Iron and Steel Industry (Denationalisation)

HC Deb 21 February 1961 vol 635 cc282-4

2. Mr. Nabarro

asked the Chancellor of the Exchequer what further progress the Iron and Steel Holdings Realisation Agency made in the denationalisation of the publicly-owned steel industry in the three months ended 31st January, 1961.

16. Mr. Cronin

asked the Chancellor of the Exchequer if he will make a statement on the progress made by the Iron and Steel Holding and Realisation Agency in the denationalisation of the steel industry during the present Session of Parliament.

The Chancellor of the Exchequer (Mr. Selwyn Lloyd)

During the three months ended 31st January, 1961, the Agency's receipts from realisation of securities in companies which are no longer its subsidiaries, was £1.8 million. Details of an impending sale of prior charges by the Agency have been reported in a Treasury Minute which was laid and published yesterday. This sale of securities, which will realise about £85 million, means the transfer to private ownership of about two-thirds of all the prior charges still held by the Agency in companies of which the equity has already been sold. The proceeds of this sale will enable the Agency to help finance the very large development programme of its subsidiary Richard Thomas & Baldwin Ltd., without calling upon the Exchequer for funds.

Mr. Nabarro

May I ask my right hon. and learned Friend two questions? Firstly, in relation to the £85 million, which was the subject of the Treasury Minute late last evening, has there been a profit or a loss to public funds in that important regard? Secondly, in the context of Messrs. Richard Thomas and Baldwin, can my right hon. and learned Friend, having regard to the long delay which has already occurred, give the House an assurance that this issue, notably of the equities—the bluest of blue chips—is imminent?

Mr. Lloyd

With regard to the second part of my hon. Friend's supplementary question, I stated in October that it was the intention of the Government to see that this process of denationalisation was substantially completed during this Parliament. With regard to the first part, there is no loss to public funds. These prior charges are created almost entirely at the time of the sale of the equities. They were moneys provided by the Agency itself. Therefore, the transaction has to be looked at together with the selling of the equities. As a matter of fact, as far as the four companies are concerned, in which both equities and prior charges has been disposed of, that is to say, Colvilles, Consetts, Dorman Long and United Steel, there is a profit of about £5 million.

Mr. Jay

Is the Chancellor of the Exchequer aware that he is totally wrong and appears to be ignorant of the main facts of this transaction? Is he not aware!that these prior charges were taken up at par by the Realisation Agency and are now beng sold at a heavy discount, involving a loss of about £25 million to the taxpayer? Is he not also aware that this totally unnecessary sale, which will do no good to anyone, is forcing gilt-edged prices down to record low levels, to the serious loss of many tens of thousands of small investors?

Mr. Lloyd

I completely disagree with the latter part of the right hon. Gentleman's supplementary question. He forgets that we are under a statutory duty to do this. A statutory duty has been laid upon us by Parliament to get rid of these prior charges. As for the right hon. Gentleman's point about the prior stocks having been issued at par, they were issued at the time of the sale of the equity. Unless this money had been put up, the sums received for the equities would not have been what they were. On balance in the books of the Agency there is a surplus of £5 million.

Mr. Jay

Is the right hon. and learned Gentleman really not aware that the fact that certain other transactions took place at the same time makes no difference whatever to the fact that these were issued at par and that therefore a large loss has been incurred? Is he not aware also that, though he is under a statutory obligation to carry out this foolish transaction at some time, he is under no obli- gation whatever to carry it out at a moment when gilt-edged prices are so low that the loss to the taxpayer is at the highest possible figure?

Mr. Lloyd

I will give the right hon. Gentleman a practical example. When the equity of the Steel Company of Wales was sold, the Agency received £40 million for it. The Agency certainly would not have received £40 million unless it had been willing to put up £40 million worth of debentures at the same time.

Mr. Cronin

Will the Chancellor of the Exchequer explain how shares acquired by the Iron and Steel Holding and Realisation Agency at 20s. and now sold at 12s. 9d., as in the case of United Steel, can possibly make a profit.

Mr. Lloyd

They were not acquired by the Agency. There is a misunderstanding. I think it is thought that these prior charges were taken over when the industry was nationalised and compensation paid for them. It was nothing of the kind.