|Tobacco Advertising and Promotion Bill [Lords]
Mr. Wilshire: That response was so bizarre that it requires pursuit. The Minister's answer shows her failure to grasp the purpose of an annual report and the way in which it is produced and published. If the Minister cannot grasp that one of the primary purposes of an annual report is to be an advertisement for a company, I suggest that she goes to a presentation by a major company in the stock exchange.
David Taylor (North-West Leicestershire): As the hon. Gentleman suggested, one purpose of an annual report is to promote the company as an attractive vehicle for investment. It is never designed to promote the products produced by the company.
Mr. Wilshire: I accept that the hon. Gentleman has a point. However, the problem with that argument is that the Bill makes it clear that the thing itself does not have to be the advertisement. We covered that ground when we discussed the fact that it is the thing contained within that runs foul of the law. Perhaps the purpose of an annual report is not to promote the sale of tobacco, but it would have that effect, and that worries me.
Mr. Flook: Earlier, I declared an interest. I used to work for a financial public relations company, and I was involved in designing and promoting annual reports. I can state categorically that such reports are produced for no other reason than to provide information for investors about what the company does and, more importantly, as a promotion—to tell people what the company does and to promote its products to the wider world.
Mr. Wilshire: I will be eternally grateful to my hon. Friend. His is the voice of real experience, rather than mine as a lay investor in a company. If I am not succeeding in persuading the Minister or the hon. Member for North-West Leicestershire (David Taylor), they should go to the City and sit in on a presentation made by a major company to the stock exchange, especially to pension funds. I would not like to probe hon. Members' pension funds too closely.
John Robertson: The hon. Gentleman mentions pension funds. Call me an old cynic, but I imagine that pensioners investing in pension funds could be inundated with annual reports containing advertisements. Such investors may not be aware that their pension fund invested in tobacco industries. They would be appalled to receive such advertising through their doors. Is that not exactly what the Minister is trying to avoid?
Mr. Wilshire: The hon. Gentleman suggests that pension fund investors receive that sort of information. They do not. We are discussing pension fund managers. If the Minister said that to pursue the matter would mean that everyone who had a pension would be sent something, I would agree that the hon. Gentleman was right, but I do not believe that to be the case.
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John Robertson: Are you telling me that that is impossible under the law? Is there is no way that you can send anything to investors in pension funds from a company that is being invested in to support that pension fund? Can you categorically tell me that?
The Chairman: Order. The hon. Gentleman must not use the term ''you''.
Mr. Wilshire: I am not a pension fund manager, and have never made any attempt to learn whether a pension fund would give me a list of its policyholders. I sincerely hope that it would not. The only way that one could communicate with the policyholders of a pension fund would be to get such a list. I should imagine that if a pension company were to send adverts for tobacco, it would immediately fall foul of the Bill. I understand what the hon. Gentleman says; if he were right, I would be on his side, but I am fairly confident—with the caveat that I am a layman in such matters—that he need not worry on that score. However, if I am proved wrong, I shall apologise.
Tim Loughton: Perhaps I can help my hon. Friend as someone who was in the fund management industry for 16 years. When I ran individual and collective funds—a unit trust—if I had held a tobacco company's shares, there would be a report of that in the accounts that would go to the collective fund's manager, in whose name, or in whose company's name, the shares would be held. There is no direct contact between the tobacco company and the hundreds of thousands of pension fund holders who happen to hold a stake in that pension fund. The hon. Gentleman's fears are completely and utterly unfounded.
John Robertson: That does not answer the question.
Mr. Wilshire: I hear what the hon. Gentleman says, but I hope that my hon. Friend the Member for East Worthing and Shoreham has answered half his question. I shall now try to answer the other half.
On the question of pension fund managers being bombarded with information, I think that that already happens and will continue, not because people would send such information unsolicited, but because any pension fund manager who wants to keep his job and be successful will make it his business to ask for the maximum amount of information, in order that the investment decisions made on behalf of the pension fund investors are made in a sensible and knowledgeable way. We do not have to worry about the pension fund managers; they exist to get that information, and will ask for it. There are not many of them anyway, so there would not be thousands of people being bombarded with information. I hope that that reassures the hon. Gentleman that we are not seeking to do what he suggests.
What concerns me is that the annual report is in itself intended to be an advertisement. The presentations made by companies to pension fund managers, unit trust managers and others are deliberately designed to sell the product, and the products are shares in that company. The success of a company and its ability to invest in the future depends upon its success on the stock market; it can then raise more money. My hon. Friend the Member for
Column Number: 98Taunton (Mr. Flook), who is the expert, has confirmed that the annual report is intended to be an advert. People like him have earned their living producing such adverts.
David Taylor: The hon. Gentleman may care to correct a statement that he made. I think he said that the products that are made make shares in the company. Is that what he means?
Mr. Wilshire: If I said ''the products that they make'', I apologise. What I intended to say, and hope that I did say, was that the products that the presentation sells are shares. If I did not make that clear, I apologise.
David Taylor: Will the hon. Gentleman explain why increasing the demand for the shares of Gallaher or whoever would be linked to the promotion of tobacco products and greater sales of those products?
Mr. Wilshire: It would do so for the very reason that I gave. I was seeking, by talking about the presentations to the pension fund managers, to demonstrate beyond all doubt that the annual report is itself an advertisement. I should have thought that fund managers are far too hard bitten to fall for any of that smoking rigmarole.
We have established via pension fund managers that the document is an advert. We must then fall back on the fact that anything contained in it that has the effect of promoting tobacco is illegal. It is at that point that we switch to the hundreds of thousands of small investors, who get the same document through the letterbox. The document is an advert because of the purpose for which it was produced, mainly for the pension funds, in which the primary decisions are taken. The presentation goes to tens of thousands of people, and if they read it, the effect may be to make them decide, ''I will buy brand B''. That way, brand B has been promoted via an advertisement. That concerns me.
Mr. Ruffley: I rise to support my hon. Friend's point. Labour Committee members should read clause 1 again, where a tobacco advertisement is defined as,
Within the terms of that definition, statements in an annual report would, beyond peradventure, amount to tobacco advertisements.
Mr. Wilshire: I thank my hon. Friend. I am relieved that someone present has a better memory than me. I was floundering to remember which clause included that definition. That goes right to the heart of the argument that we had about clause 1: we were told that we need not worry, because there needs to be both ''purpose'' and ''effect''.
Mr. Ruffley: There needs to be purpose or effect.
Mr. Wilshire: Exactly so. We now have the proof that to include ''effect'' is going too far.
I agreed to meet the Minister half way. If the purpose is to promote a tobacco product, I am on her side. I do not want to allow annual reports deliberately to include advertisements. I hope that I have said
Column Number: 99enough to persuade her that we have a difficulty with the matter under discussion. It will be said, ''There is an effect. It is an advertisement. It will have an effect on the investors.'' If the company does not include information that it is legally bound to communicate, it will be in breach of the Companies Act, and the Financial Services Authority and other organisations will come down on it like a ton of bricks. I hope that the Minister will respond to the spirit of my offer to meet her half way, by saying that she sees the point that I am trying to make.
Yvette Cooper: We have been round the houses on this matter. Companies can choose which and how many pretty pictures they include in their annual reports—they can put in whatever they want. If they publish a tobacco advertisement—that is, an advertisement whose purpose or effect is to promote a tobacco product—and if the exclusions explicitly set out for people engaged in the trade and so forth do not apply, they are covered by the Bill.
Companies are entitled to promote or advertise their shares through annual reports or other sorts of circular to their investors, but they are not entitled to advertise their tobacco products unsolicited to their investors. That provision is right. I do not see why the tobacco companies should be given a loophole through which they can bombard their investors with advertisements for tobacco, as this amendment would allow—advertisements that promote tobacco products or have the effect of doing so.
Companies will not be prevented from providing their investors with all of the information that they legitimately require and need about the marketing or the business of the company and so forth. We have dealt with this subject at length and I oppose the amendment.
|©Parliamentary copyright 2002||Prepared 9 May 2002|