Internet and Technology Stocks (Hansard, 28 February 2000)

§ Lord McIntosh of Haringey
My Lords, the values placed by the stock market on Internet and technology companies reflect investors' expectations of their future earnings.

§ Lord Phillips of Sudbury
My Lords, I am sure that everyone will be as impressed as I am by the succinctness, if not the wisdom, of that reply. Is the Minister aware of the enormous demoralisation that has been caused over recent years to key groups of employees such as teachers, those in the medical professions, social workers and the rest by the immense and growing disparity in remuneration between them and the City? Is he further aware, therefore, of the damage that will be done, and is being done, to the willingness of those groups and many others to remain within education, health and social work by the extraordinary casino-like activity in respect of technology stocks? Is there not a scintilla of socialist wisdom remaining from the present Government's long past on which they can draw to exert some control over what is, by any reckoning, something of a Stock Exchange farce?

§ Lord McIntosh of Haringey
My Lords, I am glad that in the latter part of his supplementary question the noble Lord got round to the subject matter of his original Question, which enables me to attempt to answer it. Yes, of course there is huge resentment about the disparity in incomes between those who are seen as gamblers and those who devote their lives to public service. That is only natural. I do not know whether it was George Soros himself or someone commenting at the time of George Soros' major coup who described the stock market as alternating between greed and fear. For that reason especially, I do not think it right for the Government to attempt to second-guess the stock market.

§ The Earl of Northesk
My Lords, perhaps I may take this opportunity briefly to congratulate noble Lords opposite on their birthday. Is the Minister aware that the number of private investors buying shares on the Internet in Britain is reportedly doubling every three 319 months? Are the Government satisfied that the message from Christine Farnish, director of consumer relations at the FSA, that Consumers investing their money in smaller company shares need to know that the prices of those shares can be very volatile—both up and down. They need to think carefully about the risks involved before deciding what shares they buy and how many", is being adequately disseminated?

§ Lord McIntosh of Haringey
My Lords, on behalf of all my noble, right honourable and honourable friends, I am grateful to the noble Earl for his congratulations. As regards the proceedings at the Memorial Hall, I was never quite sure whether the final decision was for the 27th or the 28th, which is possibly why we have been celebrating both days—and why not? The remarks from the FSA quoted by the noble Earl sounded very sensible to the Government at the time. I am sure it is in everyone's interest that investors, particularly private investors, should be aware of the difficulties and dangers referred to. We are grateful to the noble Earl for disseminating them more widely.

§ Lord Skelmersdale
My Lords, I hope that I misunderstood the Minister. He said that in his view Internet entrepreneurs were gamblers. I hope that that is not true. If the gamblers to whom he referred in an earlier supplementary answer are those who invest on the Internet, why should not doctors and the other people to whom the noble Lord, Lord Phillips of Sudbury, referred profit in exactly the same way as any other investor?

§ Lord McIntosh of Haringey
My Lords, the noble Lord has doubly misunderstood me. I certainly did not say that Internet entrepreneurs were gamblers. In response to the noble Lord, Lord Phillips, I said that those who worked in the public service resented the difference between them and those whom they regarded as gamblers. I did not myself use the word "gamblers". However, it is true that the Internet and information technology generally make a huge contribution to the success of this country, and it is important to encourage it in every way. Whether that leads to a particular valuation of any stock is a matter for those entrepreneurs and the market, not the Government.

Lord Bruce of Donington
My Lords, can my noble friend assure the House that the Government have already taken into account the grossly artificial values reflected in some very prominent stocks at the present time? In particular, can the Minister tell the House how the Government will deal with the very serious questions that will arise when the bubble inevitably bursts?

§ Lord McIntosh of Haringey
My Lords, I am not sure that I fully understand what my noble friend recommends the Government should do. We cannot intervene directly, or even indirectly, in free markets; that is not our role. We do not seek to second guess the 320 markets. I also made clear in response to the noble Earl, Lord Northesk, that we agree with those in the Financial Services Authority in particular who express caution about some of these stocks and advise great caution on the part of investors. It appears likely that a large number of those stocks which are valued very highly without ever having shown a profit will collapse, as my noble friend suggests. However, that is not a recipe for the Government to intervene.