be left unsigned and expressed in the form of a proposal for ordinary resolution to be approved by the company in general meeting.".'.—[Mr. Gould.]

Brought up, and read the First time.

Mr. Bryan Gould (Dagenham)

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

Mr. Deputy Speaker

With this it will be convenient to take amendment No. 1, in clause 1, page 1, line 9, at end insert

'and (c) inserting a new provision to modify the presentation of company accounts so as to allow shareholders to consider contributions for political purposes separately from other business in general meeting.'.

Mr. Gould

May I begin by welcoming the Under-Secretary of State for Corporate Affairs to his new job and to the Bill? As the hon. Member for Chichester (Mr. Nelson) said, he has arrived at a crucial moment, because the Bill is about to break the unfortunate record established by his Department in respect of the Insolvency Act 1986 and the Financial Services Act 1986. If my hon. Friend the Member for Bolsover (Mr. Skinner) is right in predicting that hundreds of new amendments will be tabled, that unhappy record will be broken with some comfort.

In welcoming the Under-Secretary, I venture on the debate with some trepidation, because I recently read in the newspapers that this occasion is to be used by the Minister to launch a most ferocious attack on me. The reports appear in dreadfully blood-curdling terms, and I understand that I am to be portrayed as the bogy man, red in tooth and claw, and as someone with whom to frighten all right-thinking people. The only comfort that I take is that I see myself—perhaps I am mistaken—as a most unlikely bogy man, but, when I see the Minister sitting opposite me in all his meekness and mildness, I feel that he is a rather improbable hatchet man.

The only reason that I feel that degree of trepidation, however, is that, again, the self-same reports tell me that the precise weapon with which it is intended to attack me is a book which I recently published. I should be delighted if the hon. Gentleman wishes to draw attention to the book, but I assure the House that any arrangement that the hon. Gentleman may have made with my publishers to provide further publicity to the book really has nothing to do with me. I can certainly do little about it. But if he will insist on boring hon. Members with frequent references to my book, I plead not guilty to that imposition. The responsibility must be entirely that of the hon. Gentleman.

The book refers briefly to principles of limited liability in similar terms to those which I used on Second Reading. I fear that those who expect to find great revelations in the book will be sadly disappointed—if, that is, they have bothered to familiarise themselves with the proceedings on the Bill so far. However, the book does not deal with company donations. That is the subject of the new clause and, therefore, this brief debate. I assure the House that, for the moment at any rate, we are safe from the dreaded attack about to be launched by the hon. Gentleman.

The new clause is an exact replica of the amendment passed in another place when the Bill began its passage with their Lordships. It is by no means a perfect provision. Opposition Members understand that it suffers from some defects, but we believe that it was worth tabling the new clause in this precise form simply to encourage the House to take a similar view of this issue to the one that was taken by their Lordships. If the Government are willing to accept the principle that lies behind the new clause, I have no doubt that the technical problems could be corrected by an appropriate amendment or new clause when the Bill returns to the other place.

The defeat which their Lordships inflicted on the Government in the other place was rightly hailed as a great political victory—indeed it was—but it was also a great victory for common sense. The debate, vote and conclusion on that occasion demonstrated that anybody who bothered to look at the arguments—their Lordships considered the arguments very carefully—would realise the thinness of the Government's objections to what was being proposed. Accordingly, their Lordships inflicted defeat on the Government. Predictably enough, the Government reversed that decision in Standing Committee, but, although they mustered the votes, it cannot be said that they won the arguments. The arguments remain exactly as they were when the matter was debated in the other place, and they are arguments which would convince everybody other than direct supporters of the Conservative party.

Mr. Tim Smith (Beaconsfield)

It was not a Government amendment; it was my amendment, and the Committee agreed it.

Mr. Gould

I read the record of the Committee's deliberations with some care. I am slightly surprised that the hon. Member for Beaconsfield (Mr. Smith) should put his head forward on the chopping-block a second time. His ministerial colleague, the present Minister's predecessor, was quite rightly criticised for sheltering behind the hon. Member for Beaconsfield, who, admirable though he is, is not a direct spokesperson for the Government. It would have been much more appropriate for the Minister to advance that proposition rather than to use a Conservative Back-Bench Member to do the job for him.

The starting point of this debate is that the matter of donations by commercial companies to political parties is one of considerable murkiness. In making that assertion, I am encouraged and sustained by the very good evidence that considerable embarrassment is felt by all parties to such transactions. Again, the best evidence for that embarrassment is the very considerable efforts made by donors and recipients—let us be clear that the only major recipient that matters here is the Tory party—to conceal what is going on. It is persuasive evidence of that embarrassment that great subterfuges are resorted to and clandestine procedures are used. Every effort is made to conceal the truth of what goes on in that murky and somewhat grubby relationship.

That is why we saw all the revelations in The Independent earlier this year about the river companies which have only recently come to light, although they functioned for many years. We are told that all that is behind us and in the past, but, at the time, we would have been assured that there was nothing in the stories anyway. We can place little reliance on assurances that none of it happens any longer. It is considered that at least three of the river companies still exist, but it is not clear for what purpose.

There is also the use of front organisations—again not a matter which can be disputed. The Conservative party finds it convenient to set up front organisations, of which British United Industrialists is the most prominent, so that donations can be made in an indirect fashion. The reason for that is clearly admitted by some of those involved. Lord Taylor of Taylor Woodrow, prominent in BUI, admitted that BUI provides a financial conduit for business men who are frightened of their names being displayed as supporters of the Conservatives. That is a clear admission that the purpose of setting up the front organisation is to deceive and to conceal what is really happening.

There are also devices such as the use of special bank accounts, for example, the so-called free enterprise account at Drummonds bank. I wonder whether the Minister will enlighten us on whether that account still functions and, if so, for what purpose. It is not only the donors who are shy in these matters, but the recipient—the Tory party—is extremely reticent. Tory party accounts make no mention of the substantial donations that its own members concede account for about 90 per cent. of Tory party income. There is a great deal of effort to conceal what is happening on both sides of the transaction.

There is a good reason for that embarrassment. A transaction in which commercial enterprises, usually companies, pay to a political party—in this case the Government—sums of money in circumstances in which that party in government could conceivably reward such payments with commercially important decisions favouring the donors is fraught with difficulty and will always arouse suspicion—and rightly so. Such suspicion centres on relationships which involve the award of personal honours. the award of Government contracts, the making of public appointments, and the application of ministerial permissions and sanctions of various sorts. In each case in which a payment is made and a reward is either potentially available or is actually made, the only safeguard that we have in the public interest to ensure that it is not an improper relationship is that there should be maximum openness about what is going on.

Such transactions would be bad enough if it were a matter of individuals making payments of their own money, but what is particularly worrying about company donations is that a small group of people make donations of other people's money and, presumably, expect some reward for themselves or for their company as a consequence.

A potent example of the difficulty into which secrecy and confusion can lead us is the recent sad episode of the Monopolies and Mergers Commission report on the brewing industry. When the commission made its report, the then Secretary of State proclaimed that it was an excellent report and that he was minded to implement it in full. Some of us were just a little more sceptical, not to say cynical, about that matter. We then observed a sequence of events in which great efforts were made by the major brewing firms to lobby hon. Members, Ministers and eventually, so we understand, the Prime Minister. The all too sadly predictable upshot was that the brewers had their way. The Secretary of State who had proclaimed himself so boldly at the outset was made to look foolish and craven when he abandoned the report by the Monopolies and Mergers Commission. Perhaps nothing improper happened in that relationship. However, no one observing that course of events could fail to ask whether the success which the brewers clearly expected and eventually enjoyed did not have something to do with the fact that the major brewers are bank-rollers and paymasters of the Tory party.

5.30 pm

Because suspicions necessarily and naturally arise in such cases, for some 20 years now this legislature has regarded donations to political or charitable purposes as a special category. That is why the Companies Act 1967 made special rules for that kind of donation. That is why the law remains that any donation over £200 must be reported specifically in the annual report presented to the ordinary general meeting.

Mr. Hanley

The hon. Gentleman was right to state that any donation of that sort over £200 must be stated in the directors' report. He will also know that any shareholder can raise the subject at an annual general meeting and may vote with a simple majority whether such a payment should have been made. Surely in corporate terms democracy is available and there is also the opportunity to embarrass directors. The matter can be raised in a proper form.

Mr. Gould

The hon. Gentleman and I have sat opposite each other in many Committees dealing with these issues. He will be aware that there were earlier occasions when I had to tell him that his interventions had come a little early. If he will exercise a little patience, I will be happy to deal with his points.

The point that I was making, which is important to the sequence of the argument, is that there is good reason for the present company legislation to make special provision because the decision to give money to political or charitable purposes cannot, in the ordinary sense, be a commercial decision. If it was a commercial decision in the sense that it was expected to produce a direct and immediate commercial consequence or benefit to the company concerned, it would clearly be improper for the very reasons that we have just discussed. The donation cannot be made for buying a ministerial decision favourable to that company. It can be made only in propriety for a much wider purpose reflecting the general political judgment of the directors concerned. However, that is not what they are employed to do. Both shareholders and non-shareholders are entitled to make such a judgment, but the directors are employed to make a commercial judgment which, by definition, is excluded. That is why special rules are provided.

We must then decide whether the current arrangements which recognise the special nature of such donations are adequate to protect the shareholder and assure the public interest that nothing improper is happening. The difficulty with the situation described by the hon. Member for Richmond and Barnes (Mr. Hanley) is that of course it is possible for a shareholder attending the ordinary general meeting to comment adversely on what has already happened. However, his only sanction is to vote against the whole report and vote it down. For the reasons that were explained admirably in another place when their Lordships discussed the issue, that is a highly unlikely course of action because it is well known that if that happened a great blow would be dealt to the company's commercial management with a consequent loss of confidence. That is why the sledgehammer provided by the current provisions cannot possibly be an effective weapon in the hands of disgruntled shareholders who want simply to express their opposition to this particular use of the company's resources.

However, in that scenario, shareholders are informed retrospectively and too late. They are informed in a way that makes it impossible for them to do much about it. That is why we propose that the position should be improved so that shareholders have more control over a situation in which they are currently powerless.

Mr. Hanley

Where in the Companies Act 1967 does it say that shareholders must vote in favour of the whole directors' report? I understood that the matter could be raised separately by the requisite number of shareholders and therefore it can be voted upon separately.

Mr. Gould

Of course, anything can be raised and discussed separately. However, to get any effective action, a special resolution would have to be tabled. The only effective way of reversing what had happened would be to vote down the whole report.

The Government's arguments against the proposal in new clause I are totally unconvincing.

Mr. Nicholas Baker (Dorset, North)

What would be the position of directors who proceeded to make a donation against the terms of a resolution carried at an ordinary general meeting if such a resolution had been voted down, albeit if that was not a special resolution? Will the hon. Member for Dagenham (Mr. Gould) release us from our anxieties? Will we get a discount on the price of his new book? Is that the book before him?

Mr. Gould

Yes, this is my book and I am anxious to display it. It is available at the full price. It is called, "A Future for Socialism". Unfortunately, I do not have the right to sell it in large numbers, but I can recommend several excellent book shops which will sell it at its cover price.

In response to the point made by the hon. Member for Dorset, North (Mr. Baker), the problem is that no special resolution could undo what had already happened. A resolution would have to be passed instructing company directors not to make such payments in future. It would be very difficult to be sure that, as shareholders move from one company to another, they keep pace with what has happened and been reported to them retrospectively.

The Government argue that the proposals in new clause I affect only trivial amounts. They may be trivial to the company donors, but they are substantial in terms of financing a political party. In 1987 the donations amounted to £4 million. Indeed, there may be other donations which were not adequately reported. In 1984, a survey of 1,250 companies revealed that 320 had made donations—243 to the Tory party and 110 to front organisations. The proportion of companies making those gifts is quite large. Taylor Woodrow, P and O, Allied Lyons, British and Commonwealth and United Biscuits are among the companies which gave more than £80,000 last year. These are not inconsiderable sums.

The Government's next argument is that advanced by the hon. Member for Richmond and Barnes—that the present arrangements are quite sufficient. The difficulty is that most shareholders are naturally not represented at an ordinary general meeting. Also, and I believe that Conservative Members are unwilling to acknowledge this, many shareholders are not individual or direct shareholders; they are the beneficiaries of or people with interests in pension funds and insurance companies which have major shareholdings on their behalf. There are hundreds of thousands, if not millions, of people whose contributions to pension funds and insurance companies are invested without their knowledge in companies which then, without referring to the shareholders, make political donations to the Tory party. That is an extraordinarily unsatisfactory situation and we should do what we can to correct it.

Mr. Tim Smith

What evidence does the hon. Gentleman have that shareholders, whether direct or indirect, are dissatisfied with the present arrangements?

Mr. Gould

Shortly I shall discuss the polling evidence that reveals public opinion, but the hon. Gentleman's question demonstrates what is wrong with the present situation. As a consequence of the amendment that he moved in Committee, and as a consequence of the status quo that he wants to preserve, it is extremely difficult for shareholders to be aware of, or to express an opinion on, precisely the question to which he has addressed our attention. Because we believe, in the interests of democracy, that shareholders should have that opportunity we want a change to be made.

At an earlier stage in our deliberations the right hon. Member for Braintree (Mr. Newton), then Minister of Trade and Industry, suggested that there was a remedy in the hands of shareholders in the sense that if they were dissatisfied with political donations reported to them, they could sell their shareholding and move on to another company. That doctrine is extraordinary if based on any democratic principle, and it would not even work in practice. Even if an individual shareholder followed that advice, even if he were to traipse around the stock exchange to look for companies that met his criteria and even if he were prepared to accept all the transaction costs that might be involved, he could never be sure that he had not invested in yet another company that was making the political donations to which he had originally objected. He would discover that only when he attended the ordinary general meeting. The Minister and his colleagues quickly dropped that argument and we have not heard much of it since.

Mr. Hanley

I do not want to delay the House, but surely if a prospective shareholder felt so seriously about this matter he could write to the directors to ask them about their policy.

Mr. Gould

Why does a democratic right to exercise control over what is admitted on all sides to be a specific and rather dangerous form of donation depend upon the initiative being taken by the shareholder who fears that he may or may not be aggrieved? If we establish the principle that it is right that shareholders should have some power of control over such matters, that right should be available to them, whether or not they initiate that right. In an election no one suggests that one must apply for a vote before one receives it—one receives a vote by virtue of being a citizen. Similarly, as a shareholder, one should have a vote and that right of control.

The hon. Member for Beaconsfield asked about the evidence as to the opinion of shareholders. The only evidence of which I am aware is a MORI poll that showed that 82 per cent. of the public—admittedly not shareholders in particular—favoured our proposal that shareholders should be consulted before political donations are made. The only instance of a ballot being taken of shareholders was, as far as I am aware, conducted by the National Freight Corporation when no fewer than 87 per cent. of shareholders voted against political donations being made. In the absence of any other evidence I believe that the available evidence is conclusively in favour of our proposition.

If the hon. Member for Beaconsfield wants further convincing on this matter, I refer him to members of his own party. The Charter Movement, which publishes Charter News, said: Over 90 per cent. of the Party's income in 1987–88 came from donations. No information is given in the accounts about these donations, which makes it all too easy"— and all too understandable for our political opponents to allege improprieties, which it is then impossible for Conservative supporters to counter". The arguments against our proposal do not carry conviction. Our proposal has widespread public support and it flows directly from democratic principle and practice. No amount of special pleading—one might almost say specious pleading—on behalf of the Tory party can displace the proposition in the new clause, which is fully supported by public opinion and which is consonant with common sense and democratic principles.

Mr. Frank Haynes (Ashfield)

The Conservatives adopt a one-sided approach to this argument. They made the trade unions consult their members about the political levy and they put that on the statute book. When it comes the other way round, however, they do not want to know. The shareholders are told after the donations have been made and they are not consulted about them. If the Conservatives do not accept what we are suggesting, will my hon. Friend let them know in no uncertain terms that when we get back into office after the next election we shall do it ourselves?

5.45 pm
Mr. Gould

My hon. Friend is right to point to the double standards which the Conservatives apply to this important issue and I endorse the point that he has made.

The onus is on the Government, or more particularly the Conservative party, to say why a sensible reform should not be implemented. Their continued opposition to that sensible reform shows that they are prepared to put self interest above public interest. It shows that their constant espousal of shareholder democracy is a sham and how determined they are to keep from the light of day and from proper scrutiny their grubby relationship with their secret backers. It is an act that needs to be cleaned up and if the Tory party will not do that job, Parliament will, and if we have to wait for a Labour Government, Parliament, under that Government, will do that job.

Mr. Nelson

What we have just witnessed is another death throe of the Labour party. Underneath it all it recognises that it has lost the support of enterprise and industry. The only way in which it can make up for that is to try to prevent that part of the economy from contributing freely to a party that stands for an ideology that it perceives to be in the interests of the economy, employers and company employees.

When my hon. Friend the Member for Beaconsfield (Mr. Smith) moved an amendment on this matter in Committee—it was the first subject to be dealt with—it represented an initiative from Conservative Back Benches and was not at the instigation of the Government. It was universally welcomed in principle by Conservative Members because we believe that the directors of a company should decide what is in the best interests of that company; indeed, they are required to do so. Their interests are those of their employees, customers, creditors and shareholders.

All companies are affected one way or another by Government policy, but certain major companies, such as those in the oil industry, the financial services industry and in defence are radically affected by the policies adopted by political parties and by the Government of the day. I believe that it is proper and above board for those companies to be able to back overtly a party that stands for their interests, be they the interests of their employees, shareholders or interests relating to their specific activities.

The new clause represents an admission by the Labour party that the productive side of the economy knows which political party is backing it. It is only because the Labour party is bereft of the policies that can lead to future stability for companies that it has sought to frustrate the right of those companies to back that party.

Mr. Ian Gow (Eastbourne)

Will my hon. Friend please read out to the House a list of those companies that make political gifts to sustain and strengthen the Labour party?

Mr. Nelson

I fear that I do not have that information to hand. If my hon. Friend is able to catch your eye, Mr. Deputy Speaker, I hope that he will be able to elucidate on that. It is undoubtedly true that the Labour party receives support from a variety of quarters—from the corporate sector, as well as from the trade unions.

The hon. Member for Ashfield (Mr. Haynes) mentioned the requirement that has been placed on trade unions to ballot their members. The difference is that one can opt out of making political contributions through a trade union, whereas, other than by selling the shares, one cannot opt out of a company of which one is a member. The two cases are fundamentally different.

Mr. Gould

The hon. Gentleman has just made a powerful point in support of our contention. I was also interested in a point that he made a moment ago when he appeared to concede that the effect of passing the new clause would be to "frustrate"—to use his word—the making of such donations to the Tory party. May I take it that he concedes that to introduce this element of shareholder democracy would produce decisions that are different from those currently taken by a small minority of directors?

Mr. Nelson

No, I do not concede that because, as my hon. Friend the Member for Richmond and Barnes (Mr. Hanley) has already said, that right is already available to members of a company. Before the annual general meeting, members of a company are given that company's report and accounts and have adequate time in which to table any necessary resolutions and to obtain support for them. Any board of directors worth its salt—most of the boards of directors of this country's public limited companies are certainly that—would take seriously any such resolution passed at an annual general meeting.

Mr. Derek Fatchett (Leeds, Central)

Parallels with trade unions have been drawn several times. From his vast knowledge of industry, the hon. Gentleman must know that trade unions operate on exactly the same basis as companies. Under the law as it has existed from 1913—and as it still exists, with one major change—trade unions publish their political fund accounts. They present them to their annual meetings—their conferences. In those circumstances, there is an exact parallel with companies. Why did the hon. Gentleman vote for the 1984 trade union legislation, which imposed an additional duty on trade unions—to ballot their members—when he opposes such provisions for shareholders?

Mr. Nelson

Because at that time many members of trade unions could not get out of being members of their trade unions. In many cases, their jobs depended on their trade union membership because of the closed shop. Under that reality, it was essential that there was openness in terms of trade union contributions—I welcome what the hon. Gentleman said on that—and that people had the right to opt out. In my judgment, that position is not analogous to that of a company, because the opting-out provision does not mean the same thing and cannot operate in the same way.

Mr. Nicholas Baker

Will my hon. Friend give way?

Mr. Nelson

Although I do not wish to prolong the debate, I shall give way briefly to my hon. Friend.

Mr. Baker

My hon. Friend has put his finger on the important point, which is the position of directors of a company that has, by its shareholders, voted to disapprove of such payments. I put the point to the hon. Member for Dagenham (Mr. Gould)—who did not answer it—that any directors who persisted in making such donations in the face of such a resolution would not simply be doing something unwise or immoral, but would be laying themselves open to a legal action, instigated by their shareholders. The existing law is not negligible; it is powerful and directors are right to take notice of it.

Mr. Nelson

I am obliged to my hon. Friend and agree 100 per cent. with what he has said.

The Labour party has defended every restrictive trade and labour practice that we have tried to sweep away over recent years. The dock labour scheme is just one example. My right hon. Friend the Secretary of State for Trade and Industry is right to seek to liberalise industry and to promote profitability and reinvestment. Why should industry not be allowed to decide who is helping its ambitions, employees and shareholder interests? Companies already provide facilities for their members to question political contributions, so the new clause is redundant and unnecessary and the House should not accept it.

Mr. David Winnick (Walsall, North)

We all know which restrictive practice the hon. Member for Chichester (Mr. Nelson) has defended. I have no doubt in my mind that the new clause and our amendment will be heavily defeated. If it was possible for the Conservative party to have a heavier Whip—perhaps a six-line Whip—it would do so. We can rest assured that there will not be a single Tory rebel on this issue. They will all troop through their Lobby accordingly.

I also have no doubt that if people outside the House knew what we were discussing, they would believe that the Opposition have fairness, justice and reason on their side in tabling this new clause. As the beneficiary of donations from companies, the Conservative party is saying, "The law is all right. There is no need to change it." Indeed, even the existing legislation, which was enacted in 1967, was not greeted with any enthusiasm by the Conservative party at that time. The only explanation for all this is that the Conservative party is extremely reluctant to allow undue attention to be paid to the way in which it is so heavily financed by so many companies.

If contributions were made to the Conservative party in a straightforward way, there would perhaps be less reason for tabling the new clause. However, such contributions are not made in a straightforward way—they are made in a furtive, underhand and murky way, as my hon. Friend the Member for Dagenham (Mr. Gould) has said.

My hon. Friend referred to the river companies. I did not use to know of their existence and I doubt frankly whether many Tory Members knew either. Indeed, at least one Tory Member is nodding in agreement with that comment. However, the river companies existed for many years and the purpose of those fake companies was quite clear. Incidentally, they were publicised in The Independent when the Sunday Times was not keen to publish the story. Their purpose was to channel large sums of money to the Tory party. Because the river companies were never publicised, until those articles appeared most people—including those in the media as well as many politicians—did not know of their existence. I would imagine that their existence was known to just a few people in the higher reaches of the Conservative party.

British United Industrialists is another Tory front organisation. I have certainly known about it for a number of years. The function of that organisation—very likely, it has no other function—is to act as a financial link between various companies and the Tory party. Indeed, 90 per cent. of the income of British United Industrialists is simply passed on to Conservative Central Office. At one stage in the 1970s it was decided that contributions to the Conservative party should be made out to the "free enterprise account" at Drummonds bank.

The Conservative party does not even publish a properly audited balance sheet of its finances. That is why there is so much concern about the manner in which one of the state's two major parties organises its finances in such an underhand and furtive way. It does so because it is frightened that undue attention might be paid to the sources of its money.

If, as the hon. Member for Chichester said, the Conservative party is proud of the way in which it receives such donations, the question from myself and my hon. Friends is surely obvious—why not publish the full details? Why behave in this underhand way? The explanation is obvious also.

Lord Taylor, the president of Taylor Woodrow, who is a leading light in these financial dealings, and whose own company is so generous to Tory funds, is quoted as saying: We had to fight Harold Macmillan to avoid him going socialist. And, but for Aims of Industry, Edward Heath would have agreed to putting union leaders on the boards of companies. Clearly the present Prime Minister is much more to the liking of Lord Taylor as party leader than were two of her predecessors.

Under existing legislation a company needs only list the amount under political donations. It can state that it is making a contribution to BUI, and nothing else. The shareholders will not know how that money will be sent on from BUI to the Conservative party, or perhaps to another front organisation. The new clause would mean that such contributions would be properly and separately debated at general meetings, which explains why Conservatives are so opposed to making the change.

6 pm

Sometimes when I study the way in which the Tory party organises its finances I wonder whether Richard Nixon and those associated with him mastermind the arrangements. He knew all about laundering money; perhaps he could have given the Tory party more advice. Money is being laundered—the Minister shakes his head, but it certainly is, and the river companies would not have existed had they not been considered necessary by Tory central office.

We are not talking about peanuts—about donations of £100 or £400 or so. Last year 16 companies alone made donations of £50,000 or more each to the Conservative party or front organisations, and the top 10 donated more than £1.5 million. The largest donation came from Taylor Woodrow, which last year contributed more than £111,000 to the Conservative party.

I want to compare briefly the subject under debate with the way in which this same Government insisted in legislation that unions must hold ballots every ten years on whether to have a political fund. As I said when the legislation was debated, at their annual conferences unions could decide whether they wanted to continue a political fund or to discontinue or start one. The law on that was perfectly clear. Moreover, as the hon. Member for Chichester pointed out, any member of a union with a political fund can opt out—that has been the position since 1913. Any member of any trade union can tell the branch secretary that he does not want to contribute to a political fund and that is that.

Shareholders cannot opt out in the same way. Despite all the safeguards in place at the time, the Conservative party—with no members dissenting—decided to change the law, and the trade unions had to hold a ballot every 10 years. It so happens that victory went to the trade unions. Not only did all the unions with political funds vote to keep them: one or two that never had one decided to begin one.

However, the purpose of the exercise was quite different—the Government tried to cripple the finances of their major opponents. We have never denied of course that the Labour party's funds have always been far more limited than those of the Conservative party, but the Government were not satisfied and tried to undermine still further the financial position of their political opponents—and that from a party which claims to be in favour of parliamentary democracy.

We are not trying in this new clause to cripple the funds of the Tory party. The proposed clause will not be passed, hut: if it were, shareholders would be able to approve, or not, donations to the Conservative party. It is likely that they would usually approve them—I would not challenge that.

In case some Conservative Members believe that I am exaggerating—I always try to avoid that—one of the leading members of the Charter movement inside the Tory party, Peter Hardy, is quoted as saying that he has long suspected that the Conservative party has hidden reserves in secret bank accounts. If I or my hon. Friends had said that, we would have been denounced as exaggerating as usual. Presumably, Peter Hardy is as much an active Conservative supporter as any Conservative Member—the difference being that he and others in the Charter movement, such as Eric Chalker, happen to believe that their party should be run in a straightforward and honest manner. I see no reason why they should be criticised for that point of view.

My hon. Friend the Member for Ashfield (Mr. Haynes) told my hon. Friend the Member for Dagenham that he hoped that a Labour Government would effect the sort of changes in the financing of political parties which will never he made as long as the Conservative party has a majority in the House. I agree. Perhaps we should have brought about such changes when we were in office: it is regrettable that we did not.

Conservative Members may shrug this off and call it the usual Labour party propaganda, but the more they resist modest reforms along these lines the more determined the Labour party will be when in office to make substantial changes to ensure that the Tory party is put on the same footing as the Labour party. So if trade unions which, to a large extent, finance the Labour party need to hold political fund ballots every 10 years, alongside observing the provisions from before the 1984 Act, it is only right and proper that the same should apply to companies and shareholders.

Either we change the law along the lines being suggested now, or we perhaps should come to the conclusion that the financing of the Conservative party by big business and of my party, in the main, by trade unions is wrong, and that the remedy lies in some form of state funding. There is already state funding of opposition parties, from which the Conservative party benefited when it formed the Opposition. I am not entirely sure that that is the best remedy but I am coming round to that view more and more. Perhaps the real remedy to end many of the present controversies would be for the state to finance political parties in accordance with the number of votes they received at the previous general election. I am not entirely convinced that that is the solution, but perhaps we should consider it further at some stage.

Mr. Richard Shepherd (Aldridge-Brownhills)

The last point made by the hon. Member for Walsall, North (Mr. Winnick) has some merit. The most extraordinary thing about this debate is the sense of déja vu that it conveys. I had not appreciated that the Opposition had been converted so solidly by the arguments advanced by my party and the Government during the reforms of the trade union movement.

What is sauce for the goose is sauce for the gander. All the arguments adduced by the Opposition spokesman, the hon. Member for Dagenham (Mr. Gould), tailor neatly with most of the arguments adduced by the Government when requiring ballots on trade union political funds. It can be argued with a sense of equity that it is not unreasonable that companies should ask their shareholders directly whether they should make a political donation. It must be reasonable.

Some of my Conservative colleagues have said that it does not matter, and that they can be sacked anyway. I have listened to the same arguments from the trade union movement. For 60, 70 or 80 glorious years it had the perfect source of finance, and the leadership did not have to trouble the membership too much about detail. It was the leadership's right to grant funds to the Labour party. Indeed, the Labour party was created by the trade union movement.

Our anxiety is that the public may perceive that we are the creation of big business. Clearly it will be a case of what is sauce for the goose is sauce for the gander if it is exposed that our support comes from big business. There should be a more relaxed atmosphere. The argument that the decision should be put to the shareholders may well not serve us ill, as a party. There is no evidence to suggest that it will. There is a lot of evidence for the argument advanced by my hon. Friend the Member for Chichester (Mr. Nelson), that the judgment of the majority of shareholders will be in favour of the continuation of donations.

I remember the Labour party's trepidation at the prospect of change in trade union legislation. There was anxiety. I have to acknowledge that there was also some triumphalism among Conservative Members that that legislation would be the end of the Labour movement as we knew it. It was thought that trade unionists who were deeply disaffected and disappointed by the conduct of the Labour party would withhold funds. In the event, it did not turn out that way. As the hon. Member for Walsall, North has just said, the legislation consolidated Labour's strength and the donations, strangely enough.

I do not see any reason why there should be any mystery. It is not an unreasonable proposition that shareholders should vote directly on donations to political parties. That is why I call this sauce for the goose and sauce for the gander.

There is a sense of equity and fairness in our nation. It looks blindly partisan if we say that we expect rules and regulations to be imposed on our political opponents, but that they must not apply to us. Our arguments have mirrored those made by a nervous Labour party when it had to confront the possibility of unions having to ballot their members on political donations. Companies may decide to donate money to the Labour party or that wealthy individuals, through companies, may make donations to the S whatever it is called—the SDP, I think.

It is important that the Conservative party shows itself to be fair-minded about this matter, particularly these days. The Government should treat this issue with caution for fear that, should we reject a measure that is essentially fair, the public perception will be that we have become so particular in these matters that we want only to reinforce our own finances. We will find it in our interests to do this because the measure would give confidence to company boards, supported by the votes of their shareholders, if that is their wish.

I beg my colleagues on the Front Bench to look at this proposal with a more open mind.

Mr. Charles Kennedy (Ross, Cromarty and Skye)

I support new clause I. [Interruption.] Does the hon. Gentleman wish to intervene?

Mr. D. N. Campbell-Savours (Workington)

I did not want to intervene. I was merely asking my hon. Friend the Member for Walsall, North (Mr. Winnick), from a sedentary position, whether the British School of Motoring contribution has been sorted out yet.

Mr. Kennedy

The hon. Member for Workington (Mr. Campbel-Savours) was kind enough to give me advance warning that he intended to crack that hilarious joke, which has never been heard in this Chamber before. I gather that it refers to a body which was once known as the British Liberal party, of which I was not a member. Therefore, I am not prepared to answer or to take responsibility.

I agree with the new clause although, after listening to the speech of the hon. Member for Walsall, North (Mr. Winnick), I feel that we should go for full state funding of political parties. Ultimately, that will be seen to be the logical step, and it is preferable to what was fairly described by the hon. Member for Aldridge-Brownhills (Mr. Shepherd) as the sauce for the goose, sauce for the gander situation with which we have been presented in this debate, and in previous debates on the Bill.

6.15 pm

The frank and straightforward speech of the hon. Member for Walsall, North highlighted what, from the point of view of a third political party, is a basic criticism of the whole system. He rightly said that the bulk of Labour party funding comes from the trade union movement—I say good luck if it wants to use finances in that way—and that the bulk of Conservative party funding comes from the corporate and the private sector.

The hon. Member for Dagenham (Mr. Gould) was critical of the Department of Trade and Industry's response to the Monopolies and Mergers Commission's report on the brewing industry. Conservative Members were critical of the Labour party's attitude to trade union legislation and to the promises in the policy review document that there would be further movement in a direction that the trade unions want. All that underpins the fundamentally unhealthy nature of having a political system that is so directly dependent, on one side of the political divide, on private sector finance and, on the other side, on the trade union movement. That clearly influences Government and Opposition policies to an unhealthy and dangerous extent. That approach has done much legislative damage to the body politic for many generations.

Mr. Michael Brown (Brigg and Cleethorpes)

Can the hon. Gentleman tell the House whether he has arrived at that conclusion because of the experience of his former party—the SDP—which I understand received approximately £9,975 in the year up to 1987? It may be that that £10,000 now goes to the Liberal Democrats. Perhaps the hon. Gentleman is embarrassed by that. [HON. MEMBERS: "From Lonrho."] Yes, from Lonrho—I think that you will have heard of that company, Mr. Deputy Speaker. Is it embarrassment at receiving that sort of donation that has led the hon. Member to the conclusion that he has just put to the House?

Mr. Kennedy

I can assure the hon. Gentleman that the party of which I am a member has not received, and is unlikely to receive, any money from Lonrho, and would turn it down if it were offered. If that party which adheres to the right hon. Member for Plymouth, Devonport (Dr. Owen) receives money from Lonrho, that is a question for him. If money from that source was paid to the then SDP in 1987, I was not aware of it. I would not have supported it, and any questions about it should be directed to the politician who now purports to be the leader of that party.

Mr. Brown

Should the hon. Gentleman not be arguing that it is a question not whether the Conservative party needs to publish its accounts but whether the party of which he was once a member ought to publish its accounts more widely?

Mr. Kennedy

I was once a member of that party, but if the hon. Gentleman studies the legal and constitutional terms of the merger between the Social Democractic party with the British Liberal party, he will find that that party is still within the merged party and therefore those people, to whom I shall refer as provisionals in all this, must speak for themselves. I do not take responsibility for them.

I shall return to my basic contention—[HON. MEMBERS: "It is the very man—the hon. Member for Caithness and Sutherland (Mr. Maclennan)."] I am sure my hon. Friend will write to the hon. Gentleman to answer his question. I should add that I am sponsored by nobody.

Conservative and Labour Members have criticised each other's parties. However, in defending their own parties they highlighted the weakness and the unsatisfactory nature of the entire system. It cannot be healthy for the body politic of the country for industry to be bound financially to one side of the political divide. That is sure to influence legislation and party political attitudes and it is the mirror image of what happens on the other side of the political divide.

Criticism has been levelled at my party and at some of its members. When the SDP came into being, we said that one cannot build a party that will not be in somebody's pocket unless one is prepared to dig into one's own pocket. The Liberal Democrats adhere to that principle. The present financial arrangements will not be changed by the Bill. The overwhelming bulk of our funding comes from membership subscriptions and through direct mail appeals to members and supporters. At the end of the day, that is healthier and fairer than the funding of political parties related to the proportion of the board of directors that a party has been able to attract at the previous election.

If the Government will not accept the new clause as a small step, I hope they will take an early opportunity to redress the gross injustice, imbalance and incoherence of the political system which arise from our present unsatisfactory arrangements.

Mr. Gow

The hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) criticises political parties that receive donations from companies. He said that he did not like money going from trade unions to the Labour party and from companies to the Conservative party. He suggested that such donations, and presumably other voluntary donations, should cease and that the British people should be obliged to finance the Social and Liberal Democrats, the Labour party, the Conservative party and the Scottish National party. So muddled is the hon. Gentleman's thinking that one could conclude that possibly even Sinn Fein should be supported in that way. That proposal does not find much favour among my hon. Friends, although my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) seemed to be flirting with the idea.

Those who wish to support political parties, whether they are members of trade unions or companies, should be free to do so. I am strongly opposed to imposing additional taxation on the British people so that they can finance political parties of whose purposes they may disapprove.

The hon. Member for Ross, Cromarty and Skye is immensely and rightly popular in the House, but his speech contained another sad characteristic. He criticised political parties that receive donations from companies and was asked by my hon. Friend the Member for Brigg and Cleethorpes (Mr. Brown) about Lonrho. The hon. Gentleman said that he knew nothing about it. Lonrho has extensive trade dealings with the Republic of South Africa. The Financial Times of 23 February 1988, a newspaper well known to the hon. Member for Ross, Cromarty and Skye, said: Lonrho, mining, trading and industrial company headed by Mr. Tiny Rowland, donated £9,775 to the Social Democratic Party last year. That was in 1987. That means that at one time Lonrho, with its vast interests in South Africa, thought that it might hedge its bets and make a donation to what was then. I think, called the Alliance. The hon. Gentleman will correct me if I have my timing wrong.

At that time, some companies and even a few people believed that it was possible for the Alliance to attract some support from the British people. I have news for the hon. Gentleman. No donation will be forthcoming from Lonrho at the next general election to the Social and Liberal Democrats. The support for that party from the trade union movement and companies and from the British people will be very slender.

Dame Elaine Kellett-Bowman (Lancaster)

What about the learner drivers?

Mr. Gow

I shall come to that later.

The hon. Member for Ross, Cromarty and Skye complained about the way in which political parties are funded. We have seen that opportunistic change of mind before by the SLD, because it characterised the abandonment of its previous support for the policy of first past the post. The SLD has grown out of the Liberal party. When the Liberal party was amassing great majorities in the kingdom by means of first past the post, it was in favour of that system. When it discovered that its support was waning and that the only way in which it could have more Members of Parliament was to alter the rules, it was in favour of doing so.

It is a new doctrine for the inheritors of the Liberal party now to say that they are in favour of state funding for political parties and against trade unions, companies or individuals being allowed to support such parties. The reason for that is simple. It is that everybody knows that the SLD is bust. That is why it says that it should be financed by the Government. That is a most dangerous argument and it again reveals that, when the going gets rough and when that party cannot support itself by the existing rules of finance for the electoral system, it will alter course.

Mr. Graham Allen (Nottingham, North)

I support the hon. Gentleman's view about not levying the taxpayer. People should not have to pay into a state fund that finances political parties. Will the hon. Gentleman extend that argument to shareholders? Should they be levied for money for the Conservative party? Would he go further and say that consumers of beer, supermarket goods and insurance and other services should be balloted and consulted before money is taken from them?

Mr. Gow

I propose to deal with that matter, and I shall again give way to the hon. Gentleman if he is dissatisfied with what I have to say.

The new clause contains a proposal that retrospective approval will have to be given at an annual general meeting for donations that have been made by the board of directors. A board of directors should be free to carry out the duties laid upon it by the memorandum and articles of association of the company concerned and, of course, must act within the constraints of the Companies Acts. It should be up to directors to take decisions that fall properly to them. Of course directors are accountable to and removable by shareholders at the annual general meeting. If shareholders do not like the decisions taken by the directors, those directors can be and frequently are removed.

The new clause seeks to set a dangerous precedent. If retrospective approval has to be given for a political donation, will it also be required if directors enter into a contract with the Republic of South Africa? That question will appeal to Opposition Members. That is an interesting matter that exercised the attention of my right hon. Friend the Prime Minister at Kuala Lumpur.

I am glad that the shadow Chancellor is in his place. I understand that some Opposition Members say that specific approval should be given by shareholders if a company enters into a contract with the Republic of South Africa. Some may say that shareholders should be asked before donations are made to charity, or that specific approval should be required before a donation is made to disaster funds. It is perfectly proper to rely on the protection given in the Companies Act 1967, and I believe that the hon. Member for Wallsend (Mr. Garrett) was in the House at that time. That Act requires disclosure of sums of more than £200.

6.30 pm

The law as presently in force requires full disclosure. It is obvious that shareholders in general meetings can issue an instruction, through resolution, that no further political donations should be made. It is possible for any shareholder who does not like the donations policy of his company to sell his shares, or not to buy them if it has been the practice of the company to make donations.

I wish to express my enduring thanks to those excellent and wise British companies and British people who continue to make donations to the Conservative party. Those people and those companies perceive in my judgment correctly—that their true interests lie in the continuation of a Conservative Government.

Mr. Campbell-Savours

When the current arrangements for payments to political parties by companies were devised conditions were different. Only a small minority of the wider public were in a position to acquire and retain shares. We were not in what is described today as a "shareholder democracy". As one widens share ownership, one is required to reconsider the powers that are available to shareholders to influence arrangements in companies. Many of the Government's arguments about widening shareholder democracy, certainly throughout the privatisation debates, were about ensuring that shareholders—the wider public—have a stake in and some influence over the future and the potential for business. If that is the case, surely the matter should not be kept in isolation, and consideration should be given by the House to change.

My hon. Friend the Member for Dagenham (Mr. Gould) has put to the House the proposition that simpler and more equal treatment should be meted out to trade unions, as it is to companies, regarding their political contributions. He has sought only to ensure that trade unions are treated no differently from companies and vice versa. I do not see that it is possible to argue against that. I can concur with every word of the speech of the hon. Member for Aldridge-Brownhills (Mr. Shepherd). If one is being equal in treatment, one must be open-minded about those matters. If a political party might lose out by way of that arrangement, it drives us to consider the whole question of state funding of political parties.

The hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) mentioned the British School of Motoring. I will not score any political points by drawing attention to what happened some years ago. The British School of Motoring was making contributions of several hundred thousand pounds to the Liberal party and the Liberal party was receiving them because it has no other way of funding its operation. I do not blame the Liberal party for taking the money. If that is the only way to fund one's political party, one must do it. However, we all know that what happened on that occasion was wrong. When I looked into that matter in some detail I was able to locate a debate in the House of Lords during which a Liberal peer had moved an amendment to legislation on driving schools. In the eyes of the public and Parliament his motive in moving that amendment was related to the political contribution that had been made. It may be that peer moved that amendment for the most altruistic of reasons. However, when the public saw the facts and realised that his political party was being funded by way of a substantial contribution, they naturally drew the conclusion that there must be some connection.

I tell that story only to show that, because of the system as it is presently arranged, the public will inevitably be suspicious. Every contribution of weight that is made to the Conservative party must inevitably lead some members of the public to believe that there may be a connection with the treatment that the Conservative party gives to big business or the way particular Secretaries of State and Departments might handle business that may help companies that make contributions. I am not necessarily saying that that is what happens, but if the public are led to believe that there may be a connection, it further generates suspicion in their minds as to political contribution as against political pay-off.

Mr. Michael Brown

The hon. Gentleman is making a very interesting and sincerely held point. However, by the same token, could it be argued—although I do not argue it—that any hon. Member who is sponsored by a trade union will be perceived in the same way?

Mr. Allen

They do not make a direct contribution.

Mr. Brown

The hon. Gentleman says that it is not a direct contribution. Nevertheless, the public may still be suspicious. When an hon. Member speaks on behalf of a large mining community in his constituency, and if he happens to be sponsored by a miners' union, nobody in the House disregards his points simply because he is sponsored by that union. The hon. Gentleman's point falls down on those grounds.

Mr. Campbell-Savours

The hon. Gentleman presumes that I will be partisan in my reply, but I do not intend to be so. I accept that inevitably the public will be suspicious. Whether there is a need for that suspicion is another matter. As the House knows, sponsored Members of Parliament do not receive money from trade unions. I am sponsored by the Confederation of Health Service Employees but it pays me nothing and I would accept nothing. I would not draw a penny of expenses from the union. However, I accept that the public might conclude that there was a connection between the way in which I conduct myself in the Chamber and the sponsorship arrangement in the background. All I am doing—as did the hon. Member for Aldridge-Brownhills—is trying to be neutral and say that there should be equal treatment. The hon. Gentleman did not talk in terms of suspicion, but we should not rule out the possibility that that might exist. The proof can be found in the case of BSM and the Liberal party.

Other cases have recently come to light. I know that the case of the Westminster cemeteries and Lady Porter is controversial, and I shall try to deal with it neutrally. During the inquiries by Westminster city council into all that happened in Westminster, an argument developed about how the Conservative party was funded during the 1983 election. Many people could not work out where the money to service the Conservative campaign had come from. It may he that all the funding was proper, honourable and above board. However, as the investigations and inquiries developed and as queries about the river companies were raised in the national media, that sparked off the suspicion—wearing a more political hat than I am now, I willingly fostered it—in the minds of the general public that something might be wrong. Such suspicion arises only from the fact that at the moment we have a system that allows companies to allocate money to political parties without any accountability. I would argue that they should not be in a position to make those contributions because I am a supporter of state funding of political parties.

My hon. Friend the Member for Dagenham hinted that the Labour Government may look sympathetically at the need to legislate to introduce such funding. However, I do not see that hint as an attempt to penalise the Conservative party in the way that the Conservative party thought that it was penalising the Labour party in 1985, through employment legislation. Were the Labour party committed to legislate on funding because we have a duty to protect all political parties, irrespective of what they believe, and ensure that they are properly funded, that would spark off the necessary debate that we need on state funding of political parties. The hon. Member for Eastbourne (Mr. Gow) is obviously opposed to this funding, but in such conditions he might look more favourably on what I think is a neutral position to take on funding.

I only wish that the debate were less partisan. Conservative Members seem so defensive about a system that, like the hon. Member for Aldridge-Brownhills, they know is morally and in equity wrong. Instead of locking themselves into a position of inflexibility, a few more charitable gestures on the principles involved should be the order of the day. Perhaps before the end of the debate we shall have some words along those lines.

Mr. Tim Smith

I join the hon. Member of Dagenham (Mr. Gould) in welcoming my hon. Friend the Member for Wokingham (Mr. Redwood) to the Front Bench. I was pleased when he was appointed to his new position in July because I believe that he is peculiarly well qualified to take over this responsibility, and we shall see that as our debates proceed.

I listened carefully to what the hon. Member for Workington (Mr. Campbell-Savours) said, and we understand that he favours state funding of political parties. However, that is not what the debate is about. It is about how companies should determine political donations. We should establish the principle of accountability and openness. We heard a lot at the beginning of the debate from the hon. Member for Dagenham about concealment, murkiness and all the rest. However, we know that the saga that was revealed in all its shock horror-status by The Independent related to what happened before the Companies Act 1967. It has specific and clear requirements about the disclosure of political and charitable donations, and we have heard about those. The key to this is that people should know what companies are doing. We now know from its accounts that Lonrho made a donation to the SDP and that many companies make donations to the Conservative party.

Mr. Gould

What about private companies?

Mr. Smith

I think that the same provision applies to private companies as to public companies, but I stand to be corrected. The main contributions come from the large public listed companies and disclosure is required. Even if they make the contribution to British United Industrialists, one would have thought that, because of the number of times that that organisation has been mentioned in our debate, most people would know what it stood for. The argument is about accountability and openness, and shareholders know what is happening and are in a position to challenge it if they wish to do so, and we have heard of the different ways in which they can do that.

The hon. Member for Dagenham said that it is wrong that directors do things with other people's money, but that is what directors are paid for. They are the stewards of the shareholder's money, and it is their job to decide how to dispense that money to the best benefit of all the shareholders.

Mr. Gould

Is there not a distinction between what directors do with the company's money in its commercial interests and what they do by way of donation to political and charitable causes? If the hon. Gentleman would not accept that, is he denying the basis of the special provisions of the Companies Act, which require disclosure in those cases?

6.45 pm
Mr. Smith

Before a board of directors makes a decision to make a donation to a political party, it has a serious debate on the matter. The overriding consideration in that debate is the commercial interest. The directors ask themselves whether it is in the commercial interest of the company for it to make that donation. Many companies, not unnaturally, take the view that it is in the interests of the company to make a donation to the Conservative party because it is the party which stands for free enterprise and supports the private sector. Therefore, that is an entirely reasonable thing to do.

Mr. Nicholas Baker

Companies see donations sent in certain political directions as more in the interests of freedom and enterprise. Is not the solution something that was mentioned in Committee when the hon. Member for Dagenham (Mr. Gould) was not there to hear it? The hon. Member for Workington (Mr. Campbell-Savours) was fair, but the hon. Member for Dagenham was motivated by revenge, and his tone was invidious. Is not the solution for the Labour party to make itself so in favour of freedom of enterprise that it will attract donations? We come back to what the debate is all about when I say that the answer to making the Labour party more acceptable is, I suspect, in the book sitting by the hon. Member for Dagenham.

Mr. Smith

My hon. Friend may be right about the book. I have bought a copy and am looking forward to reading it. The key to the matter is the commercial interest of the company, and it is on that basis that companies decide whether to make donations to political parties.

Mr. Winnick

What evidence does the hon. Gentleman have of the serious discussions that he claims go on in companies about such donations? Are we to understand that, for example, in Taylor Woodrow—bearing in mind who is president of that company—there is a lengthy and serious discussion of the pros and cons? The discussion is likely to be similar to those that used to go on in the politburo of the Soviet Communist party. Why do not companies make it clear that they are donating to the Conservative party? What is all this business about British United Industrialists? Why, unless it is to deceive, do they use a front organisation?

Mr. Smith

I have already dealt with that last point. It is self-evident that a decision to make a donation to a political party is a major decision by a board of directors, and not one made in two or three minutes. It is discussed carefully and many companies refuse, as a matter of company policy, to make a donation to any political party simply because they do not believe, wrongly in my view, that it would be in their commercial interests to do so. The commercial interests of the company are the foremost consideration, and the directors have the responsibility—that is why they are elected by shareholders—to make such decisions. Were we to agree to the new clause, we would be undermining the principles on which company law is based. Shareholders delegate their responsibility to directors. If they do not like what the directors are doing, they can get rid of the directors by voting them out of office. Alternatively, as my hon. Friend the Member for Eastbourne (Mr. Gow) says, they can sell their shares. Those are the options open to them.

That brings me to the distinction between shareholders and trade unionists. We have heard much about parallels, and my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) has said that in equity we should treat shareholders and trade unionists equally. There are, however, fundamental distinctions. An individual can be a shareholder in several companies, and many people are in that position. If such an individual does not like the stock, he can sell it, but that option is not open to a trade unionist. There are many people who, because of their employment, have to be members of a trade union. They have little choice in the matter. Furthermore, they cannot switch from one union to another. Even more important, if a trade union determines to set up a political fund, it can then have a major influence in determining the policy of the Labour party. Its block vote at the Labour party conference may play a major part in determining that party's policy. No companies have an equivalent role in the Conservative party.

Mr. Richard Shepherd

It is my understanding that it is the Government's intention to legislate to make unlawful the closed shop, and that is legislation which I shall support. That being so, the burden of my hon. Friend's argument is not sustainable. Is he saying that trade unionists may or may not belong to a trade union? If that is so, they are not obliged to make donations or vote for a contribution to be made to the political fund. This is an argument that is based on sauce for the goose being sauce for the gander. Surely it is not an unreasonable principle that shareholders should have the opportunity to vote on the issue.

Mr. Smith

I understand the strength of my hon. Friend's feeling on this issue but I do not accept that there is a parallel between companies and trade unions. I dealt with these matters when I developed the argument in Committee. I know that it is an embarrassment to the Labour party that trade unions have major block votes and can determine the Labour party's policy. There is no comparable arrangement within the Conservative party for companies. That is why the system is such an embarrassment to the Labour party, and I understand that it is considering changing it. That is one fundamental difference, and I have mentioned others.

I am saying that we should have a satisfactory system of accountability and openness. We should not undermine the principles of company law on which legislation is currently based.

Mr. Fatchett

I think that the hon. Member for Aldridge-Brownhills (Mr. Shepherd) has summed up the key issues, especially when he dealt with parity of treatment. That issue goes to the heart of the political system and the heart of democracy. There have been one or two attempts by Conservative Members to obscure the issues. For example, the hon. Member for Eastbourne (Mr. Gow) has talked about retrospective legislation and retrospective decision making. With respect, the hon. Gentleman's examples of contracts with South Africa do not relate to the issues that arise as a result of political funding. There has been some embarrassment among Conservative Members because there has been no willingness to meet the arguments advanced by the hon. Member for Aldridge-Brownhills, which are based on parity of treatment.

There has been a substantial difference historically between the ways in which trade unions have been able to make political donations and the ways in which companies have been able to do so. Inititally, trade unions have to ballot their members under the 1913 legislation if they are to have a political fund. No such condition applies to companies. Trade unions have to give their members the right to opt out, but no such condition applies to companies. The hon. Member for Beaconsfield (Mr. Smith) said that an individual could move his shares from one company to another, but he has overlooked two factors. As my hon. Friend the Member for Workington (Mr. Campbell-Savours) said, someone might want to continue to invest in a certain company but not invest in the Conservative party. The hon. Member for Beaconsfield also overlooked the fact that many shareholdings are held by institutions, and institutions may not give their members the opportunity to opt out of a particular shareholding. The defence argued by the hon. Member for Beaconsfield does not hold water.

Within the trade union structure there is provision for ballots and the right to opt out, but in addition there is the right to study the political fund accounts at each annual conference, which is the governing body. Conservative Members argue that the same right exists for shareholders, but shareholders do not have the rights of a ballot or of opting out.

We are told that there is no need for shareholders to have further rights because the disclosure provisions are sufficient. On the other hand, we are told that boards of directors take decisions that are in the commercial interests of their companies. It appears that one of those decisions is to make a donation to the party which believes in private enterprise, that being the Conservative party. Conservative Members should understand that what the Government are doing to the economy will undermine a great deal of private enterprise within the industrial sector.

The third largest donation made to the Conservative party in 1988 came from British and Commonwealth Holdings plc. The report of the annual general meeting of that company appeared in the Financial Times on 28 September. Presumably the decision to make the donation was taken in the interests of the company's shareholders because it is thought that the Conservative party is good for the company. The House will probably be aware that the profits of British and Commonwealth Holdings plc have declined in the last financial year by 45 per cent. The company' chairman, Mr. John Gunn, attributes that decline to one factor—the Government's reliance upon high interest rates. It seems that directors do not always take decisions that are in the best interests of their shareholders.

I had the pleasure of considering in Committee the measure which became the Trade Union Act 1984. We were told by Conservative Members that there was a need for constant accountability, a constant flow of information and a constant process of legitimacy before trade unions could be allowed to make political donations. I think that my hon. Friend the Member for Walsall, North (Mr. Winnick) was correct when he said that at that stage there was some enthusiasm among Conservative Members in the expectation that such provisions would lead to a substantial decline in the Labour party's funding. They voted for a provision that meant that trade unions had to ballot their members once every 10 years to reaffirm the right to have a political fund. There is no similar provision or right for shareholders, and Conservative Members have not argued that there should be one. When Conservative Members said that they wanted a provision in the 1984 Act that would confirm trade unionists' support for political donations, why did they decide not to extend the same right to shareholders? The conditions that apply to trade unions do not apply to companies and their political donations.

The hon. Member for Aldridge-Brownhills is right when it comes to the essence of the argument, and that does not necessarily mean reducing the £3.5 million that is provided to the Conservative party each year in corporate donations. The argument turns on making all donations accountable, open and legitimate, and that goes to the heart of the democratic process.

Mr. Allen

This has been a fairly lighthearted excursion into political funding. It needs to be put on record, however, whether the intention of the Trade Union Act 1984 was as frivolous as seems to be suggested. In my view, the intention was to undermine completely the funding of the Labour party so that the party would be destroyed, thereby creating a one-party state.

Madam Deputy Speaker (Miss Betty Boothroyd)

Order. The hon. Gentleman's intervention is interesting but not relevant.

Mr. Fatchett

I confirm what I perceived to be the intentions of Conservative Members through the 1984 legislation—to undermine the funding given to the Labour party and, in effect, to create almost a one-party state. The intention was to take the financial life blood away from the Labour party.

7 pm

Reference has been made to books and to the pushing of various publications. My hon. Friend the Member for Dagenham (Mr. Gould) has promoted his book. I want to tell the House about an excellent book on the trade union political fund ballot. Any hon. Member who wishes to buy a copy has only to ask me, and I shall tell him at which bookshop he can buy it. I will not be diverted——

Mr. Allen

What about television advertising?

Mr. Fatchett

That is without television——

Mr. Allen

It can be on television next week.

Mr. Fatchett

I want to return to the point made by the hon. Member for Aldridge-Brownhills, which is that this debate goes to the heart of the political system and to the heart of democracy. When there is openness about political contributions, as there is in the relationship between trade unions and the Labour party, there can be no suggestion that those contributions are used for particular purposes. However, when the system is not open, when company chairmen and directors who donate to the Tory party gain more than their fair share of honours—as a result, one suspects, of those donations—when influence is exercised by various individuals, the argument for openness and accountability becomes that much stronger.

We are not trying to reduce donations to the Conservative party; we are asking for parity of treatment. We want an open democracy with accountability by trade unions to trade unionists and by companies to shareholders. That is the essence of the argument and hon. Members should not obscure it by disclosure or by an embarrassing defence of the Conservative party's vested interests. We must relate to the issue, to parity and to democracy. If the Minister devoted his intellectual powers to that argument, I am sure that he would support new clause 1.

The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. John Redwood)

I thank the hon. Member for Dagenham (Mr. Gould) and my hon. Friend the Member for Beaconsfield (Mr. Smith) for their kind remarks.

I wish first to respond to my hon. Friend the Member for Chichester (Mr. Nelson), who questioned the number of amendments tabled and the basis of our debates today and tomorrow. As all hon. Members can see, there are a number of Government amendments, but most of them comprise one or two types—they are either amendments to take on board the very good points made in Committee, or they result from consultation with a range of professional interests and other groups and are technically consequential upon that. I hope that there will be a spirit of co-operation in the House as most of the amendments are non-political. I hope that, as we make progress, I can offer assistance to those who make good points and, wherever possible, I hope to accommodate some of their wishes.

We began this debate with the one highly contentious issue that was bound to arise. There is a sense of déja vu because most of the ground has been well trodden already. The Opposition have not put forward any new arguments tonight that might have added to our previous debates. As others have sketched, a good piece of legislation—the 1967 Act, introduced by a Labour Government—is already in place and we are happy with the disclosure requirements that it places on companies. We intend to ensure that those requirements are not only in force, but are fully enforced. We shall carefully consider any point raised by any hon. Member who believes that there has been some dereliction of duty in the enforcement of those clear disclosure provisions.

Members of companies need to know whether donations are being made, which is the purpose of the 1967 Act. That is bolstered by good proposals about company democracy. A range of powers would give shareholders the right at annual general meetings to raise questions, to table ordinary resolutions and to put pressure on boards of directors. Above all, there is a great deal of choice for shareholders. I know that some like to construct what they call "ethical portfolios", which do not include any company that invests in South Africa. As only one in four of the top 100 companies are wise enough to make donations to the Conservative party, there is plenty of scope and choice to construct an apolitical portfolio. However, I share my hon. Friends' view that not many, if any, of the companies in the top 100 make donations to the Labour party, so it would be quite difficult to construct a Socialist portfolio of companies. That is the problem that has led to this jealousy clause that we are debating.

The issue should be put in perspective. To those hon. Members who would raise the question of symmetry of treatment between trade unions and companies, I must repeat that there is extensive machinery within companies, within the company law framework, which we support and intend to ensure continues. It should also be recognised that the trade unions make a much larger contribution proportionately, and in total, to the Labour party than do the top companies to the Conservative cause. In 1987 alone, one union gave £5 million—a stunning sum. The reason why the Conservative party enjoys more funds in total and does not have the same financial difficulties that so often face the Opposition is its strong basis of mass membership. It is the only party with well over 1 million members. It is an active party, well organised and capable of raising money from a range of donations from people of all sorts and styles——

Mr. John Garrett (Norwich, South)

Tea dances.

Mr. Redmond

Yes, tea dances do raise money for the Conservative party—and why not? People can have fun and they can raise money for the one good cause in this place.

The origins of the Labour party's problems lie in the fact that they do not have money coming from the companies' sector. It is on this point that I must take issue with the hon. Member for Dagenham. He need not worry because I do not intend to savage him tonight. Indeed, he has done a signal good service. He has produced a book that reveals in great detail exactly how he has moved well to the Left of the right hon. Member for Chesterfield (Mr. Benn), who once held many strong views on industrial policy and even had the benefit of being able to implement those views so that the public could recognise just how dreadful they were.

I can well understand why companies will vote massively to support a Conservative Government if a party insists on threatening shareholders with renationalisation on the cheap, with damaging the interests of minority shareholders after a Government raid on a company and with separating ownership from control, which must mean taking away votes from shareholders as there can be no other explanation for that, with the suggestion that employees, trade unions, customers—an enormous group—should in many cases be ranked above shareholders and in some way be given votes just as the shareholders lose theirs and by sustaining the attack in saying that stakes must be bought in private sector companies. I can understand why, if companies are threatened with municipalised competition to provide subsidised undercutting of worthwhile businesses in the private sector; with the wish for public interest commissioners who would set investment programmes, control dividends and reduce the cash flow by lowering prices—all suggestions which are not only in the hon. Gentleman's book, but are part of the Labour policy review document. Companies will no doubt appeal to their shareholders to endorse their actions by not opposing them at annual general meetings.

It is a sign of the success of its policy that the Conservative party is still the main party that benefits from donations by companies. There is little trouble at AGMs because shareholders clearly and intuitively understand the need to support a party of private enterprise——

Mr. Allen

If company donations to the Conservative party are a sign of great faith in that party and a barometer of the approval of businesses for that party, can the hon. Gentleman explain why those donations are currently falling?

Mr. Redwood

Companies are particularly keen to offer donations at election times and I am sure that if a general election were in the offing, the hon. Gentleman would find that donations increased again. It concentrates the mind wonderfully. That is when people will understand that a party of free enterprise is needed to defend the interests of shareholders from the wild policies adduced in "The Future of Socialism".

Mr. Campbell-Savours

I spoke about the wider shareholder democracy in my brief speech. What about a shareholder in my constituency who has £500 worth of shares? If the annual general meeting is held in London and that person is at work, how can he influence the decisions taken there? The Government want people to invest, yet there may well be tens or even hundreds of thousands of shareholders in that position.

Mr. Redwood

Shareholders can go to the meeting, organise themselves, write to the chairman and express their views in a variety of ways short of going to the meeting. The hon. Gentleman knows how democracy works in the political sphere. The same is true within a company framework. The powers are contained in company law. The responsibilities are on the shareholders, who exercise them if they see the need to do so. It is not that that is difficult, but that shareholders do not want to do it. That is what the hon. Gentleman cannot bear.

Mr. Campbell-Savours

The Minister has not grasped my point. The question is whether the shareholders are physically able to attend a meeting. What happens if a group of shareholders feels collectively that it wants to change a company's policy? How can it influence events? It may be that when there were few shareholders of companies——

Madam Deputy Speaker


Mr. Redwood

If a group of shareholders is worried about a matter, surely one of them who is retired or has a day off can attend the meeting, table a resolution and, if the right numbers are present, vote in the usual way. At company general meetings there are proxy systems and other ways of voting for a properly tabled resolution which is circulated with the general agenda.

The Labour Government put in place a fair law which we wish to operate sensibly and well. Shareholders are happy with the present system because they are worried by the policies of the Labour party and, in particular, those of the hon. Member for Dagenham. The powers are there and I, like many other hon. Members who have spoken, wish to see wider share ownership mean a true share-owning democracy. Present company law is more than adequate to do that. The only thing that would wreck it would be if I accepted any of the wild ideas adduced by the hon. Member for Dagenham. I hope that the House will vote against the new clause.

Mr. Gould

I confess to finding the Minister's first speech on the Bill disappointing in two respects. First, I assume that what I heard was the much-trailed, ferocious and blood-curdling attack that was to be made on me. [HON. MEMBERS: "Just wait."] It may well be that that attack is to be repeated, but I have a feeling that it will not bear repetition. From its present ineffectiveness it will become hardly effective in any respect. I had hoped for something more full-blooded and perhaps the Minister will try again for something better. In the meantime, to hon. Members who are encouraged by that ferocious onslaught to buy my book and to those who, like the hon. Member for Beaconsfield (Mr. Smith), have already done so, I immediately offer to autograph their copies and those of future proud possessors.

Mr. Redwood

I am delighted that jointly we can advertise the hon. Gentleman's book because it will do the Conservative cause so much good. The only thing that worries me is that if he offers too many autographed copies, their value will drop, so should my hon. Friends insist on buying their own copies and on not having them autographed?

7.15 pm
Mr. Gould

Hon. Gentlemen have no option but to buy their own copies. The book will not be given away.

The second disappointment in the Minister's speech can be briefly expressed. Like all his hon. Friends, except the hon. Member for Aldridge-Brownhills (Mr. Shepherd), the Minister failed to understand the real purport of our proposal. Some of them understood it but chose not to reveal it. It may be that the Minister is as deficient in his judgment of this point as he was in his estimation of the effect of a wide readership of my book. In this debate a division has emerged. Opposition Members believe that democracy, good practice and the public interest require that directors are obliged to obtain shareholders' approval in advance of giving money to political parties. By contrast, the Government offer the present position in which it is open to shareholders, if they are properly organised and informed and sufficiently motivated to turn up to an ordinary general meeting, to initiate a response to what has already been done. They are required to remonstrate with directors in retrospect. That is not an adequate expression of what democracy requires in that context.

On that basic point, we differ strongly from the Government who seem unable to comprehend what is at stake. It is because I find the Minister's response so disappointing and his comprehension so inadequate that we shall press the new clause to a Division.

Question put, That the clause be read a Second time:—

The House divided: Ayes 168, Noes 223.

Division No. 338] [7.16 pm
Abbott, Ms Diane Doran, Frank
Allen, Graham Dunwoody, Hon Mrs Gwyneth
Anderson, Donald Eadie, Alexander
Archer, Rt Hon Peter Eastham, Ken
Armstrong, Hilary Ewing, Harry (Falkirk E)
Ashley, Rt Hon Jack Ewing, Mrs Margaret (Moray)
Ashton, Joe Fatchett, Derek
Banks, Tony (Newham NW) Fearn, Ronald
Barnes, Harry (Derbyshire NE) Field, Frank (Birkenhead)
Barron, Kevin Flannery, Martin
Battle, John Flynn, Paul
Beckett, Margaret Foot, Rt Hon Michael
Beith, A. J. Foster, Derek
Bell, Stuart Foulkes, George
Benn, Rt Hon Tony Fyfe, Maria
Bennett, A. F. (D'nt'n & R'dish) Galloway, George
Bermingham, Gerald Garrett, John (Norwich South)
Bidwell, Sydney Garrett, Ted (Wallsend)
Blair, Tony Gilbert, Rt Hon Dr John
Blunkett, David Gordon, Mildred
Boyes, Roland Gould, Bryan
Bradley, Keith Griffiths, Nigel (Edinburgh S)
Brown, Gordon (D'mline E) Griffiths, Win (Bridgend)
Brown, Ron (Edinburgh Leith) Hardy, Peter
Bruce, Malcolm (Gordon) Hattersley, Rt Hon Roy
Buchan, Norman Heffer, Eric S.
Buckley, George J. Hinchliffe, David
Campbell, Menzies (Fife NE) Hoey, Ms Kate (Vauxhall)
Campbell, Ron (Blyth Valley) Home Robertson, John
Campbell-Savours, D. N. Howarth, George (Knowsley N)
Canavan, Dennis Howells, Geraint
Carlile, Alex (Mont'g) Howells, Dr. Kim (Pontypridd)
Clark, Dr David (S Shields) Hughes, John (Coventry NE)
Clay, Bob Hughes, Robert (Aberdeen N)
Clelland, David Illsley, Eric
Clwyd, Mrs Ann Ingram, Adam
Cohen, Harry Janner, Greville
Cook, Robin (Livingston) Johnston, Sir Russell
Corbett, Robin Jones, Barry (Alyn & Deeside)
Cousins, Jim Jones, Ieuan (Ynys Môn)
Cox, Tom Jones, Martyn (Clwyd S W)
Cummings, John Kennedy, Charles
Cunliffe, Lawrence Leadbitter, Ted
Cunningham, Dr John Leighton, Ron
Darling, Alistair Lewis, Terry
Davies, Rt Hon Denzil (Llanelli) Litherland, Robert
Davies, Ron (Caerphilly) Livingstone, Ken
Davis, Terry (B'ham Hodge H'l) Livsey, Richard
Dewar, Donald Lofthouse, Geoffrey
Dixon, Don Loyden, Eddie
Dobson, Frank McAllion, John
McAvoy, Thomas Reid, Dr John
McCartney, Ian Richardson, Jo
Macdonald, Calum A. Robertson, George
McKelvey, William Rogers, Allan
McLeish, Henry Rooker, Jeff
Maclennan, Robert Ross, Ernie (Dundee W)
McNamara, Kevin Ruddock, Joan
Madden, Max Sedgemore, Brian
Mahon, Mrs Alice Sheerman, Barry
Marshall, Jim (Leicester S) Sheldon, Rt Hon Robert
Martlew, Eric Short, Clare
Meacher, Michael Skinner, Dennis
Meale, Alan Smith, Andrew (Oxford E)
Michael, Alun Smith, C. (Isl'ton & F'bury)
Michie, Bill (Sheffield Heeley) Smith, J. P. (Vale of Glam)
Michie, Mrs Ray (Arg'l & Bute) Steinberg, Gerry
Moonie, Dr Lewis Straw, Jack
Morgan, Rhodri Taylor, Matthew (Truro)
Morley, Elliot Thompson, Jack (Wansbeck)
Morris, Rt Hon A. (W'shawe) Turner, Dennis
Mowlam, Marjorie Vaz, Keith
Mullin, Chris Wall, Pat
Oakes, Rt Hon Gordon Wallace, James
O'Neill, Martin Watson, Mike (Glasgow, C)
Orme, Rt Hon Stanley Welsh, Andrew (Angus E)
Owen, Rt Hon Dr David Welsh, Michael (Doncaster N)
Parry, Robert Williams, Rt Hon Alan
Patchett, Terry Wilson, Brian
Pike, Peter L. Winnick, David
Powell, Ray (Ogmore) Worthington, Tony
Prescott, John Wray, Jimmy
Primarolo, Dawn
Quin, Ms Joyce Tellers for the Ayes:
Radice, Giles Mr. Frank Haynes and
Randall, Stuart Mrs. Llin Golding.
Aitken, Jonathan Chapman, Sydney
Alexander, Richard Chope, Christopher
Allason, Rupert Clark, Dr Michael (Rochford)
Amess, David Clark, Sir W. (Croydon S)
Amos, Alan Clarke, Rt Hon K. (Rushcliffe)
Arbuthnot, James Colvin, Michael
Ashby, David Coombs, Anthony (Wyre F'rest)
Atkinson, David Coombs, Simon (Swindon)
Baker, Nicholas (Dorset N) Couchman, James
Baldry, Tony Cran, James
Banks, Robert (Harrogate) Currie, Mrs Edwina
Batiste, Spencer Curry, David
Bellingham, Henry Davies, Q. (Stamf'd & Spald'g)
Bendall, Vivian Davis, David (Boothferry)
Bennett, Nicholas (Pembroke) Day, Stephen
Benyon, W. Dicks, Terry
Biffen, Rt Hon John Douglas-Hamilton, Lord James
Blackburn, Dr John G. Dover, Den
Blaker, Rt Hon Sir Peter Dunn, Bob
Body, Sir Richard Durant, Tony
Bonsor, Sir Nicholas Evans, David (Welwyn Hatf'd)
Boscawen, Hon Robert Evennett, David
Boswell, Tim Fallon, Michael
Bottomley, Mrs Virginia Favell, Tony
Bowden, Gerald (Dulwich) Fenner, Dame Peggy
Bowis, John Field, Barry (Isle of Wight)
Boyson, Rt Hon Dr Sir Rhodes Fishburn, John Dudley
Brandon-Bravo, Martin Fookes, Dame Janet
Brazier, Julian Forman, Nigel
Brown, Michael (Brigg & Cl't's) Forsyth, Michael (Stirling)
Bruce, Ian (Dorset South) Forth, Eric
Buck, Sir Antony Fowler, Rt Hon Norman
Burns, Simon Fox, Sir Marcus
Butcher, John French, Douglas
Butler, Chris Gale, Roger
Butterfill, John Gardiner, George
Carlisle, John, (Luton N) Garel-Jones, Tristan
Carlisle, Kenneth (Lincoln) Glyn, Dr Alan
Carrington, Matthew Goodhart, Sir Philip
Carttiss, Michael Goodlad, Alastair
Cash, William Goodson-Wickes, Dr Charles
Chalker, Rt Hon Mrs Lynda Gow, Ian
Channon, Rt Hon Paul Grant, Sir Anthony (CambsSW)
Greenway, Harry (Baling N) Norris, Steve
Griffiths, Peter (Portsmouth N) Onslow, Rt Hon Cranley
Ground, Patrick Paice, James
Grylls, Michael Patnick, Irvine
Gummer, Rt Hon John Selwyn Pawsey, James
Hague, William Peacock, Mrs Elizabeth
Hanley, Jeremy Porter, David (Waveney)
Hannam, John Powell, William (Corby)
Harris, David Redwood, John
Haselhurst, Alan Riddick, Graham
Hayhoe, Rt Hon Sir Barney Ridley, Rt Hon Nicholas
Hayward, Robert Ridsdale, Sir Julian
Heathcoat-Amory, David Roberts, Wyn (Conwy)
Heddle, John Rossi, Sir Hugh
Hicks, Mrs Maureen (Wolv' NE) Rost, Peter
Higgins, Rt Hon Terence L. Rumbold, Mrs Angela
Hind, Kenneth Sainsbury, Hon Tim
Hogg, Hon Douglas (Gr'th'm) Shaw, David (Dover)
Hordern, Sir Peter Shaw, Sir Giles (Pudsey)
Howard, Michael Shephard, Mrs G. (Norfolk SW)
Howarth, G. (Cannock & B'wd) Shersby, Michael
Howe, Rt Hon Sir Geoffrey Sims, Roger
Hughes, Robert G. (Harrow W) Smith, Sir Dudley (Warwick)
Hunt, David (Wirral W) Smith, Tim (Beaconsfield)
Hunt, Sir John (Ravensbourne) Soames, Hon Nicholas
Hunter, Andrew Speller, Tony
Irvine, Michael Spicer, Sir Jim (Dorset W)
Jack, Michael Spicer, Michael (S Worcs)
Jackson, Robert Stanbrook, Ivor
Janman, Tim Stanley, Rt Hon Sir John
Jessel, Toby Steen, Anthony
Jones, Gwilym (Cardiff N) Stevens, Lewis
Kellett-Bowman, Dame Elaine Stewart, Andy (Sherwood)
Key, Robert Stokes, Sir John
Kilfedder, James Stradling Thomas, Sir John
Kirkhope, Timothy Sumberg, David
Knapman, Roger Summerson, Hugo
Knight, Greg (Derby North) Taylor, John M (Solihull)
Knight, Dame Jill (Edgbaston) Taylor, Teddy (S'end E)
Knox, David Thompson, D. (Calder Valley)
Lang, Ian Thompson, Patrick (Norwich N)
Latham, Michael Thorne, Neil
Lawson, Rt Hon Nigel Thornton, Malcolm
Leigh, Edward (Gainsbor'gh) Thurnham, Peter
Lester, Jim (Broxtowe) Townend, John (Bridlington)
Lilley, Peter Townsend, Cyril D. (B'heath)
Lord, Michael Tracey, Richard
Lyell, Sir Nicholas Twinn, Dr Ian
Macfarlane, Sir Neil Waddington, Rt Hon David
MacGregor, Rt Hon John Wakeham, Rt Hon John
MacKay, Andrew (E Berkshire) Waldegrave, Hon William
Maclean, David Walker, Bill (T'side North)
McLoughlin, Patrick Walters, Sir Dennis
McNair-Wilson, Sir Michael Ward, John
Madel, David Wardle, Charles (Bexhill)
Mans, Keith Warren, Kenneth
Maples, John Watts, John
Marland, Paul Wheeler, John
Marshall, John (Hendon S) Whitney, Ray
Marshall, Michael (Arundel) Widdecombe, Ann
Martin, David (Portsmouth S) Wiggin, Jerry
Maxwell-Hyslop, Robin Winterton, Mrs Ann
Meyer, Sir Anthony Winterton, Nicholas
Mills, Iain Wolfson, Mark
Miscampbell, Norman Wood, Timothy
Morrison, Sir Charles Young, Sir George (Acton)
Neale, Gerrard
Nelson, Anthony Tellers for the Noes:
Nicholson, David (Taunton) Mr. Tom Sackville and
Nicholson, Emma (Devon West) Mr. Stephen Dorrell.

Question accordingly negatived.

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