MPs urge extension of shares agencies

The agency set up to help the taxpayer get better value for money from the remaining nationalized businesses should have its remit extended and its powers strengthened.

But a potential conflict of interest in its responsibilities for the Royal Mail and the Post Office network – one of the more difficult issues facing the government – should be removed, the Commons’ public accounts committee recommended yesterday.

The Shareholder Executive, set up in 2003, advises on or manages the government’s shareholding in 27 of the bigger and more sensitive businesses that taxpayers still own or have a stake in – such as BNFL, air traffic control, the Met Office, Channel 4, British Waterways and the Royal Mint.

It has done a good job, the cross-party group of MPs said yesterday, helping stem losses and increase profits in businesses that turn over about GBP 21bn.

But “its powers are too limited; its independence has been compromised by being placed with the principal shareholding department [Business, Enterprise and Regulatory Reform], and some government departments have failed to use its services,” Edward Leigh, the committee’s chairman, said.

A separate board is being created to oversee the executive, which should help with the independence issue, the committee said.

But departments with other businesses that have a turnover of more than GBP 4 bn are not required to use the executive’s services – and in at least one case appear to have struck poor deals as a result.

It has only a limited ability to provide finance for the businesses, and politicians’ willingness to invest in government-owned concerns can conflict with other public policy priorities. To help redress that, the executive should be given an explicit role to advice departments on the finance needs of the undertakings they own, the committee said.

And, as the executive itself acknowledges, it needs to get more businesses to pay a dividend to the taxpayer, an area in which it has made only limited progress.

On the postal service, the executive’s remit extended beyond ensuring that the taxpayer got a good return. It also provided policy advice on the postal market and the Post Office network, and oversight of the postal regulator and watchdog, the committee said.