HC Deb 14 June 1995 vol 261 cc787-8
10. Mr. David Evans

To ask the President of the Board of Trade what plans he has to limit the ability of companies to set directors' fees and dividends. [26812]

Mr. Jonathan Evans

Directors' salaries and remuneration packages are matters for individual companies and their shareholders. It is not the Government's policy to intervene in such decisions.

Mr. David Evans

I thank my hon. Friend the Minister for his reply. The lot opposite want to introduce the social chapter and a minimum wage and want to control directors' pay. Is that not a way of having a pay policy, a policy which failed so miserably in the late 1970s? Does my hon. Friend think that it is a bit rich that the leader of that lot opposite accepts £79,000 from three LWT directors who earned their fortunes from share option schemes? He got the leadership and his pay went up by 125 per cent. Is that the new caring, sharing Labour party, with one rule for them and one rule for us?

Mr. Jonathan Evans

I share my hon. Friend's views but I bemoan the fact that I do not possess his eloquence in putting them forward.

Mr. Harvey

In the context of the monopoly utilities, is it not the case that setting top pay on the basis of profits and share price gives top executives a direct incentive to charge the maximum price that the regulator will allow? Until those industries become fully competitive, would it not be better for shareholders to approve pay packages on the basis of a broader measure of performance which would include customer satisfaction, lower prices and environmental protection, to name but three? Will the Government consider bringing, in an index of those wider measures, which customers could look at, perhaps as part of the citizens charter initiative?

Mr. Evans

I do not think that there is a role for Government in operating the sort of function outlined by the hon. Gentleman. The Government have always made it clear that salaries and remuneration are matters for shareholders. That was my original reply to my hon. Friend the Member for Welwyn Hatfield (Mr. Evans).

Mr. Dover

Does the Minister agree that such matters are far better left to the directors of a company? Does he also agree that, under the Cadbury code, it is for the remuneration committee to see to matters such as directors' fees and top executives' salaries?

Mr. Evans

It seems that that view is shared not only by many Conservative Members but, according to the Financial Times, by the right hon. Member for Copeland (Dr. Cunningham), who apparently recently met Sir Richard Greenbury and Mr. Tim Melville-Ross of the Institute of Directors and assured them that Labour's new buzz words were co-operation, partnership and consensus and that its guiding principle will be minimalist intervention.

Ms Eagle

The Minister's statements on this matter are contradicted by the Prime Minister, who said that he would be willing to think about legislation if those excesses carried on and if Greenbury recommended it. Does the Minister realise that he is putting his career at risk by disagreeing with his own Prime Minister at the Dispatch Box?

Mr. Evans

I am grateful to the hon. Lady for showing such concern about my ministerial career. I shall outline the Government's policy in relation to Greenbury, which is quite clear. My right hon. Friend the Prime Minister has made it clear that he will await the Greenbury committee's recommendations and that the Government are ready to consider any proposals that Sir Richard Greenbury thinks may need legislative back-up.