HC Deb 30 April 1980 vol 983 cc1545-73

Lords amendment: No. 1, in page 2, line 21, at end insert— (3A) Without prejudice to subsection (3)(b) above, any proceedings on an application made by British Aerospace before the appointed day under section 31(3) of the Act of 1977 may be continued on and after that day by the successor company, and any order made under subsection (9) of that section with respect to any loss resulting to British Aerospace from the transaction to which the application relates shall be made in favour of the successor company.

11.5 pm

The Minister of State, Department of Industry (Mr. Adam Butler)

I beg to move, That this House doth agree with the Lords in the said amendment.

This is a technical amendment. Like the other amendment that we have before us tonight, it was moved by the Government on Report in another place and it was unopposed, so there is no reason why it should detain us for long.

The House will remember that clause 1 deals essentially with the vesting of the property, rights liabilities and obligations of British Aerospace, the corporation, in a company nominated by the Secretary of State. It ensures, in effect, that that company will become a full successor to the corporation.

Subsection (3) provides that in all agreements and documents, with the exception of enactments, all references to British Aerospace after the appointed day will refer to the successor company. It is in connection with that exception that a small problem has arisen which the amendment seeks to rectify and which I hope will meet with the approval of the House.

Under section 31 of the Aircraft and Shipbuilding Industries Act 1977, British Aerospace has been enabled to seek compensation for onerous transactions undertaken by one of the vesting companies before nationalisation. At the moment, arbitration proceedings under that section are in hand in respect of one alleged onerous transaction. After the day appointed for the vesting of the undertaking in the successor company, the right to continue those proceedings under section 31 will vest, along with all other rights, in the successor company.

However, section 31(9), which enables the arbitration tribunal to make an order for compensation in respect of an onerous transaction, provides that the order may be made only in favour of the corporation and not of the successor company.

As I said, subsection (3)(c) specifically exempts enactments from the general provision in the subsection that references to the corporation are to be taken, after the appointed day, as references to the successor company. This would have the effect that, if proceedings in the case to which I have referred were still pending after the appointed day, they would be carried on by the successor company, but any order for compensation could be made only in favour of the shell corporation.

An amendment to section 31 is therefor necessary to ensure that, after the vesting, an order for compensation is made in favour of the successor company and not the corporation, so that the right to compensation will vest with all other property, rights, liabilities and obligations of the corporation in the successor company.

This narrow amendment adds a new subsection to clause 1. We believe that it is necessary, because the arbitration proceedings to which I have referred are of uncertain duration and there is a risk that an order for compensation would not be made until after the appointed day.

I hope that hon. Members will agree with me that this is a sensible and equitable amendment. As I said, it is a technical one and is fully in accordance with the Government's overall policy that the company should be the full successor to the corporation. It is not a controversial amendment, and I hope that the House will agree with the Lords in it.

Mr. Les Huckfield (Nuneaton)

We note that the Minister of State is up to his usual tricks. On this Bill, he always says that everything that he is proposing is of really minimal consequence and does not make much difference one way or the other. When we begin to look at it, we find that it is of great significance and that it conceals a great deal more than he pretends to the House.

When the hon. Member wrote to me on 2nd April—I am grateful that he did so—he put at the end of his letter the words I thought you should know of these amendments in advance; you will agree that they are not points of substance. I knew then that something was up, because that is exactly the technique that he has used to ply and plough his way through the Committee stage. Having read the debates in the other place, and having just heard his performance here, it is clear to me that nothing has changed.

A great deal of my hon. Friends' time has been spent on the Bill. That is why they have come to hear what the Minister says tonight. They are very concerned. The Opposition are not whipped. My hon. Friends are here because they want to be, and not because they have to be. But we know that the hon. Member for Preston, North (Mr. Atkins)—I dignify him with that title—is here only because he wants to see how his share applications are likely to go. It is well known—he will be interested in these compensation issues—that he has only one interest in seeing the passage of the Bill on to the statute book: he wants to buy as many shares as he possibly can.

Mr. Douglas Hogg (Grantham)

That is an unparliamentary remark.

Mr. Huckfield

It cannot be unparliamentary, because the hon. Member for Preston, North said that he wanted to buy the shares. I cannot help it if the hon. Member for Grantham (Mr. Hogg), who does not come to this place very often, did not hear his hon. Friend the Member for Preston, North say that, but it was said, and my hon. Friends can testify to it. The hon. Member said that he wanted to buy the shares. I have news for him. The flotation of the new company is apparently to be put off yet again, and may not now take place until the autumn. I hope that he will be able to stay in this House that long.

But it is, of course, to the amendment from the other place that I wish to turn. The Minister would have us believe that this is simply a matter of transferring any compensation benefits from the current statutory corporation to the shell company and then to the fully publicly quoted and properly fledged successor company. He said that it was a simple matter of ensuring that any benefits from arbitration landed in the lap of the new successor company.

11.15 pm

The Minister has failed to tell us that an almighty argument is going on about compensation. I wonder when arbitration will end. Perhaps the company will be renationalised before it has been concluded. The Minister knows that the Labour Party will renationalise British Aerospace without compensation. The Government should get themselves up to date about the position of those proceedings.

The Minister told us that the issue of compensation would take a tiny bit longer than anticipated. In his letter to me, he wrote: We had previously understood that a settlement would be reached before the appointed day. I have news for him. Has he read the Financial Times of 16 January? There is an article in that paper by Robert Cottrell, who is supposed to know what he is writing about. Presumably he would not have been given a job with the Financial Times if he did not. [Interruption.] If hon. Members are unhappy about using quotations from the Financial Times, I can quote from other journals and newspapers. I thought that they trusted the Financial Times. If they do not, they should tell us whom they do trust.

Mr. Deputy Speaker (Mr. Bernard Weatherill)

Has this anything to do with the amendment?

Mr. Huckfield

Conservative Members are making the usual sounds of whipped men. We know that they have been whipped. They would not be here if they did not have to attend. If the hon. Member for Preston, North knew how his shares would go, he would be off. He is staying only to find out what will happen to them.

Mr. Nicholas Winterton (Macclesfield)

The hon. Gentleman is not doing the House a service by tackling the amendment in this way. Is he aware that some Conservative Members are here because they have Hawker Siddeley or British Aerospace factories in, or close to, their constituencies? Those factories employ many people. We are here to ensure that the Bill safeguards a satisfactory future for the new company. I hope that the hon. Gentleman will treat this issue seriously. Many Conservative Members hope that the Bill will be given serious consideration. We are concerned about the future of the new company and the employment that it will provide.

Mr. Huckfield

Perhaps I can intervene in my own speech. Although the hon. Member for Macclesfield (Mr. Winterton) claims to represent a peripheral British Aerospace constituency—more peripheral than that of the hon. Member for Preston, North, who is not allowed to speak—he should know that the Bill was first mooted on 24 July 1979. It received a Second Reading in the middle of November 1979. Nevertheless, this is the first time that I have heard the hon. Gentleman speak on this subject. Perhaps he was ill. Perhaps he is still ill. If he was ill, he must have been ill for a very long time.

Mr. Nicholas Winterton

The hon. Gentleman will appreciate that hon. Members cannot intervene on every subject relating to their constituencies. Is he aware that although some Conservative Members may not speak, they take an active interest in such issues? They follow debates in the House and in Committee. Again, is the hon. Gentleman aware that although I represent a constituency in which British Aerospace is " peripherally " of interest—I consider that it is of great interest—I have met representatives of the company on a fairly regular basis. Indeed, I have made representations to the Government about the areas in which they are concerned. I hope that the hon. Member will withdraw his rather unfortunate remarks.

Mr. Huckfield

When an hon. Gentleman has to come to the House to justify his performance as much as the hon. Gentleman has done tonight—

Mr. Deputy Speaker

Order. We are straying rather wide of the amendment, which relates to the transfer of assets. It has nothing to do with the hon. Member for Macclesfield (Mr. Winterton).

Mr. Bob Cryer (Keighley)

Will my hon. Friend give way?

Mr. Huckfield

Of course.

Mr. Cryer

I want to focus attention on the amendment, but I ask my hon. Friend to forgive the hon. Member for Macclesfield (Mr. Winterton), who has outside interests. He is the chairman of CAMRA and he has other financial interests. It is only natural that those interests take him away from the House, as the interests of other Conservative Members take them away from it.

Mr. Huckfield

My hon. Friend has put the matter in proper perspective. The hon. Member for Macclesfield appears to feel strongly about aerospace, but it is the first time in this Parliament that I have heard him speak on the subject.

I hope that you will forgive me, Mr. Deputy Speaker. I was side-tracked because I dared to indicate that I was about to quote from the Financial Times. I referred to compensation, which is the subject matter of the amendment. Before I was distracted by Conservative Members, I was about to quote from the Financial Times of 16 January 1980. The Minister of State would have us believe that we are dealing with a simple issue—merely transferring any benefits from the compensation arbitration to the new successor company. I hope that the Minister will tell us how long the compensation proceedings will take.

The article in the Financial Times to which I have referred states: GEC and Vickers, for example, have received a £40 million down payment for BAC. The two companies mooted compensation in the order of £200 million at the time of nationalisation. Vosper has received £1.3 million whereas it is believed to be seeking up to £25 million. Those companies now moving into arbitration must steel themselves for further delays of some two years before final settlement is reached. You will note, Mr. Deputy Speaker, that Conservative Members are leaving the Chamber. The great interest in aerospace on the Conservative Benches is waning already.

Mr. Douglas Hogg

The hon. Gentleman should look at the Benches behind him.

Mr. Huckfield

My hon. Friends are here because they want to be. The article continues. I refer to a passage about three or four paragraphs after the one that I have quoted. Reference is made to the procedures that may have to be followed to the Court of Appeal and other courts. It states—I hope that the hon. Member for Macclesfield, who for the first time professes an interest in aerospace matters, will listen: The upshot is that some companies will have waited more than eight years for compensation by the time settlement is reached. If they have to wait that long, British Aerospace will have been renationalised. There will not be any compensation that time round.

Mr. Christopher Murphy (Welwyn and Hatfield)

Disgraceful.

Mr. Huckfield

The Minister tries to pass this over as a matter of little significance. Does he thing that by some crude sleight of hand he can dismiss the issue?

The House cannot dismiss the fact that some companies might have to wait eight years before their compensation is settled. If the hon. Member for Macclesfield does not like that—he should be interested in compensation, as some of his constituents might still be awaiting compensation—he should address himself to the circular that was issued by Vosper on 12 February. It was sent to a number of shareholders. I hope that my hon. Friends will listen to me quoting from the circular, because I know that they follow these matters assiduously. The letter is signed by Sir John Rix, MBE, the chairman of the company.

Mr. Adam Butler

On a point of order, Mr. Deputy Speaker. The hon. Gentleman has been discoursing on compensation in general, which is dealt with under sections 35 to 41 of the 1977 Act. This amendment refers only to section 31, which is a different matter. It involves the safeguarding of assets, and so on.

I seek your guidance, Mr. Deputy Speaker, whether it is in order to deal with general questions of compensation in discussing this amendment? Secondly and specifically, I cannot see that Vosper-Thorneycroft, which is a shipbuilding company, has anything to do with the aerospace industry.

Mr. Deputy Speaker

I, too, was listening carefully to the hon. Gentleman. I hope that he is developing his argument, but he must relate it to the amendment. I have had to intervene on two occasions about that matter. May we stick to the amendment?

Mr. Huckfield

I know that you will recognise, Mr. Deputy Speaker, that I have been distracted by Conservative Members.

Mr. Frank Dobson (Holborn and St. Pancras, South)

Driven to distraction.

Mr. Huckfield

That is the phrase that I was about to use.

I was trying to concentrate on section 31 of the Aircraft and Shipbuilding Industries Act 1977, with which the amendment deals. It is with that section that the letter from Sir John Rix is concerned. The letter was sent to all shareholders.

I see that the hon. Member for Macclesfield has crossed the Floor. Perhaps he has been persuaded by my arguments. [Interruption.] Mr. Deputy Speaker, you will appreciate that I have to put up with a great deal of distraction from the Conservative Benches—and some of the distraction has now crossed to this side of the House.

The letter says: We do not understand how virtual confiscation can be condoned by a Conservative Government, particularly when it is considering the sale of a part of a confiscated industry on a willing buyer/seller or open market basis. Furthermore "— and this is the chairman of one of the companies, who is acutely concerned about what will happen to these arbitration proceedings under section 31— the Government's present stance is in stark contrast to the statements on the subject of compensation by Conservative spokesmen when in opposition.

Mr. Butler

On a point of order, Mr. Deputy Speaker. The hon. Gentleman is talking about a shipbuilding company, which has nothing to do with aerospace. Secondly, despite what he says, he is not dealing with the matter covered by section 31 of the 1977 Act; he is dealing with a matter totally separate from tonight's amendment or anything to do with the Bill and one that involves the payment by Government for assets nationalised by the previous Administration. The amendment that we are discussing involves compensation that might be payable to British Aerospace or, as the amendment would allow, to the successor company. I submit that these are totally different matters and that the hon. Gentleman is out of order.

Mr. Deputy Speaker

The hon. Member for Nuneaton (Mr. Huckfield) is straying widely from the amendment. He will accept that Vosper Thornycroft has nothing to do with it. I must ask him to confine his remarks to this Lords amendment.

Mr. Cryer

Further to that point of order, Mr. Deputy Speaker. It is a difficult, complicated and highly technical amendment. I was following my hon. Friend's comments with considerable interest. It is true that compensation under the British Aerospace Bill affects aerospace alone, but the 1977 Act is slightly wider. I should be interested to hear my hon. Friend's remarks further.

Mr. Deputy Speaker

I thank the hon. Gentleman. I am following the matter carefully, but it is an abuse of the rules of this House to stray from the amendment that we are discussing. Perhaps we can continue on that basis.

11.30 pm
Mr. Huckfield

Further to that point of order, Mr. Deputy Speaker. I am now in some difficulty. The hon. Member's own letter to me of 2 April refers to section 31 of the Aircraft and Shipbuilding Industries Act. He should know that when the last Labour Government nationalised aircraft and shipbuilding they did so in the same Bill. He should also know that the argument that is currently being advanced by Vosper-Thorneycroft is exactly the same as the argument of GEC and Vickers. In fact, it is all the same kind of argument. The Minister knows that, as aircraft and shipbuilding were nationalised together, all those who need compensation, all those who still fear that they may have to go to arbitration, are putting exactly the same case. Because of that, I am bound to cite one of the companies that have been most vociferous in demanding compensation. Just as the shipbuilding company has been very vociferous in demanding compensation under section 31, to which the hon. Gentleman refers in this letter, so also have GEC and Vickers been equally vociferous. It is the same argument—that is why I have sought to make it tonight.

Mr. Deputy Speaker

Order. It may be the same argument, but this is the British Aerospace Bill. It is perfectly in order for the hon. Member to allude to something that may have happened in another industry, but not to dwell upon it. Will he please confine his remarks to the Bill?

Mr. Cryer

Further to that point of order, Mr. Deputy Speaker. I was on the British Aerospace Bill Committee, and the 1977 Act was widely referred to exactly in the terms that you mentioned—by way of reference, in order to illuminate the proceedings on the present legislation. However, because the 1977 Act is altered by the British Aerospace Bill, it must involve some references that my hon. Friend the Member for Nuneaton (Mr. Huckfield) will have to go into in some detail because of the technical nature of the Act that is mentioned in the amendment.

Mr. Deputy Speaker

The hon. Member has an advantage, in that he was on the Committee. But many matters were discussed during the Committee stage. Tonight we are discussing one specific matter in one specific amendment—Lords amendment No. 1. It is to that that we must address our remarks.

Mr. Huckfield

Obviously I shall be bound by your ruling, Mr. Deputy Speaker, because I always appreciate the wisdom that you bestow on our proceedings, but here we have a company that stands in need of compensation and is accusing the present Conservative Government of the near-confiscation of assets. That is the accusation that is being advanced——

Mr. Adam Butler

On a point of order, Mr. Deputy Speaker.

Mr. Huckfield

This is intolerable; I was in the middle of my speech.

Mr. Butler

On a point of order. May I repeat what I said a few moments ago about this amendment and section 31 of the 1977 Act? It is not correct to say that the matter that the hon. Member for Nuneaton (Mr. Huckfield) is trying to raise falls within the scope of that section. It does not. Compensation for the companies that were nationalised by his Government was dealt with under other sections. Section 31 deals with compensation that might be payable to British Aerospace or to the corporation. It is a totally unrelated matter.

Mr. Deputy Speaker

Order. The House would best be served at this time of night by leaving points of order and getting on with the debate on the amendment. Will the hon. Member please confine his remarks to the amendment?

Mr. Huckfield

I am being placed in exactly the same utterly intolerable position as that in which the Opposition were placed all the way through the Committee stage. Time and time again the Government sought to railroad the Bill through the Committee because they want to flog the company off to their supporters. We are witnessing the same again tonight.

We cannot find out the truth about the new company. Even the memorandum and articles of association were placed in the Library only at the beginning of this month. We have engaged in some consultations. We have found that the memorandum and articles of association are not technically complete, but are deficient, so we cannot find out what the new company is all about.

We are not satisfied with the memorandum and articles of association that have been placed in the Library. We cannot find out when compensation will be paid. We cannot find out when the arbitration proceedings will be concluded. We have a major private company that is accusing the Government of virtual confiscation, yet the hon. Gentleman keeps saying that we cannot even ask questions about it.

If we cannot find out about the sucsecssor company—the successor company is relevant, because it is mentioned in the amendment—if we cannot find out about the arbitration proceedings, if we cannot find out when the compensation issues will be settled and if we cannot ask questions about those matters, what is relevant? What is germane to the arguments on the amendment? That is precisely what people want to know. They want to know when they will get their money. They want to know when the compensation proceedings will be completed. They want to know when the arbitration tribunal will be wound up.

Companies are actually talking about going to the European Court of Human Rights because they cannot get any sense out of the Government. The hon. Gentleman comes to the House and, with a mere sleight of hand, says " It is all right. It is just a bit of technical redrafting ".

The way in which the hon. Gentleman has treated the Bill and the way in which the whole denationalisation matter has been treated is an insult to the House and to the workers in the industry. The hon. Gentleman has not enlightened any of us tonight by the way in which he has tried to dismiss the amendment and to cover up what is actually taking place at present in the matters of compensation.

We are far from satisfied about the way in which amendments such as this are being treated. We cannot find out what kind of successor company we are talking about, because we believe that the memorandum and articles of association are deficient. We cannot find out about the compensation. It is questions such as these that must be answered before we can agree to take further any amendments like this.

The hon. Gentleman goes on to talk about the successor company and its possible flotation. People in the City are beginning to wonder whether the company ever will be floated. It is not our fault that the minimum lending rate stands at 17 per cent. [Interruption.] The hon. Member from wherever it is takes a very scant interest in our proceedings, anyway. Perhaps he wants to buy the shares as well. I should have thought that hon. Members on the Government Benches wanted to see the passage of this denationalisation legislation and the flogging off of British Aerospace. If so, they should be very concerned about the fact that their Government are dragging their feet on denationalisation. I quote from the financial page of the Sunday Telegraph of 6 April. It is headed—rather appropriately—" Sale of the Century ". It says: Now aerospace offer grounded. This is very germane to the successor company, because it is the successor company which is being talked about in this amendment. The article goes on: The Government's plans to sell off British Aerospace to the public have crashed into a solid wall of record breaking interest rates. I understand that the Bank of England and the Department of Industry are now resigned to a postponement of British Aerospace flotation until Autumn at the earliest. Some questions must be answered before we can take the amendment further. When will this new company be floated? It is not only that the previous private owners want to know when they are likely to receive their compensation; it is that the country as a whole is entitled to know when the Government intend to carry out their election pledges. As far as we can see, there will be delay after delay. It is possible to imagine a situation in which we may never have a successor company. Before we can take anything further forward tonight, we want to know about the flotation.

While I am talking about the successor company—the hon. Gentleman will recognise that the successor company is entirely relevant, because it is mentioned in the amendment—I ask whether the hon. Gentleman has looked at the memorandum and articles of association of the new successor company? Whilst we are talking about some of the benefits of the arbitration proceedings possibly passing to the successor company, I hope that my hon. Friends—I know that they will be very concerned about this—will take note of the fact that the Secretary of State has allowed himself to be almost completely deprived of any powers that he might have wished to have to control this new company. That is the kind of successor company that is mentioned in these amendments tonight.

We want to hear from the Secretary of State exactly what powers to appoint directors he intends to exercise. Article 72, on page 30, says that the Secretary of State may reserve to himself the right to appoint two directors. The trouble is that if he is reserving to himself the right to appoint only two directors out of a board of six he is, in fact, reserving the right for himself to have a permanent minority influence.

Furthermore, the directors whom he appoints will not be entitled to be the chairman or deputy chairman of the company, will have no casting vote, no vote on any contracts between the company and the Crown, and no power of veto. If that is the kind of condition to be imposed on the Secretary of State's own appointments to the board of the company, I have to ask what is the use of the Secretary of State's even bothering to appoint directors. It seems that he has reserved to himself powers that will be so minimal as to be virtually meaningless.

What does the hon. Gentleman think that the Secretary of State's appointed directors will be able to do? As far as we can see, all that they can do is to ask for a meeting and speak at it. That is all. If that is the way in which the Government intend to preserve the vital strategic interests of the nation, they ought to have said so in the defence White Paper. Vital defence equipment manufacture will be at stake, and the Secretary of State has allowed himself to be manoeuvred into a position in which he may possibly reserve the right to appoint two directors, who cannot really do anything once they are on the board.

It is issues such as this that we really must have settled to our satisfaction before we take the matter further. I must ask the forgiveness of the House for raising these matters at this late stage, but, as the hon. Gentleman did not put the articles in the Library until 2 April, and as this is the first chance that we have had to refer to them, this is the only way in which we can find out what we want to know.

Article 100, on page 39, provides that the minimum borrowing powers of the new company—presumably that will have to be private borrowing, because as far as we can see none of the nationalised industries in future will be allowed to do any Government borrowing—will be at least £450 million. I should have thought that that would vitally threaten the survival of the successor company and could, at certain times, render it vulnerable to fluctuations on the private market.

What I have said demonstrates the need for much more information before we can take further either of these amendments tonight. It is particularly unfortunate that the hon. Gentleman always comes before this House and tries to dismiss anything that he introduces as merely a technical and drafting amendment, when what he has tried to do is to skate over the fact that, although the new memorandum and articles of association have been placed in the Library, when we study them they give rise only to even more worries.

11.45 pm

For example, I cannot see for the life of me how article 40, on page 19, is supposed to prevent British Aerospace passing into foreign ownership. Yet that is suposed to be the most technically perfect example or variant that the Government have produced to prevent British Aerospace passing into foreign ownership. Having taken legal advice on this matter, I am advised that it is absolutely impossible for British Aerospace to police in whose names the shares will be held.

If the hon. Gentleman really means that these articles are intended to prevent the new company passing into foreign ownership, I must tell him that on the basis of my legal advice they do nothing of the sort. Therefore, we could well end up in a situation in which any benefits from the arbitration proceedings in compensation terms, which might ultimately be paid to the successor company, will not end up in this country. They might end up in foreign hands. As far as we can see, there is nothing in article 40 to prevent that happening.

Far from being a technical, drafting amendment—this is why my hon. Friends are showing such great concern about it—[Interruption.] At least my hon. Friends are taking an interest, which is more than Conservative Members are doing. Far from being a simple drafting or technical amendment, which is necessary because the Government forgot something when the Bill went to the other place, we are discussing matters of great moment. We are talking about when the compensation might finally be paid. We are talking about the fact that we may have to go to the Court of Appeal, or even to the European Court of Human Rights. We are talking about whether all this might take as long as eight years. As I have said, we hope that by then the companies will have been renationalised. All that is involved in this argument.

We must also raise—because it is only appropriate to do so—the question of the memorandum and articles of the new company. Now that those have been placed in the Library—of course, it was not our fault that they were put in the Library so late—I hope that we will be forgiven if we ask what kind of company the new successor company will be.

Unless we get some satisfaction on these points, I am afraid that we shall have to detain the House even longer. I know how strongly my hon. Friends feel. We want some answers. We were not given many answers in 19 Committee sittings, or on Report. I hope that the hon. Gentleman or his hon. Friend will try to give us some answers now.

Mr. Nicholas Winterton

I shall be very brief. Although the hon. Member for Nuneaton (Mr. Huckfield) may not think that we are interested in this matter, I can assure him that we are, as I tried to imply earlier. Although the hon. Member for Keighley (Mr. Cryer) brought in the fact that I happen to have some outside interests, which do not detract from my parliamentary duties or take me away from the House, they perhaps assist me in understanding commercial matters. In fact, this is a commercial matter, and I have been involved in the formation of a new company. Therefore, I share some of the concern which has rightly been expressed by the hon. Member for Nuneaton about the memorandum and articles of association of the company.

I want to direct my remarks particularly to that, because I am concerned about how the compensation to the successor company might well be affected if there were a heavy foreign interest in that successor company. From the answers that my hon. Friend has given me in response to letters that I have sent him and to private words that I have had with him expressing my concern about certain aspects of this Bill, I am not sure how the new successor company could deal with that situation.

If there are substantial sales of shares to foreign investors or their nominees—the hon. Member for Nuneaton rightly mentioned this matter—perhaps, ultimately, with the risk of the appointment to the board of foreign directors, how in the long term, if the compensation to which the hon. Gentleman has referred could take up to eight years to be finalised and passed through to the successor company, will that going distributed, and what effect will it have upon a company that might at that time have a substantial foreign investment?

I say to my hon. Friend on the Front Bench that I want to see the company denationalised, but at the same time I want to see that a guarantee is written into this legislation, or the articles or the memorandum, whereby not only this House but the people who work for British Aerospace can be assured that the company will remain predominantly British for all time.

There is one other matter that I want to raise. It relates to the anxiety that many members of the company feel that British Aerospace could be divided up and that the more profitable elements of British Aerospace might well be sold off separately in due course. How, then, would this compensation, which is very much part of this Lords amendment, be effective if there were separate companies to which compensation would ultimately have to be allocated and distributed?

While I do not agree with some of the remarks of the hon. Member for Nuneaton about the lack of trust that the Government have shown and the way in which they have bulldozed the Bill through—I would not have thought that 19 sittings, on a fairly straightforward Bill, indicated that the Government have sought to bulldoze the Bill—certainly there are some unanswered questions.

That is one of the reasons why I am here. I remain somewhat dissatisfied with the assurances and guarantees that the Government have been able to give, because, as I have indicated, I want this company to remain British. I believe that it is vital that a company in this strategic area of our economy—and it is an important defence industry—should remain predominantly British. There should be a minimum only of overseas investment and interest in this company, because this is a very important matter for Britain and for our defence.

I also believe that it is important that those who work for the company should not be messed about by nationalisation and denationalisation. I am strongly opposed to the way in which the Opposition have said that they will nationalise the company again when they come back to power—if they ever come back to power—and that they will do so without compensation. I hardly think that that will give confidence to the very skilled and basically responsible work force employed by British Aerospace.

I am concerned that this company should remain one unit. There is no point in selling off the profitable elements. I do not wish to get out of order and therefore suffer criticism from you, Mr. Deputy Speaker, but I must ask my hon. Friend how this amendment and the articles of the new company could operate if it broke up and compensation had to be allocated in some way to two or three companies that on vesting day were part of British Aerospace Ltd., the new aircraft corporation that we are forming.

I hope that my hon. Friend can be a little more forthcoming. Certainly, ploughing through the memorandum and articles of association of the company that are in the Library and that were placed there, as the hon. Member for Nuneaton said, only on 2 April, is hardly the best way of proceeding with a very important matter. I understand the urgency and the difficulty, but perhaps even at this late stage my hon. Friend can be reasonably forthcoming with the assurances that I seek. I know that hon. Members on the Opposition Benches seek these and other assurances and, perhaps more important, so do those many thousands of people who work in this important industry.

Mr. Tom McNally (Stockport, South)

I follow the remarks of the hon. Member for Macclesfield (Mr. Winterton) with some enthusiasm. However, the hon. Gentleman spoke of not " messing about " with this important industry, and I have to ask who has messed about with a success story in terms of public ownership, high technology, worker participation and management involvement in a new industry.

The hon. Gentleman raised an important matter, and those who are messing about with British Aerospace sit on the Treasury Bench. Like the hon. Member for Macclesfield, I want a satisfactory future for British Aerospace Ltd., but it is significant that, after all the inquiries made in Committee, a Conservative Member should express doubts about foreign involvement in this key industry. The hon. Gentleman still doubts whether the Government can give the necessary guarantees.

On this Third Reading——

Mr. Deputy Speaker

Order. This is not a Third Reading debate. That is what I am concerned about.

Mr. McNally

I appreciate that, Mr. Deputy Speaker. Even at this late stage, when we are discussing Lords amendments, a Conservative Member is still worried and seeks reassurances from the Minister about the dividing up of British Aerospace Ltd. How glad we are that the hon. Gentleman has taken up the arguments that the Opposition put week after week in Committee.

Some of my constituents who work in British Aerospace told me today that they would like to hear the debates on the Lords amendments. They said that they had heard that another place had taken on a new, robust attitude and was defending people's interests and putting a check on the Government.

My constituents had read the sort of articles that appear in The Daily Telegraph explaining that when Labour Governments are in power their Lordships check abuse by the Executive and when Conservatives are in power they look after the interests of the workers. I had to show them the amendments—the rather mediocre effort of another place to defend the interests of those who have worked hard to make common sense of a high technology industry. British Aerospace reports for 1979 show a success story during a depressing period for British industry.

The Minister of State has tried to finesse us on the problems of British Aerospace by talking about this amendment being a technical problem, a problem of compensation for " onerous transactions ", " orders in favour of the corporation ", " successor companies " and so on. But the hon. Member for Macclesfield still has doubts, and the hon. Member for Preston, North (Mr. Atkins) has fled the field. Only the Government spear carriers are left.

Many of us work with and for those in British Aerospace. Throughout our debates, the Minister of State has never carried the workers or the management. The only people whom he has carried are the ideological spear carriers on his Back Benches. He has not even carried the hon. Member for Macclesfield.

The Minister has much to answer for in going through with this terrible, meddl- ing, ideological Tory manifesto commitment. He should be ashamed of himself.

Mr. Cryer

I am grateful for the opportunity to make one or two comments. Clearly the technical nature of the amendment indicates the rushed nature of the legislation put to the Commons and the lack of information which horrified even the hon. Member for Macclesfield (Mr. Winterton). Even when the Minister has written to the hon. Member, and no doubt begged him to read what was there, the hon. Member is still not satisfied. That is an indication of the rushed nature of the legislation.

12 midnight

The amendment remedies an oversight which, because of the absurd process which the Government adopted to pursue the denationalisation measure, they overlooked. The Minister argues that the amendment is necessary, although it was not recognised before, because some arbitration might result in money being awarded to British Aerospace—a public body. The Minister wants any such money to be awarded to the successor company. The successor company is not clearly defined because of one of the more obscure parts of the Bill. Whether the successor company relates to the transitional company or the final company is not clear from the amendment. It rests on the words " successor company ".

If the award is made to the corporation, that might delay clause 10(9) of the Bill under which the Secretary of State may, by order, after consulting British Aerospace and the successor company, dissolve British Aerospace on a day specified in the order, as soon as he is satisfied that nothing further remains to be done by British Aerospace under subsection (3) or (6) above. I am not too concerned that the successor should be denied the money if it helps to keep British Aerospace alive and prevents its winding-up by instrument.

I assume that " the successor company " means the final company and not the shell company. The minister mentioned the shell corporation and said that the money should not go to it. I assume that if money did go to the shell corporation—that is, British Aerospace which is at present vigorous, healthy and profitable—when the profits are transferred, the money awarded under the arbitration procedure would go to the Consolidated Fund. I am all in favour of that If arbitration awards are made, they should go into the public purse rather than to the successor company.

During debates on the Bill, the successor company was held to stand on its own feet with sturdy private enterprise entrepreneurs making independent decisions. That is utter nonsense. It is a fabrication. The Bill contains a number of provisions which set up a company in a partial way.

I like to take the Minister at his word. If the successor company takes on the task against my wishes and against the wishes of the majority of workers, it must accept that arbitration claims are proceeding, that they are for the previous corporation and that it pushes out the boat on the private enterprise venture as it stands now. It should not pick up awards in future years which arise as a result of British Aerospace activities.

I am not keen on letting this clause through at all. It seems to me—given the economic circumstances that the Government are creating, including the climbing rate of unemployment—that they cannot recover, and will not be able to recover, by 1984–85 in any convincing way. Therefore, there will be a Labour Government. That Labour Government will be committed to renationalising and activating the British Aerospace corporation, and if that corporation is still in existence it will be so much easier for that task to be carried out. Therefore, it seems to me that this technical amendment, indicating as it does the rushed, sloppy and careless nature of the legislation, is being pushed through by a Government motivated by a doctrinaire drive which would not disgrace any Right-Wing Government in Western Europe.

The Government have been sloppy in their approach, and the Lords have brought forward this techncal amendment to make sure that the successor is guaranteed a position free of any sort of encumbrance. I take the view that they should take the position as it stands and push the private enterprise boat out without any encumbrance and without any possibility of income from any award. That might well help keep British Aerospace in existence—I shall be interested to hear the comments of the Minister if that is so—so that it can be resurrected and once again be a source of pride to the nation.

Conservative Members know that the corporation is currently a highly profitable public enterprise. That is why it is being attacked. The Tories cannot stand public success because such success means that their own dogma is thereby diminished.

Mr. Dobson

I start immediately by disclaiming any interest which I have pursued in this Bill as it has passed through its previous stages.

When I noted the Lords amendments, I began to pay particular attention to them. I thought that I understood what they meant until I heard the Minister's explanation of what they meant. I then became puzzled once more, and I have had to refer back to the Aircraft and Shipbuilding Industries Act 1977. I promise that I will refer to that Act only by way of illustration, or history, in my speeeh.

I have observed, both as a result of my involvement in the various stages of the Transport Bill and also at a greater distance in the other denationalisation measures brought before the House by the Government, that one of their major objectives has been to relieve the State corporations, as they pass into private ownership, of any onerous burdens. The objective has been to pile on to those corporations as many assets as possible to make them more attractive to prospective purchasers. This amendment—not the product of any ingenuity on the part of the Lords, since it was a Government amendment introduced in the House of Lords—is intended to do just that.

I propose to take the House back, as I think anyone must who is trying to explain this amendment, to the Aircraft and Shipbuilding Industries Act 1977. Section 31 refers to " onerous transactions ". The onerous transactions referred to are transactions which some of the private companies might have entered into prior to nationalisation in order to stymie nationalisation, or to worsen the position of such enterprises as the British Aerospace corporation once they were nationalised. One of the provisions was that a tribunal should be established which would consider whether any loss was incurred, in this case, by British Aerospace as a result of the transactions entered into. The purpose of this provision in the 1977 Act was to protect the public corporation against any unscrupulous or ridiculous activity on the part of the private companies which were to be nationalised. It therefore seems reasonable that the British Aerospace corporation should be compensated for that kind of action.

There seems to be no logic in carrying those rights forward to the private owners who now want to buy the British Aerospace corporation because it is a worthwhile asset. For that reason, unless the Minister can convince me that my understanding of the 1977 Act and the Bill and the Lords amendment is entirely erronous, I feel that I cannot support the amendment. It is yet another case of laundering and gilding and making more attractive a State corporation before it is sold to the private sector.

Mr. Adam Butter

The interesting thing about this debate is that their Lordships, who adopted a critical attitude towards the Bill and fulfilled their duty, as would be expected, accepted the amendment unopposed because they saw it for what it was and were able to comprehend what was behind it. On the other hand, this evening we have had the sort of speech from the Opposition Front Bench which those who served on the Committee got used to and bored with because of its repetition.

Tonight, because I judge them to have been largely irrelevant, I do not propose to answer all the points made by the hon. Member for Nuneaton (Mr. Huckfield). It would be wrong for me to answer the point that he made regarding compensation because, as I made clear on a point of order, the compensation referred to in the amendment falls under section 31 of the 1977 Act and has nothing to do with the compensation to be paid to the previous owners of the companies which are nationalised. Further, there is nothing in the amendment which has any relevance to the articles of association.

References were made to the company directors. As always, the hon. Gentleman misquoted. Therefore, I shall correct him on this point. He will be aware that the directors are precluded from voting only on contracts between the company and the Government as customer, but in all other respects will act as full directors of the company.

There is some small relevance in the point about the flotation. In the case to which I referred, which is undergoing arbitration, the question was whether the corporation would be fully active when that case was settled or whether the successor company would have been set up. There was a possibility that the limited company would have been set up before the arbitration proceedings closed—and, when we looked at this matter some months ago, we thought it likely that they would have concluded quickly—but, when it became apparent that that was not so certain, we decided that it would be wise to introduce this amendment in another place on Report, which we did.

On the other hand, my hon. Friend the Member for Macclesfield (Mr. Winterton) related the amendment to two specific points. He questioned whether, if under section 31 compensation were to be paid as an outcome of the present case, it was likely to be paid to a company which was foreign owned or was split up into separate bits. In both those possibilities he saw some complication and sought my guidance.

The articles of association of the new company will ensure, provided they are not altered, that the maximum foreign shareholding of British Aerospace Ltd. will be kept to 15 per cent.

Mr. Les Huckfield

Absolute rubbish.

12.15 am
Mr. Butler

There are safeguards written in, and duties imposed on the directors to ensure that shares are not foreign held, and certificates to that effect will be sought. They will have powers to challenge and disfranchise where there is doubt—

Mr. Huckfield

Will the Minister give way on that point?

Mr. Butler

I shall give way in a moment.

They will be able to challenge nominee holdings and subsidiary company holdings which may be foreign subsidiaries. They are empowered to take action in what we believe is a totally foolproof way to keep the foreign shareholding to a maximum of 15 per cent.

Mr. Huckfield

It is outrageous for the Minister to persist in perpetrating that myth before the House. Even in Committee, on the minimal amount of legal advice that I was able to obtain on a non-commissioned part-time basis, we put to the Minister amendments which he was forced to incorporate in the Bill because he agreed that they were technically more proficient.

Having given the articles and memoranda of association a cursory glance and a cursory legal examination, I am advised that the draft article to which he refers will have nothing like the effect that he claims it will have. He knows that as well as I do. There is no way on earth that British Aerospace Ltd. directors can police who really owns or who is the governing force behind the ownership of shares. He cannot prove that.

Mr. Butler

The hon. Member for Nuneaton has admitted that he has given the matter only a cursory look. That is typical of his attitude throughout. The superficiality with which he has dealt with the Bill has shown his real purpose in opposing it, which has been deliberately to stir up anxieties about the future.

It is true that we received some suggestions from the hon. Gentleman, and we altered the articles on foreign shareholding to a small extent following his advice, which we welcomed. If he shares the view of the Government and those in the industry that the company should not fall under foreign control, and if he really believes that the articles are not foolproof in this respect, I ask him to let me have, as a matter of urgency, the legal advice of which he claims to be aware so that we can examine it. We have taken not a cursory look at the matter but full legal advice, financial advice, and so on.

It is important that the articles of association should not be changed in this respect, and the Government have stated clearly—the hon. Member for Nuneaton may remember it—that we shall not let the shareholding of the Government fall below 25 per cent., which is the minimum necessary to block any change in the articles of association, and we shall vote our shares to protect the articles. That is a firm Government assurance.

My hon. Friend the Member for Macclesfield was concerned about a split. I am sure that if he were to look back through the reports of the Committee proceedings, and if he had been able to join us on Report, he would remember or he would have read clear statements by Ministers to the effect that it is not the Government's intention to split up the company. For that reason, we chose a single successor company and wrote that into the Bill so that it would not be possible to split up the company.

If I have to give an assurance again from this Dispatch Box, I am glad to do so. It is not the Government's intention to split up the company. It is not the management's intention to split up the company. I know that it is not the union's wish that the company should be split up. It seems to me, therefore, that it is certain that it will not be. I hope that my hon. Friend will accept that assurance from me.

Mr. Huckfield

If the hon. Gentleman is so concerned to give the House that kind of assurance, why have the Government insisted, in the articles which have been placed in the Library of the House, on specific provision for hiving off parts of the new company? They have put in the articles provision whereby the new successor company can hive off. Why do they do that if they do not intend to break it up?

Mr. Butler

The hon. Gentleman simply demonstrates his ignorance of company matters which he has displayed so many times before. Is he really suggesting that no limited company should be in a position to form subsidiary companies, if necessary to dispose of assets and if necessary to acquire assets? That is exactly the sort of rigidity that he and his hon. Friends, if they were in government, would wish to impose on industry. Indeed, it is one of the reasons why so much of the nationalised sector of British industry is in the state that it is.

My hon. Friend the Member for Macclesfield raised two points which were in line with the amendment. The hon. Member for Stockport, South (Mr. McNally) made a " Fourth Reading " speech, so there was nothing there to answer. The hon. Member for Keighley (Mr. Cryer) tried to draw me——

Mr. McNally

There is one matter that the Minister might explain, even at this stage, although the hon. Member for Macclesfield (Mr. Winterton) has collapsed like a deck of cards. Why does the Minister think, even at this stage, despite all the issues on which he has given assurances, that he has not carried with him the trade union movement—the workers in British Aerospace? That is an important question, and he should give some explanation to the House. With all the consultations they have had, the workers still have doubts, and some of the Minister's explanations tonight will increase those doubts.

Mr. Butler

The reason for there still being some doubts is the campaign, led by the hon. Member for Nuneaton, deliberately to stir up anxieties among people who wish to go on working and earning their living in British Aerospace. I have spent a great deal of time in going round British Aerospace sites to try to undo the damage that the hon. Member has been doing. The unions are very much behind the Government's plans on the two points that my hon. Friend the Member for Macclesfield raised. They welcome the Government's policy of not splitting up the industry and share the Government's wish that the company in the future should not fall under foreign control. I assure the hon. Gentleman that the unions are totally behind the Government on those two very important points of policy.

The hon. Member for Keighley tried to lead me off into giving definitions and descriptions of the successor company. His memory cannot be as short as that—we have heard him on too many occasions. He also tried to suggest that in his view the compensation which might arise out of the present case should not fall to

British Aerospace Ltd. if the company had been formed by that time. His intention, I suggest, is to try to do in a different way what his hon. Friend the Member for Nuneaton does, which is to damage the prospects of British Aerospace Ltd. Our intention is not to pile special benefits on it but that it should succeed the corporation and carry on the business of the corporation in every possible way and in like manner.

It seemed to us to be absolutely right, therefore, that if the corporation, under section 31 of the 1977 Act, was likely to receive compensation as the outcome of some tribunal proceedings, then, if the new company had been formed, that compensation should go to it rather than to the corporation because all the assets, liabilities, property and rights of the corporation are transferred under clause 1 of the Bill to the successor company. The amendment amends clause 1. As I have said, it makes it possible to make compensation payments under section 31(3) to the successor company. It is a wise and sensible amendment. It was accepted without opposition in another place. I commend it to the House.

Mr. Huckfieldrose——

Mr. Deputy Speaker

Order. An hon. Member may speak only once on a Lords amendment.

Question put, That this House doth agree with the Lords in the said amendment:—

The House divided: Ayes 79, Noes 18.

Division No. 277] AYES [12.25 a.m.
Ancram, Michael Gow, Ian Needham, Richard
Baker, Nicholas (North Dorset) Griffiths, Peter (Portsmouth N) Neubert, Michael
Banks, Robert Gummer, John Selwyn Newton, Tony
Berry, Hon Anthony Heddle, John Normanton, Tom
Best, Keith Henderson, Barry Parris, Matthew
Bonsor, Sir Nicholas Hunt, David (Wirral) Proctor, K. Harvey
Boscawen, Hon Robert Hunt, John (Ravensbourne) Ross, Stephen (Isle of Wight)
Braine, Sir Bernard Jenkin, Rt Hon Patrick St. John-Stevas, Rt Hon Norman
Bright, Graham Jopling, Rt Hon Michael Shepherd, Colin (Hereford)
Brinton, Tim Le Marchant, Spencer Sims, Roger
Brown, Michael (Brigg & Sc'thorpe) Lester, Jim (Beeston) Smith, Cyril (Rochdale)
Butler, Hon Adam Lyell, Nicholas Spicer, Jim (West Dorset)
Cadbury, Jocelyn MacGregor, John Squire, Robin
Carlisle, Kenneth (Lincoln) Major, John Stanbrook, Ivor
Chalker, Mrs. Lynda Marlow, Tony Steel, Rt Hon David
Chapman, Sydney Marshall, Michael (Arundel) Stevens, Martin
Clark, Hon Alan (Plymouth, Sutton) Mather, Carol Stradling Thomas, J.
Colvin, Michael Mawhinney, Dr Brian Taylor, Teddy (Southend East)
Cope, John Mellor, David Thompson, Donald
Dorrell, Stephen Meyer, Sir Anthony Viggers, Peter
Douglas-Hamilton, Lord James Mills, lain (Meriden) Waddington, David
Dover, Denshore Moate, Roger Waldegrave, Hon William
Dunn, Robert (Dartford) Morrison, Hon Peter (City of Chester) Waller, Gary
Faith, Mrs Sheila Murphy, Christopher Wells, Bowen (Hert'rd & Stev'nage)
Fenner, Mrs Peggy Myles, David Wickenden, Keith
Wilkinson John Wolfson, Mark TELLERS FOR THE AYES:
Winterton, Nicholas Young, Sir George (Acton) Mr. John Wakeham and
Mr. Peter Brooke.
NOES
Bennett, Andrew (Stockport N) McNally, Thomas Sheerman, Barry
Canavan, Dennis Mitchell, R. C. (Soton, ltchen) Stallard, A. W.
Eastham, Ken Morton, George Woolmer, Kenneth
Ellis, Raymond (NE Derbyshire) Orme, Rt Hon Stanley
Ennals, Rt Hon David Race, Reg TELLERS FOR THE NOES:
Evans, John (Newton) Richardson, Jo Mr. Frank Dobson and
Hamilton, W. W. (Central File) Rooker, J. W. Mr. Bob Cryer.
Huckfield, Les

Question accordingly agreed to.

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