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Companies (Political Donations)

Volume 124: debated on Wednesday 9 December 1987

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4.42 pm

I beg to move,

That leave be given to bring in a Bill to ensure that shareholders in public companies are balloted before a company assumes political objects.
In the first six months of 1987, companies donated more than £2 million to the Conservative party and Right-wing front organisations for the Conservative party. When end-of-year figures are produced, that amount will be considerably greater than £2 million, because 1987 was an election year. British industry does not donate simply to the Conservative party; it also donates a little to the alliance. That is a sign that British industry does not always back winners and has a soft spot for those who will inevitably be losers.

The top 10 donors in 1987 are United Biscuits, British and Commonwealth Holdings, Trusthouse Forte, Kleinwort Benson, Lonsdale, George Weston Holdings, Hanson Trust, Northern Engineering Industries, Newarthill, Willis Faber and Trafalgar House. They have two characteristics in common. First, not one company consulted its work force before it decided to donate to the Conservative party. Yet their work forces create the wealth that allows such companies to make political donations. The very party to which such companies donate often acts against the interests of their employees. Secondly, not one of the companies balloted its shareholders before a decision was taken. So much for the rhetoric of company democracy and popular capitalism.

I mentioned that the alliance parties have also benefited. Alliance Members tell us that the alliance is particularly keen on ballots of employees and shareholders before companies make political donations. Consistent with the alliance, they are inconsistent with principle on the matter.

Of 23 political donations made by companies to the alliance parties, 21 were made without any reference to democracy or ballots. Again, in practice, alliance rhetoric is found to be threadbare and vacuous. Principles are not applied in practice. In ony two cases out of 23 did the companies hold ballots before they donated money to the alliance parties and, more important, before the alliance parties accepted the donations.

We have a record of no democracy in British companies. In addition, there has been a new and much more sinister development in British politics, and that is the development of bought influence in the House of Commons. It is a development of the past few years, but it has become very deep in that time. It shows itself in consultancies and directorships on the Government Benches. Many Conservative Members now find themselves bought by companies to a great extent. My constituents have a right to know why Conservative Members vote in a certain way and what influence is upon them when they cast their votes.

In addition—you will recall it with some feeling, Mr. Deputy Speaker — there was the naked exercise of bought political influence in the House only three weeks ago, when the P and O company offered to take Tory Back Benchers to various hotels to put on various parties and to offer various video shows. The only matter of concern was which video was to be shown to hon. Members and their partners before they were asked to vote for that company and that company's interests.

Hon. Members should contrast that with the treatment of trade unions. What do trade unions have to do if they are to make political donations? They have been bound by law and by statute since 1913. In the Trade Union Act 1984 they were forced to ballot their members every two years so that they could decide whether their trade union should continue to have political objects. There is no such right for shareholders or employees. In addition, individual trade unionists have the right to opt out of paying a political contribution. I do not have the right to opt out of paying a political contribution when I buy a pint of beer from the firm that subsidises the Conservative party. Why do similar rights not apply in relation to shareholders, consumers and employees?

The Educational Institute of Scotland recently balloted its members about setting up a political fund. Would it not be nice to see companies being bound by the same sort of rules before they give their money to the Conservative party?

We hear a great deal from Conservative Members about the language of popular capitalism and shareholder democracy. If that is the way ahead, why are Conservative Members not consistent? Why do they not provide shareholders with the right to hold ballots—to have a voice — before their companies decide to donate politically? What justification can there be for not consulting shareholders about such a crucial decision? In the Financial Weekly of July this year, a PR spokesman for Distillers gave the reason why the company did not bother to ballot before it donated to the Conservative party. That anonymous PR spokesman said:
"The company made its first political contribution last year. But this is a subject that we don't talk about."
It is wonderful to have public relations people who do not talk about particular issues. Then we have the paternalism and arrogance of the chairman and chief executive of Hill Samuel, Mr. Christopher Castleman, who said:
"Whatever we do we consider to be in the best interests of Hill Samuel's shareholders. But we do not think that they should be balloted."
That is somewhat different from the language that applies to trade unions, which are required by law to ballot their members, and have done so for many years. Why cannot the shareholders of Hill Samuel and other companies be similarly balloted?

The Bill is modest. I am not trying to stop companies from donating to the Conservative party or alliance parties, however many parties there are now in the alliance. I am trying to make donations by companies to political parties legitimate, because at the moment they are made without democratic support, and in my eyes and the eyes of the public that is illegitimate.

If the Bill is not opposed by Conservative Members, they will agree with shareholders' charters and shareholders' democracy. If they are silent and do not oppose the Bill, I hope that they will make every effort to ensure that it has an easy passage through the House next year, so that shareholders will be able to control the political objects and activities of their companies.

Question put and agreed to.

Bill ordered to be brought in by Mr. Derek Fatchett, Mr. Terry Davis, Mr. Doug Hoyle, Ms. Jo Richardson, Mr. Chris Smith, Mr. Martin Flannery, Mr. John Battle, Ms. Hilary Armstrong, Dr. Lewis Moonie, Mr. Joseph Ashton and Mr. Ernie Ross.

Companies (Political Donations)

Mr. Derek Fatchett accordingly presented a Bill to ensure that shareholders in public companies are balloted before a company assumes political objects: And the same was read the First time; and ordered to be read a Second time upon Friday 15 April 1988 and to be printed. [Bill 68.]