HC Deb 20 June 1973 vol 858 cc681-7
Mr. Benn (by Private Notice)

asked the Secretary of State for Trade and Industry to make a statement on the cancellation of the plans to bring about a merger between Slater Walker and Hill Samuel.

The Minister for Trade and Consumer Affairs (Sir Geoffrey Howe)

As I explained to the hon. Member for Hackney, Central (Mr. Clinton Davis) on 23rd May [Vol. 857, c. 465–6], I earlier reached the view that the proposed merger did not raise issues which required investigation and report by the Monopolies Commission, and subsequent events have not altered my view. As the House will know, the parties yesterday announced their intention not to proceed with the merger.

Mr. Benn

But does not the right hon. and learned Gentleman understand that what has happened has far graver implications than his answer on the occasion or any answer to a previous Question suggests? Does he recall that the merger was promoted by two men who are very well known to Ministers, that it was supported by the Governor of the Bank of England, that it was endorsed by the Minister himself on 23rd May, that we were assured that he had received assurances which satisfied him about the merger, and that we were assured then that the public interest did not require a reference to the Monopolies Commission? In the event, is not it clear that the shareholders' interests have suffered, that it now apears from reports that 100 companies have been acquired by Slater Walker in the past 18 months and that their workers' interests have not been considered? Is not it clear from the Sunday Times reports that Slater Walker has engaged in operations which call for further inquiry, and these doubts have been confirmed by the cancellation of the arrangements for the merger by Hill Samuel, no doubt based on misleading and inadequate information?

I ask the right hon. and learned Gentleman whether he will now institute an immediate Companies Act inquiry into Slater Walker in order to bring these facts to light and to end the ill-judged efforts by him and his fellow Ministers to cover up the unacceptable face of capitalism in respect of this deal.

Sir G. Howe

As always, the right hon. Gentleman has sought to erect a far-ranging and elaborate structure on a single event. If I may go back over the matters that he raised, it is quite wrong to imply, as he sought to do, that transactions of this kind were promoted by Ministers who were familiar with some of the parties in the matter. [Interruption.] "Promoted by people known to Ministers" is an attempt to have the benefit of the innuendo without being prepared to assert it. I will deal with the right hon. Gentleman's next point in a moment.

It is worth reminding the House that the right hon. Gentleman accepted unequivocally the last time that this matter was raised that my right hon. Friend the Secretary of State had deliberately played no part in connection with these transactions. The innuendo which the right hon. Gentleman sought to introduce seeks to go back on that.

As for endorsement by the Governor of the Bank and by me, I told the House on the last occasion this matter was raised that the Governor had indicated his view, as has been the practice, and had made it perfectly clear at that stage that it was subject to a conclusion reached by my Department and, in the result, reached by me.

As for my own position, I applied my mind to the question which arose, whether this matter required consideration by the Monopolies Commission. I reached the conclusion that it did not so require. That does not amount to an endorsement one way or the other of that which is taking place. It amounts to a decision within the framework of the legislation whether it requires consideration in that context.

The right hon. Gentleman went on to mention a number of different factors, and in reaching that conclusion one bears in mind a great variety of factors, to some extent many of those mentioned by the right hon. Gentleman, but one still reaches one's conclusions whether the public interest requires a reference in the context of the legislation.

On the right hon. Gentleman's final point, I see no reason resulting from the decision announced yesterday not to go ahead with this merger to appoint any kind of inquiry of the kind to which he has referred.

Sir D. Walker-Smith

Whatever the merits or demerits of the original proposal and its subsequent revocation, which, strictly speaking, would not seem to be a matter for this House, have the Government any proposals in mind for the closer involvement of shareholders in the affairs of companies of which they are the titular owners either by way of the institution of supervisory boards, which are in practice in certain other countries, or by any other method?

Sir G. Howe

As my right hon. and learned Friend will know, I answered several questions bearing on that point on Monday. I indicated then that one of the matters that we had under consideration involved suggestions for the closer involvement of shareholders by the appointment of supervisory boards. I said that it was only one of the factors currently under debate, launched into debate from a number of sources. Another matter was the extent to which the closer involvement of shareholders could be facilitated by changes in the law relating to the obligation to disclose information. Those matters are under consideration alongside that which has been suggested by my right hon. and learned Friend.

Dr. Gilbert

Has the Minister's attention been drawn to the fact that there was heavy dealing in the shares of both Hill Samuel and Slater Walker on the London Stock Exchange yesterday morning before the announcement was made and that according to today's Financial Times there were share falls in both stocks anticipating the announcement? Has the right hon. and learned Gentleman also noticed that the Stock Exchange Council, as one might expect, did nothing about it yesterday and apparently has done nothing since?

Will the right hon. and learned Gentleman, therefore, first, consider holding an immediate inquiry into dealings in the shares of these two companies yesterday morning, and, secondly, in his coming review of company law, will he take account of the total unfitness of the Stock Exchange to supervise private share dealings in this country?

Sir G. Howe

In his question the hon. Member for Dudley (Dr. Gilbert) emphasises what is probably the most important factor in this matter. I think he was quoting from the Financial Times when he said that there were transactions in the shares of both these companies yesterday anticipating the announcement which had been made. There had been Press comment over the weekend and again on Monday expressing views about the merits or demerits of the proposed merger of a kind likely to lead to anticipation or speculation which certainly could have given rise to share transactions in relation to both companies. Those are matters to which one obviously has regard as being in the background.

The hon. Gentleman suggested the necessity for an inquiry. The powers that I possess under the Companies Acts are principally in Sections 109 of the 1967 Act and 165 of the 1948 Act. I have seen no evidence to justify the use of those powers to inquire into the transactions which have taken place. The matter to which, by implication, the hon. Gentleman referred is one which, in the first instance, should be for the Stock Exchange Council to consider.

On the wider question raised by the hon. Gentleman, plainly, as I think I indicated on Monday, legislation regarding insider dealing is one matter that the Government have in mind in preparing their proposals which will be laid before the House in due course.

Mr. Tugendhat

Does my right hon. and learned Friend agree that one might be tempted to suspect the right hon. Member for Bristol, South-East (Mr. Benn) of some hypocrisy when one listens to what he says here and compares it with his performance as Minister of Technology, when he promoted an unprecedented merger boom without consulting workers and sometimes leading to considerable displacement of workers?

On a more practical point, may I ask my right hon. and learned Friend to clarify the situation about the assurances that on 23rd May he told us he had received from Hill Samuel and Slater Walker about the way in which they would handle their substantial share holdings in industrial companies? What is the position about those assurances, which I imagine were given direct to him or at any rate to the Secretary of State, now that the merger has lapsed?

Sir G. Howe

My hon. Friend, in the first part of his question, echoed a comment that I made about the right hon. Member for Bristol, South-East (Mr. Benn) when answering supplementary questions last time. He is right to remind the House that the right hon. Gentleman promoted a number of changes in company structure with far-reaching effects and was himself active in doing so with no more consultation than my hon. Friend suggested.

The statements of intention given by the parties to the proposed merger were given as indications of the way that the merged organisation was likely to conduct itself. They were given in that context and in those circumstances. Now that the merger has not taken place, there is no merged organisation to have such intentions. The statements of intention are, therefore, not relevant in the circumstances that now exist.

Mr. Carter

May I ask the right hon. and learned Gentleman what discussions may have taken place between himself, other Ministers or his Department with either of the two companies concerned both before and after the announcement of the merger?

Sir G. Howe

The normal investigations and analysis of the implications of the proposed merger were undertaken by officials in my Department in consultation with others, as is customary, in order that advice could be given and the matter properly considered. Since the original decision was taken, I have continued to keep myself informed about the likely progress of the merger. There was no further consultation with my Department before the announcement was made by the two companies yesterday.

Mr. Biffen

Is my right hon. and learned Friend aware that there will be gratitude that the Government did not become a committed catalyst to this particular concentration of financial power to an extent that would have prevented the emergence and triumph of the doubts that were so widely held not only within but outside this House?

Sir G. Howe

I am grateful to my hon. Friend for his observation. I discharged my functions as required by the statute, and reached the conclusion that it was not a case that was appropriate to be referred to the Monopolies Commission. The matter has subsequently been considered by shareholders and others, parties or prospective parties to the proposed merger, and the conclusion of which the House knows has been arrived at.

Mr. Atkinson

Will the right hon. and learned Gentleman admit to the House that there is a great difference between the merging proposals which were made by the IRC at the time—that is, the merging of industrial interests—and the merging of pure financial interests as suggested on this occasion by the coming together of financial consortia in this way? Secondly, may I ask whether he is pleased or disappointed that this merger has fallen through?

Sir G. Howe

It is not for me to express judgment on the last part of the hon. Gentleman's question. Ministers should not be regarded as being required to pronounce judgments on each and every thing that happens on each and every aspect of our society. Of course, we have a responsibility to the House and the country to see that legislation and policy brought before the House are justified. However, it is not for us to form judgments on everything in the way implied by the hon. Gentleman.

There is some difference in the nature of the organisations concerned, but the essential point is that the judgments of shareholders and of parties concerned must be brought to bear as well as the judgments of Ministers and of Parliament on matters of this kind. They were brought to bear on the industrial mergers, about which the hon. Gentleman spoke to some extent, and they have been brought to bear in this instance. One could not conclude from the implication in his question that it is right to lay upon Ministers as great a responsibility as he implied for promoting each and every change in the industrial structure of the country which they happen to believe is right at any given moment.

Mr. Tebbit

On a point of order, Mr. Speaker. You may recollect that a little while ago I asked about what I felt could be an abuse of the PNQ procedure. Could you advise me now—

Mr. Speaker

Order. If it is a point of order relating to the PNQ procedure, we had better dispose of the next PNQ first.