ROLLS-ROYCE LIMITED

HC Deb 13 February 1973 vol 850 cc1222-54

7.22 p.m.

Mr. John Stonehouse (Wednesbury)

In the House over two years ago the then Minister of Aviation Supply made a statement of the utmost gravity—namely, that Rolls-Royce Ltd. was proposing to make itself bankrupt. That was because Rolls-Royce had been advised that it was unable to meet the expected liabilities under the RB211 engine contract which had been entered into with the Lockheed Corporation.

In the statement, the Minister said: As the Board of Rolls-Royce have stated, the loss of resources already committed to the project combined with the losses which will arise on termination are on such a scale that they are likely to exceed the net tangible assets of the company. In the light of this situation the board have decided that they have no alternative but to ask the trustees of the debenture holders to appoint a Receiver and Manager."—[OFFICIAL REPORT, 4th February 1971; Vol 810, c. 1922.] It has become quite clear since that date that the board of Rolls-Royce was ill-advised to go into bankruptcy, because it would have been possible to renegotiate the contract with the Lockheed Corporation without the extreme step of bankrupting almost the, if not the, leading engineering company in the United Kingdom.

The effects of that bankruptcy have been felt by British exports in all corners of the globe. It is indeed regrettable that it took place. The bankruptcy undoubtedly took place because of the pressure that the Government put on Rolls-Royce and the advice that was given by the Government to the directors of Rolls-Royce at that time.

I wish to draw two points to the attention of the House at the opening of this debate because they are relevant to the point to which I want to come. The first point is that the bankruptcy was brought about not by a general failure of Rolls-Royce business activities on a broad front, and not by a failure of other projects, but because—this is confirmed by what the Minister said on 4th February 1971—the expected liabilities under the RB211 contract with the Lockheed Corporation would be greater than the assets that Rolls-Royce could command.

The second point is that the Government were undoubtedly responsible for both the advice leading to the decision of the directors to go bankrupt and the pressures that were being put on the directors at that time.

The Rolls-Royce situation is unique. There has been no bankruptcy like it before and I hope that there will not be one like it again. Because the circumstances are entirely unique I believe it is reasonable and fair for the Opposition to raise points about the Government's responsibilities towards those who have been directly affected by this bankruptcy.

Had it been a normal bankruptcy of a company going on the rocks because, due to inefficient organisation'and running, it was unable to meet its liabilities in ordinary terms of trade, anyone associated with it, whether workers, shareholders or suppliers of components and raw materials, must take the consequences. However, we are not talking about a bankruptcy of that character; we are talking about a bankruptcy that was brought about by the Government in their unwisdom. We are also talking about a bankruptcy brought about not by a general failure of the business but by the failure of the company to see through a particular engine contract with the Lockheed Corporation—a priced contract which it could not fulfil with its existing resources.

In the event, that contract was renegotiated on more favourable terms to the new Rolls-Royce company. This could have been done without the bankruptcy having to take place. Certainly there was everything in the interests of the Lockheed Corporation to renegotiate the contract because the whole of the TriStar programme was dependent upon the RB211 being provided as the engine power. If that had been withdrawn it would have been difficult for the Lock-heed Corporation to have re-engined the aircraft and met its commitments to airline customers.

I emphasise that I am raising the issue about the Government's responsibility because this is a unique bankruptcy brought about by the Government, and therefore they must bear the responsibility for its effects.

Another point which I think needs reiterating is that the RB211, which was the only reason for Rolls-Royce going bankrupt at the time, was a 70 per cent. Government partnership project. As the Chancellor of the Exchequer pointed out in the debate on 8th February 1971, the Labour Administration: made arrangements to provide launching aid of up to £47 million. That was intended to cover 70 per cent. of the estimated cost of launching the engine, which was then put at £65 million. Later, the estimated cost was increased to £75 million."—[OFFICIAL REPORT, 8th February 1971; Vol. 811, c. 52.] So the Government were 70 per cent. partners in the RB211 project.

The Under-Secretary of State for Trade and Industry (Mr. Cranky Onslow)

Can the right hon. Gentleman refresh my memory on this point? When that increase occurred, did the Government correspondingly maintain its share of the venture?

Mr. Stonehouse

The Government took steps to assist Rolls-Royce in its financial needs by the Industrial Reorganisation Corporation's making funds available of £10 million, and a further £10 million was also due to be made available. The Government were quite prepared to provide extra sums to Rolls-Royce to enable it to fulfil its responsibilities. When the Rolls-Royce RB211 contract project was decided upon the principle was that the Government would have a 70 per cent. share in the project. So this is again a case of the responsibility of the Government, as a majority partner, being intertwined in this project.

The effect of the bankruptcy of Rolls-Royce, and the subsequent State ownership of the remnants of Rolls-Royce in Rolls-Royce (1971) Limited, has been that the new Rolls-Royce company has gone on with practically the whole of the old business that the former Rolls-Royce company conducted. In fact, under the terms of clause 8 of the agreement made between the receiver, Rolls-Royce Limited and Rolls-Royce (1971) Limited, and the Minister of Aviation Supply on 17th March 1971, it is quite clear that Rolls-Royce shall not commence any new trade or business, but shall concentrate on the old business with which Rolls-Royce Limited was concerned. So the whole policy of the Government in establishing the 100 per cent. State-owned Rolls-Royce (1971) Limited was to enable Rolls-Royce to continue all its business of supplying aero-engines and spare parts and, of course, to carry on with the RB211 contract once it had been renegotiated.

Here again we see a most unusual example of bankruptcy. Normally, when a bankruptcy takes place somebody moves in, takes over the old company, breaks it up and sells the profitable bits. Some of these bits are continued and some are not; they are spread all round the place. In this case the Government took special and immediate steps to ensure that the business of Rolls-Royce went on almost as though nothing had happened. The Royal Air Force continued to buy engine parts and other equipment which it urgently required to keep its aircraft in the air and the overseas customers continued to buy from Rolls-Royce the spare parts and other equipment which they required.

Rolls-Royce went on with most of its research and development programme virtually as though nothing had happened. Of course, there were economy campaigns, cutting down on overheads, and the like, but to the world at large Rolls-Royce has gone on as though nothing has happened. The Government took great pains to ensure that Rolls-Royce continued in business and they assured the overseas customers that they would continue to have the sort of service that they had enjoyed before. So this is a most unusual bankruptcy.

What has happened, however, is that the worker shareholders have lost their money, although they may get a pittance when the receiver has done his job. But, in particular, the suppliers of Rolls-Royce have lost a considerable sum of money already, and the Government have done nothing to take into account the interests of the suppliers, who probably amount to many hundreds spread up and down the land. It is their interests that I seek to raise in the House tonight, because I think that the Government have a debt of honour to those companies which supplied Rolls-Royce right up to 3rd February 1971 believing that the Government were behind Rolls-Royce and that therefore it would be without risk that they would be supplying Rolls-Royce with the raw materials, spare parts and components that Rolls-Royce needed to carry on its business. As the Government had been publicly announced as a 70 per cent. sharer in the RB211 engine project, and as the Government had been publicly announced to be putting £10 million of IRC money into Rolls-Royce, any supplier would have been quite within his rights in assuming that the Government were determined to see the business of Rolls-Royce through and would not renege on their responsibilities as such a strong partner in Rolls-Royce.

That was why so many companies went on supplying Rolls-Royce to the bitter end, without question. If Rolls-Royce had been an ordinary company, in the ordinary run of business, those companies would have decided long before that supplies would have to be cut off; they would not have taken the risk of supplying a company that appeared to be going down into some sort of bankruptcy. But the Government were very closely involved, and no doubt on occasion there was a nod or a wink to those suppliers that everything would be all right, that the Government were determined to back Rolls-Royce to the hilt and certainly were going ahead with the RB211 contract. which was the best contract this country had ever negotiated. Those nods and winks went on, so that the suppliers were lulled into a sense of security and went on supplying Rolls-Royce to the bitter end.

Mr. Onslow

May I seek clarification again? Is the right hon. Gentleman speaking of the time before or the time after the last General Election when he talks of those nods and winks, and so on? Is he speaking of the Government of which he was once a member, or of this Government?

Mr. Stonehouse

I am speaking of both Administrations and I am certain that this Administration were also responsible for giving the impression that they would honour their responsibilities as a major project participant with Rolls-Royce. Certainly that is the impression that many suppliers had, and we have to bear in mind not only the legal definition of the Government's responsibility but also what hundreds of suppliers thought was the position at that time and still think is the position today.

Mr. Philip Whitehead (Derby, North)

Does not my right hon. Friend agree that many sub-contractors believed, on about 10th or 11th November 1970—well into the period of this Administration—that the further Government assistance given to Rolls-Royce Limited was not contingent on the accountants' report and would make the company buoyant, and that they had every confidence in continuing to supply goods to the firm.

Mr. Stonehouse

Yes, at various times—in particular, in November 1970, the Government gave fairly clearly assurances that they would back Rolls-Royce. The suppliers were clearly under this impression. Now, more than two years after the Government-induced collapse of Rolls-Royce Limited, these suppliers have been paid a tiny amount towards the costs that they incurred in supplying Rolls-Royce with raw materials and components until 4th February 1971.

I am not sure of the total amount outstanding. Will the Minister say exactly what is outstanding to the suppliers who have over the years, and particularly in the last few months up to the bankruptcy, supplied Rolls-Royce? I believe that it runs to tens of millions of pounds, but no one has been able to obtain a correct estimate. The Government should give it to the House tonight.

About 15 per cent. has been paid up. A mere 15 per cent. after two years is a miserable sum of money. It does not even cover the interest charges on the money which the suppliers have to borrow to finance the outstanding debt. The 15 per cent. has been paid out on agreed invoices only. There is a tremendous backlog of invoices which have not been checked because the liquidator and others concerned have insufficient staff. Many suppliers have received 15 per cent. on only part of the money outstanding, and this compounds the problem they have to face.

Many large firms are concerned, but there are also many small firms which can ill-afford the sort of loss they are having to bear as a result of the Govern- ment's dishonesty. I say "dishonesty" advisedly and I shall refer to that later. One company—Avica—is, I believe, owed about £80,000. The chairman of the company wrote to the Financial Times about this problem on 12th April 1972—well over a year after the collapse. It is now nearly a year since he wrote to the Financial Times, and still nothing has been done to meet his problems and those of the other small suppliers who are owed sums from about £50,000 to £100,000 apiece.

These companies need an answer from the Government. It is not sufficient for the Minister to try to shelve the responsibility. He may be preparing to tell the House that the Government are not involved in this problem and that it is all to do with the new directors of Rolls-Royce (1971) Limited and the liquidator. I advise him not to say that. It would be the height of dishonesty and evasion. The buck on this issue stops on the Treasury Bench and cannot be passed to the new directors, the receiver or the liquidator. The buck stops there, because it was the Government who made Rolls-Royce bankrupt, and it was the Government who nationalised the old Rolls-Royce and appointed the new directors of Rolls-Royce (1971) Limited. The Government are one of the major customers, buying, on behalf of the Royal Air Force, engines and equipment which contain components and raw materials supplied to the old Rolls-Royce company before it collapsed. The Government have a total legal and moral responsibility, and it will not be good enough for them tonight to pass on the problem to the liquidator or the new directors.

The Government have been buying from Rolls-Royce (1971) Limited equipment which includes materials supplied before the date of the bankruptcy. It is this aspect that can rightly be described as dishonest, because the Government are getting a financial advantage from the suppliers for which they are unwilling to reimburse them. That is another reason why this Government must come clean tonight and face their responsibilities.

Some people will use strong language about this issue. They will say that the Government have embezzled the resources of the sub-contractors who supplied goods and equipment to Rolls-Royce that have since been supplied to the Royal Air Force as finished equipment. I do not know what terms to apply.

As one of the Ministers responsible for aviation questions in the Labour Administration, I have some personal responsibility for the situation that has arisen. I believe that all Governments should accept a continuing responsibility for events of this character. Had the Labour Administration continued in office we would never have allowed this situation to have arisen. We would have honoured the responsibilities of the Government to the suppliers of the old Rolls-Royce Company. I ask the Government to honour their responsibilities and not to hide behind the new directors or the liquidator. The buck stops on the Treasury Bench. I hope that there will be a message tonight from the Under-Secretary of State that the Government see their responsibilities, are prepared to honour them, and will shortly make an announcement about the special financial assistance they will ask the House to vote to enable the Rolls-Royce suppliers to receive compensation for their supplies to Rolls-Royce before the bankruptcy.

A further reason why this action would be to the advantage of the Government is that many of these small companies are the life-blood of the country's engineering strength. They provide much of the raw materials, the components and the systems that go into the finished products which are sent overseas, in terms of high technology exports. Any support we can give these companies will assist them in re-equipping themselves to face the battles of the export drive in the coming years. If the Government, in their wisdom, can afford to provide money to Clydeside and other lame ducks, there is no reason why they should not go out of their way to vote money which is due, in all honour, to the sub-contractors. It is by no means a subsidy. It is a debt of honour to them, but it will also give them some of the support they need at this critical time to re-equip themselves and build up their strength for the future.

Will the Under-Secretary tell us what representations he has received from industry about this whole matter, what replies he has sent and, generally, what further action he proposes to take to deal with the situation that I have explained?

7.51 p.m.

Mr. Philip Whitehead (Derby, North)

I congratulate my right hon. Friend the Member for Wednesbury (Mr. Stone-house) for raising this important topic. I congratulate him particularly on behalf of all my constituents upon whom the blow fell with particular severity on 4th February, two years and 10 days ago. We are discussing a debt of honour, as my right hon. Friend said. When the Under-Secretary was a back bencher he anxiously questioned the then Minister on behalf of his constituency interests about these matters. No doubt he will recollect the anxiety we all felt on behalf of the sub-contractors in particular, and all of those involved in the wholesale shakeout which followed the bankruptcy.

I go along with my right hon. Friend in saying that hindsight strengthens the view that many of us expressed at the time that this was an exemplary bankruptcy and that it was carried out hastily and unwisely. Those of us who asked at the time what real efforts had been made to contact the chairman of Lockheeds—Mr. Haughton—between 26th January and 4th February 1971, have learned not from the Government—because this matter has never been raised or debated here, any more that the White Paper on the circumstances of the collapse has been debated—but from other sources that some efforts, too little and too late, were made to draw Lockheeds into the process of renegotiation, an action which might have averted the need for the bankruptcy.

The undertakings which were given even before the bankruptcy, and even before the Cooper Brothers report was in the Government's hands, were sufficiently convincing to the sub-contractors in my constituency and elsewhere—I am sure that my hon. Friend the Member for West Lothian (Mr. Dalyell) will raise this point also—to make them go on supplying the old firm of Rolls-Royce for many months, during which it was clear to many people, including some who had previously been on the board of Rolls-Royce and who had substantial shareholdings in the company, that the company was in deep trouble. Sub-contractors in my constituency continued, out of loyalty, to supply Rolls-Royce when the repayment for their supplies was reaching them first after a delay of three months, then after a delay of six months, then after a delay of nine months and finally, of course, not at all.

One of the reasons for continuing to make these supplies available was that they were assured, not necessarily directly by the Government of the day but by way of an understanding from the company at that time, that after November 1971 there was outstanding a further financial guarantee to the company, that it was not contingent upon the report of the accountants, that the company was therefore solvent, that it would continue to trade, and that the debts owed to them would be honoured. We know what happened. The over-pessimistic—as it turned out—report of Cooper Brothers was taken aboard in toto by the Government of the day, and the firm went bankrupt.

There was a severe fall-out for all of my constituents and for people in other areas who depended upon the company. The ordinary shareholders to this day have not seen a penny of their money, nor may they ever. There was a particular problem for the worker shareholders, to whom my right hon. Friend has already referred. These were the people in the work force who had accepted shares in the company up to a limit of £500 in lieu of their salary—shares which were often held as a nest egg by the families concerned, sometimes for a generation, sometimes handed down through the family. They could not be sold on the ordinary market but they could always be sold back to the company at a guaranteed value. They were a hedge against inflation and financial difficulties for the workers concerned.

In November 1970 my constituents who were worker shareholders were told by the company that there were financial difficulties at the time and that the company could not buy back the workers' shares. They were told that the company had to "lock them in" for the time being, until things improved. Once again the worker shareholders, and sometimes their widows who still held the shares, acquiesced. That attitude came of a lifetime's loyalty to the company. They told the company that they would not make a fuss or try to take civil action against it; that they would agree and that they wished the company well. Their reward was the bankruputcy of 1971. From that day to this no worker shareholders have seen a penny of the money owed to them for their holdings in the old company. Nor are they likely to, judging from statements by the Under-Secretary and the Department. The money is owed to them for the shareholdings in the old company.

We now come to the question of the sub-contractors. Wherever I go in my constituency, visiting small suppliers—engineering firms, printing houses, the man who provided the newspapers, the man with the window cleaning contract or the people who were cutting metal on a sub-contracting basis up to the time of the bankruptcy; the people who had to wait longer and longer for the cheque from the old company to arrive—I hear the same story. They are owed money and they see an increasingly dim prospect of getting more than a small proportion back. These companies are the life blood of my town and similar communities which depended upon Rolls-Royce. To leave them in this way, virtually defrauded as they have been, seems nothing short of scandalous.

Admittedly a small amount has been paid to those sub-constractors where agreed invoices are not at issue. Suppliers who are still needed for current orders by Rolls-Royce (1971) have also been paid. But for all the other subcontractors, for all those who may have civil actions pending for breach of contract and may in that sense be in a position almost analogous to sundry creditors, for worker shareholders and shareholders alike, the gap between what is apparently on offer from Rolls-Royce (1971) and the receiver/liquidator's valuation for the assets taken over by the company—the aero engine division—is so impossibly wide that they see no hope, even now, of an agreed solution.

After the House returned from the Christmas Recess I put to the Under-Secretary a suggestion which had been widely current in the Press, namely, that the receiver/liquidator's figure for these assets was between £165 millions and £170 millions and the figure quoted by Rolls-Royce 1971—that is, the figure now on offer to the receiver—was about £35 million. I think I am right in saying that if that were the final offer there would not be a penny for a single shareholder and there would be a pretty poor payment to the creditors.

But there is a problem here. When we put the point to the Under-Secretary we are constantly told—here I paraphrase what he told me in an Oral Answer about three weeks ago—that even if the figures are correct it is particularly inappropriate for the Government to intervene, that they cannot intervene in the dispute between the receiver and the company, and that it will have to be a matter for the impartial assessor. The difficulty is that the Government, wearing a different hat, are Rolls-Royce (1971). It is a wholly-owned public company. Some people do not like to hear it said, but it is a nationalised company. Quite recently the Government were able to effect substantial changes in the executive pattern of the company. They would not have been able to do that if Rolls-Royce had been a private company. It is not good enough for the Government to say that there is nothing they can do in the dispute, because they are Rolls-Royce (1971).

The House, which has debated far too little the tangled affairs of Rolls-Royce Ltd., both at the time of the collapse and since, has a right to hear when the Government expect the independent assessor to report. Secondly, it has a right to know the present offer by Rolls-Royce (1971). We pluck figures out of the air, or, rather, from the daily Press, and the Government say, "They may be right, but we cannot intervene. We cannot do anything." Thirdly, we want to know what can be done for those who were virtually defrauded by the undertakings of November 1971, particularly the worker shareholders in the company. I apologise if that moves the debate one centimeter further than my hon. Friend's original subject.

It is said that a week is a long time in politics, but two years for a community which depended on the Rolls-Royce company, and still depends on it, is a very long time. It is at least two years too long. I want the Under-Secretary to tell the House tonight when he expects the negotiations to be wound up, and at least what is the present position of Rolls-Royce (1971), and not to take refuge—as he has so often—in saying that the matter is nothing to do with him and that Rolls-Royce (1971) has only the most tangential connection with the Government. That is simply not the case.

8.3 p.m.

Mr. Tam Dalyell (West Lothian)

I had better explain my locus and credentials for taking part in the debate. They arise from three separate matters. First, in West Lothian we have the largest organisation of its kind in the Western world, the giant forge of the Cameron Iron Works at Livingston, which makes a large number and variety of parts for Rolls-Royce. My second locus is that I have at length on different occasions raised the problem of creditors and small firms, a large number of which came to their Members of Parliament to express their embarrassment over what had happened. My third locus is that on the Adjournment—oddly enough, on another occasion when the business of the House collapsed—on Tuesday 29th February 1972, I initiated a debate which Was headed in HANSARD: Rolls-Royce Ltd. (RB21 1 Aero-Engine)". —[OFFICIAL REPORT, 29th February 1972; Vol. 832, c. 319.] Today's debate, because it has started earlier than any of us expected, has given the opportunity to do some progress-chasing in an interrogative form. I do not know whether the Under-Secretary is briefed on the first issue I want to raise. If this had been my Adjournment debate I should have given him warning. I shall understand if he is not briefed. That issue concerns the rôle of the Bank of England. In the debate on 29th February 1972 I quoted the White Paper on Rolls-Royce and the RB211, which said: The accepting houses were not informed by the Bank of England that the sum of £42 million to be provided by the Government would he subject to check by the independent accountants, because this check was essentially a matter of determining the exact sum to be paid by the Government to Rolls-Royce, and the Bank of England took the view that it was not a matter of such significance as to require them to draw it specifically to the attention of the accepting houses. I then said: The question that arises is as to the whole rôle of the Bank of England in these difficult events. I should like to ask how the Government saw the rôle of the Bank and how they see this retie being any different for the Bank the next time. This might require some consultation with the Treasury, and perhaps inquiries can be made …".—[OFFICIAL REPORT, 29th February 1972; Vol. 832, c. 325–326.] When he wound up the debate, the then Minister for Aerospace, the right hon. and learned Member for Gloucestershire, South (Sir F. Corfield) did not go into that rather important question. I do not blame him too much, because it was put at short notice. I would just put it gently to the Under-Secretary that while we all hope that there will not be a next time, certainly not in relation to Rolls-Royce, we must be wise, because we have been warned. What have the Government learnt about the role of the central bank and the joint stock banks in a matter of this nature? That is my first question. It is one that I believe to be worth asking, and I am glad to have the opportunity to ask it.

The second issue concerns the speech of the then Minister on 29th February 1972. He said: The procurement executive of the Ministry of Defence has been in very close touch on the technical side with the relevant executives in Rolls-Royce to try mutually to work out a much better system of technical reporting and technical cross-communication between the Government and the company. Equally, on the D.T.I. side, where we are more responsible for the management side, we have been doing the same exercise with regard to financial reporting. We have come a long way in agreeing with Rolls-Royce on the type of financial information we shall require, the frequency with which it is provided and, to a degree, the means by which it is compiled, because obviously accuracy and topicality are affected by that."—[OFFICIAL REPORT, 29th February 1972; Vol. 832, c. 345–346.] I agree with the former Minister, as we all would, but it is worth asking, 12 months. later, "What has been learnt?" What would be different next time, even though a company other than Rolls-Royce was affected? I do not think that the matter was covered in the debate that my hon. Friend the Member for Derby, North (Mr. Whitehead) initiated.

On patents, the then Minister said: Here again there is no confusion in the law. The situation in regard to patents arises because of some rather curious provisions in the patent law of overseas countries over which we have no control. For this reason the Government acquired the patents. At the time it was thought that Her Majesty's Government should acquire the patents, the arrangement with the receiver was that, although there was no attempt to put an individual valuation on this large number of patents, it was recognised that in toto they would not come to anything like the £20 million. That £20 million covered the patents and the remainder of the advance purchase. I think the hon. Member for West Lothian is trying to make a mountain out of a molehill."—[OFFICIAL REPORT, 29th February 1972; Vol. 832, c. 351.] I believe that on subsequent reflection few people would now say that asking questions about the issue of patents and patent law was either esoteric or making a mountain out of a molehill; because the truth is that the whole question of patent law becomes more urgent every day. Therefore, I should have thought it legitimate, granted the topic of my right hon. Friend's debate, to ask what has changed since that night when the Opposition successfully summoned the then Solicitor-General to come to explain to the House the intricacies of patent law. It seems to me that this is an important issue and it would be an opportunity for the Under-Secretary to report on the matter.

The final issue I wish to raise, apart from the needs of my constituents and some other small firms who, in effect, acted as Rolls-Royce's bankers, is that of the Government's view of their philosophy in interference in the management of Rolls-Royce. I do not ask the question in a carping spirit although at Question Time the hon. Gentleman and his hon. Friend the present Minister for Aerospace and Shipping have had some sharp exchanges with me with some mutual ill-temper of a kind in which I do not normally indulge. However, I believe that the question how the Government see their relationship with a company in the state in which Rolls-Royce (1971) Ltd. now finds itself is serious.

The issue to which I refer was the leaving from Rolls-Royce of Mr. Ian Morrow and the way he was replaced—and supposedly the Government had a hand in it—by Norman Wilkinson and his colleagues who now run the firm. I do not want to stir up a whole lot of difficulties about the past. The question I am asking is not about the past. It is about the future and concerns the relationship and the philosophy of the relationship that any Government—or shall we limit it to this Government?—would have with a firm in the position of RollsRoyce—because the truth is that the whole difficult matter of the replacement of the senior management of Rolls-Royce left a bad taste, whether we like it or not, in quite a number of mouths. That is a fact which is indisputable.

The question which is worth asking is this: in future, what would be different and how does the Ministry of Aerospace and that sector of the Department of Trade and Industry see their rôle in the choice of senior management? After all, it is on the decisions of senior management, a problem properly raised by my right hon. Friend the Member for Wednesbury, that a company depends. Gently, therefore, and in no carping spirit I ask this serious and interesting question: how does the Under-Secretary see the role of himself and his colleague, the Minister for Aerospace and Shipping in —I will not say meddling but certainly interfering with the senior management of a very famous company? I speak as one who was and am still a friend of Sir Denning Pearson, a person who thought Rolls-Royce was very hardly treated in the late 1960s and early 1970s, by many people who were for ever singing the song of technical innovation.

There are far too many politicians and newspaper columnists and others who berate this country for not taking advantage of some technological development, be it the jet engine or any other of the myriad discoveries made in Britain, and who then turn round when we do make considerable progress—in this case with the RB-211 engine, with all its intricate features—and say, "We should not have taken this risk. It was not properly thought out." This is a case of having one's cake and eating it. It is not a very attractive attitude in either politicians or journalists. To this extent I thought that Rolls-Royce were very roughly treated. I understand that the purpose of this debate is to look to the future and therefore I ask what would be the difference in the light of what was said on 29th February 1972 and in the light of subsequent debate?

8.15 p.m.

The Under-Secretary of State for Trade and Industry (Mr. Cranley Onslow)

This debate has covered slightly more ground than some of us might have expected and has taken place at a more congenial time. Neverthless, even though there is an hour or more at my disposal I hope the House will forgive me if I do not attempt exhaustively to answer every point that has been raised, though I recognise that there is an obligation on those who stand at this Box to provide answers in due course if they cannot do so instantly.

I respond first to the question of the hon. Member for West Lothian (Mr. Dalyell), and in the same spirit. He was kind in his references to our past disagreements. I have no intention of provoking him or allowing myself to be provoked this evening, and I hope we can maintain this new-found amity on future occasions. I believe he will find a substantial answer to some of the questions he posed in the Government's observations on the Sixth Report of the Expenditure Committee under the heading "Public Money in the Private Sector" and in particular on page 3 and onwards in that document, if he studies it, where the Government reply to the four lessons which the Committee saw as being there to be learned from this series of episodes of the involvement of public funds in the private domain. If having read those he still remains in uncertainty or doubt I hope he will let me know. I will then do my best to give him an answer which will clarify the situation.

I understand that even lawyers find it difficult to be absolutely sure on the law of patent, and I hope the hon. Gentleman will not think me cowardly if I refuse to venture into this treacherous area. I again undertake that he shall have an answer on that. Finally, on the question of the role of the Department in the appointment of management of the company I suppose it would be trite if I were to tell the hon. Gentleman that our efforts are directed to making sure that the best men are in the job at any given time; and I suppose it would also be trite if I were to suggest to him that from time to time circumstances and needs change. Although those are fairly rough and ready rules I hope he will take it that those are the ones by which Ministers seek to be guided.

At the same time I have to tell the hon. Gentleman—and this may be an echo of past disagreements between us—that it would be extraordinarily difficult for any Government to put themselves in the position of committing themselves to make public the advice they received on any given appointment, and particularly to undertake to reveal the reasons why any person who may or may not have been considered for a particular appointment was or was not appointed. I hope he will understand that there is here an area which has to remain within a screen of confidentiality against which Ministers come to this Box and answer as best they can.

I share the hon. Member's desire that we should not go back to acrimony on this occasion. I believe that Rolls-Royce has effective management and good prospects, and I do not wish anything to be said across the Floor of the House which is likely in any way to prejudice those prospects or to make anyone who deals with the firm or works for it feel otherwise than that he is engaged in a first-class enterprise which is a credit to this country. That is a fact. I am certain that we can all agree on that.

I have to tell the hon. Member for Derby, North (Mr. Whitehead) that one of my first duties in this post, exactly a week after I was invited to fill it, was to answer an Adjournment debate initiated by his colleague the hon. Member for Derby, South (Mr. Walter Johnson) on the subject of workers' shares. It would be wrong of me to hold out hope to him now that I can say anything very different from what I said then. I recognise and have great sympathy with the plight of those whose savings were lost.

I know that when this branch of the law is looked at, the opportunity must be taken to make sure that the flaw in the Rolls-Royce workers' share scheme which enabled the "locking-in" situation to develop is never repeated in any future employees' shareholding scheme because it is not adequately appreciated that circumstances can arise such as those which arose in Rolls-Royce. It is, alas, a fact that we have to accept, for shareholders as well as creditors, that a course of events has unfolded which leaves us with no alternative but to act as we have done. I am grateful for the way in which the hon. Member framed his remarks.

The hon. Member also raised the question of the contract with Lockheed, saying that it could have been negotiated more quickly. He will know how long it took to re-negotiate that contract, even with one of the major areas of uncer- tainty—the financial instability of RollsRoyce—established, so that it did not have an unsettling influence on the renegotiation. If he thinks it would have been easy to carry out those intricate discussions and negotiations with the status of Rolls-Royce undetermined I find it difficult to agree.

Although the hon. Member claims this now—and I do not dispute his title to do so—with more conviction than he expressed at the time, with hindsight, as he admits, as events have passed what strikes me most forcibly is how little we knew for certain at the time, and how little was available in the form of firm information on which to take decisions. We had no idea of the situation which was developing and which would have such enormous implications. Having taken some interest in this at the time, from a position of no responsibility but one of close interest, I know that there was the eternal frustration of not knowing for certain what could be relied upon. It was this which made the problem so difficult—the most difficult which has ever fallen to be handled by the leaders of business and industry.

Mr. Dalyell

The question we have to ask is: what will be different about the next time? Will it be any easier the next time there is such a calamity? Something ought to be done about this. If the roof is leaking before the storm we should not wait until the storm to do something about it and then wring our hands in agony and say, "We ought to have done this while the weather was relatively calm".

Mr. Onslow

I hope that the forebodings of the hon. Gentleman can be established as unnecessary. I hope that we will not be starting from the same place again. We must look at the lessons to be learned from this case. The first lesson is that before a Government provide selective assistance on a large scale they must satisfy themselves that the company has the financial, technical and managerial resources to complete the contract. If that step had been taken—if the contract had been examined more closely, if the management of the company had been of a different calibre, if other things had not been as they were—it is possible that we would not have got into the situation that came to pass with the bankruptcy of Rolls-Royce.

Mr. Dalyell

If that were the scenario, some of us—and I would be one of them —would be wringing our hands at the lack of initiative and foresight we showed through not getting into the American market at the time. This has to be looked at not just from the point of view of Rolls-Royce. It is easy for us—and I am as bad as anyone here—to say, "This is what we ought to have done." But when Sir Denning Pearson and his colleagues won that contract in New York there was no Member of this House who was not in favour of it.

Mr. Onslow

I always hesitate to quote myself, unlike Mr. John Smith, who until recently represented the Cities of London and Westminster in this House. I doubt whether quotations from one's speeches add spice to our conversations. I certainly would not make that claim in my case. However, having had occasion to read the report of the parliamentary exchanges when the right hon. Member for Bristol, South-East (Mr. Benn) made his first announcement about the contract, I have been somewhat comforted to find that among the questions he was asked was one from myself. I said: While the whole House will welcome the order for the RB.211, may I ask the right hon. Gentleman whether he is satisfied that sufficient financial and physical resources will be available to Rolls-Royce to enable the RB.207 to be developed in time for the airbus to meet the specifications which he has set?"—[OFFICIAL REPORT, 1st April 1968; Vol. 762, c. 47.]

Mr. Dalyell

A verys good question.

Mr. Onslow

I will not quote the answer. The hon. Member can look it up for himself. It was not borne out by events.

I come to the remarks of the right hon. Member for Wednesbury (Mr. Stone-house). If he will forgive me for saying so, he made rather an odd speech. It is nearly two years and two days since his speech in the debate on 11th February 1971 on the Rolls-Royce Bill. He repeated tonight some of the things he said on that occasion, although perhaps he said them then with still more passion and vigour.

He brought little new evidence to his cause this evening. He made an allegation about the Government having applied extreme pressure to force bank- ruptcy on the old Rolls-Royce company. I did not hear much evidence adduced for this. If he has some no doubt he will not hesitate to give it to us. In the whole of his speech I did not hear a single reference to the White Paper published just over a year ago, which he must have read. If the hon. Member did read it I fear that he may have forgotten some of it, because he will find set out there a clear and succinct account of some of the matters which seem to worry him. I direct his attention in particular to paragraphs 18 onwards of that White Paper, and suggest that he looks at what is written there. I remind him, as the hon. Member for Derby, North said, that this White Paper has not been debated by the House. As far as I know there has been no particular pressure from the Opposition for it to be debated. This suggests that it is taken to be not a tendentious or misleading account but basically an accurate and complete one.

Mr. Whitehead

My hon. Friend the Member for West Lothian (Mr. Dalyell) requested an Adjournment debate on the White Paper a year ago. He received, I believe, a non-committal reply from the then Minister, and no debate has ever taken place.

Mr. Onslow

I do not know how hard the hon. Member has pressed it since that time. I confess that I had no opportunity to read the speech of the hon. Member in that debate, not having had cause to do so at the time, and he, to my knowledge, not having pressed any of the matters he raised then in correspondence with me since I undertook responsibility for these matters.

I hope I may say, therefore, without offence that there has not been any very great pressure or evident surge of interest in this subject. It come up occasionally in debates of this kind, but I believe I am right in saying that the White Paper has been accepted by the whole House without debate, and we are entitled to draw conclusions from that fact.

Mr. Dalyell

I decided to let parliamentary sleeping dogs lie. It is true that I have not pressed the matter. I thought it was an opportunity to raise three seemingly sensible and appropriate subjects. This, by chance, was the opportunity to do so. I should not have pressed for an Adjournment debate.

Mr. Onslow

I am grateful to the hon. Member for his explanation. I drew him into the argument because his hon. Friend the Member for Derby, North seemed to be relying on him, mistakenly so, in my view.

Mr. Stonehouse

The Minister is perilously near to treating the House of Commons to a brush-off. When he asks why these points have not been raised, he must bear in mind that everybody in the House of Commons expects the Government to do their job.

There have been discussions between the Government and industry and representations have been made on behalf of all these firms. It is not in the interests of a satisfactory outcome for Members of Parliament on this side of the House apparently to be trying constantly to raise party political points. That is not our intention.

It ill becomes the Minister, in replying to the debate, to try to make out that we have not been interested simply because these points have not been raised. We have been intensely interested, but during the past two years we have been expecting the Government to do something. The fact that the Government have not is the reason for the Adjournment debate tonight.

Mr. Onslow

I wonder what the attitude of the right hon. Gentleman would have been had our roles been reversed. I wonder whether he would have taken sustained silence as evidence of continuing interest or as evidence of disinterest. I have a feeling that his inclination might have been to come to the latter judgment. I am certain that the right hon. Gentleman would have been busy enough dealing with other matters pressed on him by those lion. Members who take the trouble to press them. I do not think that the right hon. Member is fair in suggesting either that I seek to brush the motion off or that there is anything in the way in which he himself has pursued his points over the last two years and two days which would lead me to concede him the point that he has shown a continuous and burning interest. Nevertheless, he has raised it tonight and I wish to reply to him tonight.

The right hon. Gentleman spoke, both in the motion and in his speech, of an expectation on the part of the Rolls-Royce suppliers of continued Government support for aero-engine projects. He implied that this involved the Government in a responsibility to provide compensation to the suppliers. In fact, he went rather further than that—as, indeed, he has done on other occasions. If that was his suggestion, I cannot accept that anything has occurred since the last General Election which fits his description of "nods and winks" on the part of the Government. I cannot answer for the old company; I cannot answer for what happened before the last election; but if the right hon. Gentleman is telling us now that some undertakings, explicit or implicit, were given, he may agree that they might well have been declared to the House.

I must also tell the right hon. Gentleman that his assertions in that area do not necessarily correspond with other statements that have been made on the same subject. He may understand that when he first made these assertions, two years and two days ago, they attracted some attention. I can tell him that I, as a member of the Public Accounts Committee—as did other hon. Members as members of the Trade and Industry Sub-Committee of the Expenditure Committee—went to some pains to press the point when witnesses gave evidence to the committee. I can tell the right hon. Gentleman, and if necessary I can give him the column references for the evidence, that we had a categorical assurance that there was no such implicit or explicit total commitment to the project as I understand him to suggest. On that point at least he and I must disagree.

It is true that the Government have a close relationship with firms in the aircraft industry. They are the main customer on the military side and also provide launching aid for civil projects. None of this alters the basic position of the aircraft companies as commercial concerns whose boards are responsible for the way a company is run, the busines it undertakes and the success it achieves. This is true of launching aid. The principle is that the Government's contribution is fixed in advance and calculated as a given percentage of estimated costs. Once the sum is calculated, it is fixed and there is no reason why anyone should believe that, because the Government are giving a fixed sum they will, if occasion arises, provide any money over and above that.

In this connection the right hon. Member for Bristol, South-East (Mr. Benn) answered fairly specifically a Question on 22nd October 1969. Mr. Roebuck asked him …whether he will make a statement about the assistance his Department gave to Rolls-Royce Limited in securing a contract for the RB211 engine from the United States of America. The right hon. Gentleman replied, As a supplement to the statement I made in the House on 1st April, 1968, I can add that the launching aid granted for this very promising project is subject to a maximum of just over £47 million"—[OFFICIAL REPORT, 22nd October 1969; Vol. 788, c. 279.] I do not believe that that answer can be described in the terms and conditions in which the right hon. Member for Wednesbury now describes it. We are dealing with commercial concerns and with contracts made by the Government with such concerns. It would be wrong and foolish for anyone to suppose that such contracts secure for a company a cloak of immortality making it immune from the realities of the commercial world.

Whatever the Labour Government thought of the achievement by Rolls-Royce in landing the RB211 contract, their commitment was to provide up to £47 million launching aid. The fact that they regarded this sum as the maximum was demonstrated by their action when the costs rose. They did not increase their commitment. The present Government did not enter any open-ended commitment to the company to see the project through at whatever cost.

Mr. Stonehouse

The weakness of the hon. Gentleman's case at this stage is that the Government are providing on-going support for the RB211.

Mr. Onslow

I shall come to that. When I do, the right hon. Gentleman will not find it a weakness. I was reminding the House that we did not enter into an open-ended commitment. We offered up to £42 million extra launching aid for the engine, with the company obtaining extra loans from its own bankers. The company's own commitments were linked with the recovery of the money and depended also on the levy on sales. The White Paper sets out the story in full. The Government decided that they could not commit any further public funds to support the company, either generally or specifically for the engine, particularly in the light of the absence of any reliable estimates of the liabilities they would then be carrying.

So, as the White Paper relates, the company appointed a receiver and he disclaimed the RB211 contract as an onerous one. Since the company was no longer to undertake the project, there was no question of Government liability to provide launching aid for it. During the critical time up to the time that the renegotiation of the project was completed, work on the engine continued only because of indemnity from the Government. When the right hon. Gentleman complains of the way in which contractors have been treated by the Government, it is less than fair of him to forget that had it not been for the Government's action in taking on the contract, making it possible for it to continue and establishing the new company to manage the enterprise of this engine and other projects so essential to our defence interests, very large numbers of jobs would have been lost together with a very large amount of money.

It may help hon. Members if I try to answer one or two of the questions that were put about the present position of the creditors.

Mr. Dalyell

One point is that a number of creditors held the view that Rolls-Royce was backed by the Government, and it is a nub point for the future that never again must there be a degree of ambiguity. There was a vague idea of what obligations the Government had. and what obligations they did not have. Therefore, the Government of either party have to learn that the dangers of ambiguity in a situation like that can be terrific.

Mr. Onslow

I hope that when the hon. Gentleman reads the Government's observations to which I have drawn attention he will see that we have learned that lesson. I am not so sure, from what the right hon. Gentleman said, that he agrees that there was no ambiguity, but he and I would both agree that ambiguity in circumstances of this kind is wholly undesirable and unfair, and we see the consequences of this situation as something that should be avoided in future. This is similar, though on a smaller scale, to the consequences of the Beagle situation. I am certain that the relationship must be made so clear that the prudent industrialist cannot unwittingly blunder into a situation in which he finds that he has put himself at risk.

It would be too much to try to protect the foolish industrialist from the consequences of his own follies, but I go as far as to say that a prudent business man should not be put in an intolerably ambiguous situation, though I qualify that by saying that I know of my own knowledge of people active in this area who did not take on business that was offered to them by the Rolls-Royce company for reasons which seemed good to them then and on which, perhaps, they had cause to congratulate themselves afterwards.

Mr. Stonehouse

Is the hon. Gentleman making clear in this debate that the Government take no responsibility whatsoever for the debts of Rolls-Royce (1971) Ltd., although it is a wholly-owned company? Is that the message that is going out tonight to the suppliers?

Mr. Onslow

I am astonished that the right hon. Gentleman should seek to convey that message. I should have thought that it was clear that the Government take responsibility for Rolls-Royce (1971) Ltd. in the event—which and I could scarcely conceive of—of a liquidation arising again.

Mr. Stonehouse

We are talking about ambiguity. We have therefore to be careful that there is no ambiguity tonight. Are the Government responsible for the debts of Rolls-Royce (1971) Ltd., or are they not? There can be no ambiguity about that. There must be a clear answer.

Mr. Onslow

The answer is not "Yes" or "No". The answer is that the responsibility for the conduct of the company and the management of its affairs rests with the men who run it. The Government are not the board of manage- ment. The right hon. Gentleman knows that. Should it come to the necessity of the company ceasing to trade in a liquidation situation, as it is a wholly-owned Government company the situation would be—and I should have thought that the right hon. Gentleman would agree with this—the same as that which occurred when the Beagle company went into liquidation. I am not seeking to draw any distinction between the two circumstances, except to say that Rolls-Royce is so managed and so much better set upon a business activity that there is no likelihood that it will go into liquidation.

The Government are very much aware of the continuing hardship, and in some cases suffering, caused by the collapse of Rolls-Royce. The debate this evening has focused to some extent on the subcontractors and suppliers of the company. There is nothing new that I can usefully add about the shareholders, particularly the worker-shareholders, though I assure the House that it would give me great pleasure if I were able to find some way out of the situation to benefit them.

To put the matter in perspective, perhaps I can give some figures about the number of creditors. The latest count puts the trade creditors, excluding financial institutions, as claimants for some £75 million. We believe that this is made up of 7,500 claims, though it does not necessarily follow that the receiver would accept that all those claims are established as amounts agreed to be due. I am afraid I cannot say how many of the 7,500 claims from these trade creditors come from sub-contractors and how many from people such as caterers, window cleaners, travel agents and so on. Our estimate is that Rolls-Royce had about 1,000 sub-contractors when the company collapsed.

Mr. Whitehead

Since the hon. Gentleman has now told the House the amount of the claims outstanding at the moment against the old Rolls-Royce company, could he answer a question which I asked him earlier and which he has overlooked, namely, what is the present offer by Rolls-Royce (1971) Ltd. to the liquidator for the assets?

Mr. Onslow

I shall come to that point. The situation in which the subcontractors and others find themselves was the subject of passionate comment in the debate which took place over two years ago when I myself, since there were firms in my constituency which were affected, commented sharply on the situation. It is worth noting that although there were dire predictions at the time, it does not seem as though the consequences for any significant number of sub-contractors were so serious as to force them into liquidation. I do not try to belittle their loss, but I am attempting to put the matter into perspective.

So far as I am aware, only a small number of the sub-contracting firms to Rolls-Royce have gone into liquidation since the old Rolls-Royce company itself went into liquidation. I have heard it said that the number is no more than might be expected in any other sphere of business activity. Some encouragement is to be derived from that, although I do not seek to exaggerate the situation.

When the Government faced this situation and when all the factors had been assessed, the decision was taken that it would not be a responsible use of public funds to assume a very large unquantified commitment either by supporting the company with funds or by taking it over. Instead, the Government acted promptly to set up Rolls-Royce (1971) Limited to buy the aero-engine assets, and with the new company re-negotiated the RB211 contract. Both those policies provided an on-going source of business for the suppliers and sub-contractors of Rolls-Royce and also provided security for the tens of thousands of jobs involved, in Rolls-Royce and elsewhere.

At the same time the success of the new company in establishing itself was in large measure due to the co-operation and effort of those who had suffered in the collapse. It is right that tribute should be paid to them, and I gladly do so. But it would be fair for the House to recognise that the Government played some part in making it possible for the project to survive.

The right hon. Gentleman mentioned specifically that there has been some comment—although without some research I cannot tell him precisely what representations I have received on the subject —about the components and materials, sometimes of substantial value, which were supplied to the old company, passed on to Rolls-Royce (1971) Limited and incorporated into the engines sold by it or used to manufacture components of engines sold by it.

It has been suggested that the new company should pay the suppliers direct for those components. I think that that is what the right hon. Gentleman suggested. I hope that I can persuade him that that course would not be the right one. The components were supplied by the sub-contractors to the old company. Unless I am much mistaken, the nature of the relationship between the two would be such that title would pass upon delivery. They became the property of the old company although the old company had not paid for them.

When the receiver took over the enterprise he sold the components and materials to Rolls-Royce (1971) Limited as part of the aero-engine assets of the old company. The new company is to pay the receiver a fair price for these assets. As the suppliers have sold the goods to the old company, like all other unsecured creditors they must look to the joint liquidators for satisfaction of their claim. The new company is paying for the goods in question but it is paying, as is necessary in liquidation situations, the receiver and his fellow liquidators. It cannot pay unsecured creditors of the old company direct. That is the position de facto. I suggest to the right hon. Gentleman that there is some comfort to be drawn from the fact that the sub-contractors have gone on doing business in the same area, making the same machinery and the same components and supplying them to the receiver in the first case and then to the new company.

It is not for me to say what terms and conditions they may have renegotiated. However, it is not wholly out of the question that in the process of renegotiation they have been able to obtain some compensation which will, if not immediately, recoup their loss and at least reimburse them for the onus of the additional interest which they have had to pay on loans required to meet the debt situation into which the old company placed them.

There is no sense in not being matter of fact about this. It is what happens when companies go into liquidation. The only unique feature of the bankruptcy of the Rolls-Royce company was its size. Were it not for that, and, perhaps, its name, there would be less comment on what has occurred. It is possible for any company, whatever its size, to go into bankruptcy in the same way as the old Rolls-Royce company.

Mr. Dalyell

One question which will be asked by the American owners of one of the large suppliers is, "This is what the Under-Secretary says, but what are the British going to do about altering their bankruptcy laws?" I do not expect an answer on the alteration of the bankruptcy laws from the hon. Gentleman tonight, but I should like some assurance that the Government are looking at what lessons can be learnt from Rolls-Royce. Next time we shall not be forgiven, least of all by the multinational companies whose employment we welcome in this country.

Mr. Onslow

I keep trying to persuade the hon. Gentleman that we have learnt lessons. Perhaps, because I am going on at such length, he is forgetting that. I have no wish to detain the House unnecessarily. I take his point. I have not found that the consequences have been so damaging and there is respect in many parts of the world for the way in which we have reacted and the way in which the phoenix has risen from the ashes.

I turn to the delay in paying the creditors. It is a matter of regret that the price for the aero-engine assets has not yet been settled. I believe that all the parties share that regret. It is not in anyone's interest to have this major uncertainty remaining. However, large questions of judgment must be involved in a situation of that size and complexity. It would be wrong for me to attempt to influence the joint liquidators to accept a lower figure than they think is justified.

The Government did not wish to put pressure on Rolls-Royce (1971) Limited to go beyond what it believes to be a proper price. In the circumstances the only solution was to use the procedure freely agreed by both parties in advance for reference to an independent expert whose decision is binding. It is important to stress that. The nature of the decision is binding and there is no appeal from it. In doing this, the parties followed the provisions of the Heads of Agreement signed by the receiver and the old company in 1971. It is the receiver and his fellow joint liquidators to whom the creditors should look.

I cannot avoid saying that the consequences of the commercial failure of the old company are the responsibility of the board of that company—

Mr. Stonehouse

Is the hon. Gentleman aware that there is great resentment in the industry, which feels that the Government are shaking off their responsibility behind this so-called expert against whose decisions there will be no appeal? There is the impression in the industry that the Government are not facing up to their real responsibilities. Will the Minister reconsider this decision to pass all the responsibility to this so-called expert?

Mr. Onslow

No. I cannot reconsider that decision any more than I can tell the right hon. Gentleman what the figures are. It would be wrong of me to do so. Neither the right hon. Gentleman nor the hon. Member for Derby, North put his finger on what is the essential ingredient. The Government have an additional responsibility to pay, with the taxpayers' money, whatever may be the price for the assets agreed as fair by the independent assessor—

Mr. Whitehead

Surely the hon. Gentleman agrees that if the gap is as wide as the figures which I quoted indicate, there is great cause for concern on the part of the creditors, who see the gap as one which, with the best will in the world, the independent assessor is unlikely to be able to bridge to their satisfaction.

Mr. Onslow

I do not think that they are entitled to reach that conclusion. Equally, they would be entitled to be annoyed if it were suggested, or if it were a fact, that the Government had intervened to pick a figure out of the air and to say, "That is what we think is fair. Forget about the independent assessor. We shall cut through this and give you £X million." Even the creditors would not accept that as a fair figure. What is more the taxpayers would not regard the Government as having defended their interests. I cannot believe that the hon. Member for Derby, North would seriously advocate that course if he had responsibility in these matters.

I have spoken for longer than I intended. Even so I dare say that I have not wholly convinced the right hon. Member for Wednesbury that my arguments are unanswerable. In the situation in which we find ourselves, not as a result of any choice of our own but as a consequence of events which antedate substantially the last General Election, there has been no alternative but to go on as we have.

I end on this note. I am sure that there is no desire on the part of any of those concerned in the settlement that it should be protracted longer than necessary. I hope and believe that we shall see matters move forward. I am sure that the parties themselves are well aware of the need to settle them and will press as hard as they can to a settlement.

Question put and agreed to.

Adjourned accordingly at one minute to Nine o'clock.