HC Deb 12 December 1957 vol 579 cc1413-5
34 and 35. Mr. Stonehouse

asked the Chancellor of the Exchequer (1) what decision he has taken in regard to a Government contribution to the loan being raised by the British Petroleum Company Limited, which will carry the right to convert to voting shares in July, 1958, and 1959;

(2) the percentage of voting shares held by the Government in the British Petroleum Company Limited; and what will be the percentage of Government shares after the conversion to voting shares of the £41 million loan now being raised by this company.

42. Mr. Jay

asked the Chancellor of the Exchequer whether he has any statement to make regarding the Government's intentions in respect of the British Petroleum Convertible Debenture issue announced on 2nd December.

Mr. Birch

Her Majesty's Government will not subscribe to the new issue. If all the new stock is converted in 1958 and 1959, their voting rights will be just under 51 per cent. They are now 55 per cent.

Mr. Stonehouse

While thanking the Economic Secretary for that reply, may I ask whether he is aware of the widespread concern about the expensive manner in which this loan is being raised? As the State has a majority shareholding in this company, why is there no State subscription to the loan, and why is it that the large profits which will be made out of this loan and the conversion to shares in the next year and the year after will be confined to private shareholders? Further, in the event of a further loan being raised with the right to convert to voting shares, will the Government continue to retain a majority of public shares in this concern?

Mr. Birch

The hon. Member has raised a number of points. I am not able, as he is, to foresee exactly what will happen in the next two years. The terms of the issue are a matter for the commercial judgment of the board. The arguments against Her Majesty's Government subscribing to the loan are very strong. The arguments are that we should have to finance new investment by Treasury Bills. That would be inflationary and entirely unnecessary and wrong. The question about what will happen in the future is purely hypothetical. The point is that at the moment we retain the control we now have.

Mr. Jay

Is the Economic Secretary aware that it is possible for the Government, like other people, to sell gilt-edged securities on the Stock Exchange and thereby raise the money? As this was a favourable investment from the Government's point of view and as there was priority for holders of B.P. ordinary shares, why should not the Government have subscribed to the loan in the taxpayers' interest?

Mr. Birch

I do not think that it is the duty of the Government to "stag" new issues.

Mr. Paget

May we take it that in the underwriting of this issue and its allocation directors of the Bank of England will receive the usual priority?