Tories halt grilling of `fat cat' directors

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Indy Politics
Senior Tories were yesterday accused of calling a halt to the parliamentary grilling of "fat cat" company directors because of its damaging impact on the Conservative Party.

A Tory-dominated committee cancelled a session in which senior directors of Manweb and Northern Electric were due to be questioned yesterday about boardroom remuneration. MPs also called off a meeting on 18 April involving David Jeffries, chairman of National Grid, who stands to make nearly £2m when his company is floated.

Ministers and Tory whips have become increasingly embarrassed by a series of highly charged Employment Select Committee sessions involving senior representatives of privatised utilities. Directors from BT, British Gas and Powergen have tripped over banana skins laid by committee members, arguably damaging their reputations and the standing of their companies.

Tim Yeo, a Conservative member of the committee, argued that a decision to draw a line under the investigation of directors' pay was prompted by a desire to publish a report before the Whitsun recess. He said the committee had begun to go over the same ground and that "diminishing returns" had set in. Other Conservative MPs pointed out that both the cancelled meetings would have covered the same ground as an inquiry into the electricity industry being undertaken by the Trade and Industry Committee.

But Angela Eagle, a Labour member of the committee, said the Conservative Party's high command had become restive about the monotonously bad publicity emerging from the committee. "They clearly wanted to put a stop to what they regarded as politically very damaging. The Conservatives have a majority on the committee, so there's only so much we can do. If there is no consensus then the system breaks down."

Cabinet ministers have admitted privately that the publicity was damaging and the Prime Minister conceded that legislation may be needed to curb excesses.

The furore began with revelations about the earnings of Cedric Brown, chief executive of British Gas, who was accused of being "economical with the truth" over his full remuneration package. On his first appearance on 24 January he told the committee about his £475,000, but was recalled on 7 March when he revealed that share bonuses could pay him another £594,000.

Iain Vallance, the £652,853 chairman of BT, caused a degree of indignation on 31 January when he compared his job with that of a junior doctor. Ed Wallis, chief executive of the electricity producer Powergen, who last year received £1.3m, angered some of the committee members on 21 March by describing as "little jobs" three posts which earned him £36,000 a year.

Two more sessions are envisaged. One involves a private meeting on 18 April with Sir Richard Greenbury, who is chairing a CBI committee on the issue. Sir Richard earned more than £1m last year from his chairmanship of Marks & Spencer. A second meeting will involve Clare Spottiswoode, director general of the gas regulator, Ofgas, Professor J F Lamb, of the Gas Greed Campaign, and Donald Butcher, chairman of the UK Shareholders' Association.