HL Deb 29 April 1987 vol 486 cc1478-81

2.57 p.m.

Lord Brougham and Vaux

My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government what new information is available on the extent of share ownership in the United Kingdom.

The Secretary of State for Employment (Lord Young of Graffham)

My Lords, a survey commissioned by Her Majesty's Treasury and the Stock Exchange shows that 8½ million people or one-fifth of the adult population now own shares. Share ownership has now trebled since 1979.

Lord Brougham and Vaux

My Lords, may I thank my noble friend for that very informative reply? Does he agree that the initiatives of the Government to encourage employee share schemes have contributed to share ownership?

Lord Young of Graffham

Yes, my Lords. The number of approved share schemes has grown from around 30 in 1979 to over 1,200 today, and 1½ million people have now benefited under those schemes.

Lord Jenkins of Putney

My Lords, what does the noble Lord have to say to those members of the public who, in endeavouring to follow the Government's advice in this matter, have lost their money as a result of investing in shares which are supported by the Government because the money has fallen into unreliable and dishonest hands? Can the Minister comment on that?

Lord Young of Graffham

My Lords, on this particular occasion the noble Lord's question passes me by. From time to time we have always warned those who buy shares that they are speculating. We believe that shares are a good investment, but anything that goes up can come down, and I am sure that those who buy shares are fully aware of that fact.

Lord Monson

My Lords, will the noble Lord agree that the very much higher minimum commission charges currently being imposed by banks and stockbrokers as an indirect consequence of the Government's Big Bang legislation will make direct investment in ordinary shares very much less attractive for the small investor than if he invests via the medium of unit trusts?

Lord Young of Graffham

My Lords, if those who are concerned with this business charge fees that are too high, they will find that they lose business, as I have no doubt others will come along and charge more competitive rates.

Lord Diamond

My Lords, it does not need saying from these Benches that we are wholly in favour of the spread of private share ownership. The Liberal part of the Alliance said so many times long before the Tories took it up. Is the noble Lord aware that 8½ million—very good figure though it may be—is somewhat less than 55 million, which is the number of shareholders in all the companies which have been privatised by the present Government? Is the Minister also aware that it is not our task to criticise the spread of share ownership, but to criticise, first, the way in which shares of privatised companies have been disposed of, and, secondly, the lack of investment of the proceeds of the sale of capital?

Lord Young of Graffham

My Lords, I should have thought that the noble Lord, Lord Diamond, would be aware of the way in which the Stock Exchange operates and would know that one of its purposes is to provide the means for both direct and indirect investment in companies. The noble Lord will also be aware that in each of the last four years records of investment in this country have been broken.

Lord Williams of Elvel

My Lords, is the noble Lord aware that settlement departments of all the major firms on the Stock Exchange have been overwhelmed by the vast number of small bargains which have resulted particularly from the TSB and British Gas issues? What steps can the Government take to ensure that small shareholders can deal properly and without excessive cost or delay?

Lord Young of Graffham

My Lords, I am well aware that as the market opens up, as the number of individual shareholders in this country increases and as we have a successful return to popular capitalism, there will be strains as demands grow in the market. As I said in reply to an earlier question, the market has a habit of taking care of that situation. If the systems are not competitive, then systems that are competitive will come through.

Lord Molloy

My Lords, will the Minister agree that a difficult social situation has been created by the fact, which can be welcomed, that shareholders have increased three-fold since 1979? Unemployment has increased even more. People who have been unemployed for the past few years simply cannot afford to buy shares. It is no joy for the unemployed whose number seems to increase to be told that many people can afford to buy shares.

Lord Young of Graffham

My Lords, it may have escaped the noble Lord's attention that in the past eight months unemployment in this country has fallen by 180,000 and is still going down. I suspect that it will continue to go down. It has also escaped the noble Lord's attention that the economy is doing well and will continue to do so. For the unemployed to return to work, the economy must grow in a strong and wealth-creating manner. In that way we can afford not only the caring society that we all want but also see people return to work. There is no other way.

Lord Molloy

My Lords, is the noble Lord aware that if there is to be social cohesion in this nation one cannot be proud of a three-fold increase in those becoming better off and a three-fold decrease in those whose standards of living are continuing to fall—namely, the families of the unemployed?

Lord Young of Graffham

My Lords, I fail to recognise the description given by the noble Lord. However, I must confess that, as good as our progress has been, I should like to see a further three-fold increase in the number of shareholders. We have to concentrate on wealth creation which is, I suspect the quickest way to deal with the problem.

Lord Mackie of Benshie

My Lords, while we welcome the news that the noble Lord has given—obviously, it is very gratifying to know that the number of shareholders is rising—can he say how we compare with our competitors and friends in the United States and West Germany in this respect?

Lord Young of Graffham

My Lords, there is no strict comparison, but the New York Stock Exchange estimates that 20 per cent. of the total United States' population own shares, including unit trusts. In this country we know that 20 per cent. of the adult population hold shares, but that excludes unit trusts. All I can say is that there was a great difference a few years ago, and that difference is narrowing very rapidly indeed.

Lord Glenamara

My Lords, further to the question of the noble Lord, Lord Diamond, will the Minister tell the House how much the British people have lost per annum by way of the payments which were previously paid to the Treasury by industries that have been privatised? For example, can he tell the House how much British Telecom paid to the Treasury annually before it was privatised?

Lord Young of Graffham

My Lords, I must tell the House that throughout the nationalised industries sector—"the commanding heights of the economy", as I believe they were once described—in 1979–80 the British taxpayer contributed substantially. As an aggregate the nationalised industries lost billions of pounds each year. All the companies that have been denationalised are making profits. The funds have gone into the Treasury and the interest on those funds contributes towards the taxpayer. If the noble Lord would like further details I am sure he will put down a Question, in which case I shall he more than delighted to give him a full and detailed reply.

Lord Nugent of Guildford

My Lords, reverting to the point made by the noble Lord, Lord Diamond—evidently on the Road to Damascus—is my noble friend aware that, in so far as the public sector borrowing requirement has diminished from some £9 billion or £10 billion in the days of the Labour Government to £2 billion or £3 billion now, this is reducing the additions to the national debt and therefore is specifically adding to the capital welfare of the country?

Lord Young of Graffham

My Lords, I am grateful to my noble friend.

Lord Glenamara

My Lords, perhaps the noble Lord will answer my question. If he does not know all the figures, I can, for example, give the figures for Cable and Wireless. I know how much that company paid to the Treasury, and it is paying nothing now. In so far as concerns the question of the noble Lord, Lord Nugent, the investment programme—

Noble Lords

Question!

Lord Glenamara

My Lords, is the noble Lord aware that we are extremely proud of the investment programme of publicly owned industries during the time of the Labour Government? We should like to see that kind of investment programme now.

Lord Young of Graffham

My Lords, the noble Lord will forgive me if my figures are slightly inaccurate but they are from memory. I am aware that when Cable and Wireless was privatised it had a market capitalisation of some £460 million. I am also aware that at the time the Government sold off the last 20 per cent. of the shareholding it was worth rather more than £460 million. I am also aware that this company's capitalisation now approaches £4 billion and I suspect that the contribution it will make in tax to the Treasury will be far greater than the dividends it has paid in any decade in the past.