HL Deb 25 January 1995 vol 560 cc1061-2

3.3 p.m.

Lord Dean of Beswick

asked Her Majesty's Government:

Whether the present financial rewards being received by chairmen, directors and senior management in the privatised public utilities are in accordance with the Government's original privatisation objectives.

The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish)

My Lords, privatisation has proceeded fully in accordance with the original objectives. In line with those objectives, management issues, including remuneration, are matters for the companies themselves and their shareholders.

Lord Dean of Beswick

My Lords, unfortunately the Minister is disagreeing with what the Prime Minister said yesterday at Question Time when he said that he did not support such astronomical salary increases. Is it not the case that the people who are now running the privatised, former public sector industries are disgorging labour rapidly in order to buttress their own salaries? Is it not disgraceful that most of the people who are being sacked were doing reasonable jobs within the community? Is not that an outstanding example of avarice on the part of those who are acting simply for personal gain?

Lord Mackay of Ardbrecknish

My Lords, I do not think that I will take a lesson on avarice and envy from the Labour Party. My right honourable friend the Prime Minister has made two things abundantly clear. The first is that he does not agree with excessive and unjustified wage increases; and the second is the point that I made in my Answer, which is that the companies concerned are in the private sector and remuneration is a matter for them and their shareholders.

Lord Marlesford

My Lords, does my noble friend agree that under the capitalist system there is no problem over paying people highly, but those who receive that high pay may well have a problem earning it?

Lord Mackay of Ardbrecknish

My Lords, my noble friend is absolutely right. Indeed, that point encompasses a much wider field than merely the chairmen and chief executives of companies that were previously in the public sector. It encompasses all other companies, as well as people like footballers who seem extraordinarily well paid, and television and media personalities among others. Indeed, if I dare say so in your Lordships' House, it might even include some lawyers who earn what most of us would consider to be fairly astronomical fees. My question is whether the Labour Party is going to set up a body to regulate all those incomes.

Lord Strabolgi

My Lords, the Minister said that this is a matter for the shareholders. The Government say that frequently, but is the Minister aware that the power of the shareholders is much exaggerated? The big institutional shareholders do not want to get involved, and many of the smaller shareholders are retired people who do not have the resources to organise any opposition to such enormous and disgraceful pay rises.

Lord Mackay of Ardbrecknish

My Lords, the Government appreciate the important role which institutional shareholders have to play in this and other regards. On a number of occasions when this issue has arisen my right honourable friend the Prime Minister has made it quite clear that we wish to encourage institutional shareholders to play an active part in such companies, most of which they own.

Lord Campbell of Croy

My Lords—

Lord Peston

My Lords, the noble Lord has already spoken this afternoon.

Lord Hailsham of Saint Marylebone


The Lord Privy Seal (Viscount Cranborne)

My Lords, we have one minute left for Questions. I know that the Opposition Front Bench spokesman has wanted to get in, but if the noble Lord is quick, I imagine that there may be time for another question.

Lord Peston

My Lords, I am always extremely brief. The Minister referred to "avarice and envy". I am not sure that I am avaricious, but I am certainly envious of such salaries and I would not beat about the bush on that point. I only wish that I had the chance of them! Is the Minister really saying what he appears to be saying, which is that the privatisations have occurred exactly as the Government predicted and that these salaries are therefore what the Government predicted? If the Minister is saying that, how can his right honourable friend the Prime Minister possibly complain about them? If it has gone according to plan, what is the argument about on the Government's side?

Lord Mackay of Ardbrecknish

My Lords, there are two issues. I have made it perfectly clear that the companies are in the private sector and that we accept that these are matters for those private companies. On the noble Lord's point about privatisation, electricity consumers have seen an 8 per cent. price reduction in real terms in the past two years; the price of gas has fallen by 23 per cent. in real terms; and British Telecom's prices have come down by 38 per cent. in real terms since privatisation. I should have thought that those are things to be welcomed.