§ Mr. Ron Leighton (Newham, North-East)
From the end of the Second World War until May 1979, we had in Britain a broad consensus on the need for a mixed economy, but in May 1979 we saw the advent of a Government who are displaying the grossest hostility, prejudice and malice to the public sector.
The nationalised industries fall into two main groups. There are industries where private ownership and capitalism failed, such as the railways and the coal mines which were losing money but which it was felt necessary to keep in the national interest. After the Second World War they were brought into public ownership. That applied more recently to firms such as Rolls-Royce and ICL. The building of the "Atlantic Conveyor" would not have been possible in Britain, because there would have been no shipbuilding industry had it not been taken into public ownership.
The second type of industry is natural monopolies. In the days of trams, it would have been absurd for several tram companies to lay tram lines down the same road or to have half a dozen gas or electricity companies digging up the pavements to lay their lines. It was thought that the monopoly positions should not be abused but that they should be opened up to democratic control.
But this Government, rather like a group of vandals, are setting out systematically to strip the assets of the public sector to obtain quick, one-off gains. They are skimming the cream off the public sector to enable them to have some room in the Budget for tax cuts for the rich. They have already sold assets worth £1,800 million in British Aerospace, the National Freight Company, Cable and Wireless, ICL, Ferranti, Fairey Aviation and several other companies. The Government's philosophy is that those companies which are losing money but which are essential will be kept in the public sector, but that profitable industries will be sold to their friends in the City.
We know that most businesses have profitable and non-profitable parts and that the profitable parts help to balance the books. In the newspaper industry, for example, The Guardian loses money but the Manchester Evening News makes money, so one can help the other. British Rail does not make a profit, but there is no railway system in the world that does. The subsidy to the Deutsche Bundesbahn is much larger than that to British Rail. But even British Rail has profitable parts, which are being sold, such as the hotels, the Hoverspeed service and now the Sealink ferries.
No one in the House would say that public services are not efficient or that they cannot be well run. Recently in the House we paid tribute to the professionalism, efficiency, good organisation and morale of publicly owned and financed services. I refer to the Royal Marines, the Royal Navy, the Guards battalions and the paratroop battalions in the Falklands campaign. That operation was left, not to private enterprise, but to public services not run by the profit motive. I hope that no one will say that it is not possible for public services to be efficient.
What we are seeing, and the issue to which I wish to draw particular attention, is the worst vandalism of all, the selling off of 51 per cent. of the British National Oil 1373 Corporation. I regard this as a scandalous rip-off of the British taxpayer. North Sea oil is the best bit of economic good news that this country has had, perhaps the only bit, since the war. At one time we debated what we would do with the benefits from North Sea oil, how we would use it and where the money would be invested. We do not have those debates now because the money is being wasted on financing the dole queues. Oil is a great national asset.
The land is also a great national asset. I believe that at one time the Liberals had a song which said that God gave the land to the people. Perhaps he did, but some rather nefarious people have got their hands on it in the interim. However, British Oil was under national control. If 51 per cent. of Britoil is sold, this will undermine public control of this important resource, and it will be handed over to private speculators. Assets of immense, long-term economic and financial value which otherwise would have accrued to the nation will go, and there will be yet another opportunity for speculators to make gains.
I hope that nobody will sneer and laugh at that suggestion. We should remember what happened with Amersham International, which was the last episode of this kind of thing. Rothschild handled the operation of selling the shares. They were sold again the following day at about 32 per cent. more than the original price. That was a grotesque swindle of the taxpayer by speculators. One has to use the word "speculators", because why would these people buy these shares unless they thought that they would make a quick profit? Here we are talking about Britoil, which is not a small operation like Amersham International. We are talking about billions of pounds and it would be a major scandal and a disgrace if the same thing happened.
Why are the Government so intent on selling off this great national asset? No one would say that BNOC is inefficient. Neither the Government nor the Minister would claim that. The Secretary of State for Energy, when introducing the Government's plans, made no such criticism. He said:BNOC is one of the newest of the public corporations, and its spirit of enterprise has not yet been stifled by the bureaucratic embrace".—[Official Report, 19 January 1982; Vol. 16, c. 177.]In other words, he meant no criticism of its efficiency.
Already, BNOC is the third largest producer in the North Sea, after Shell and BP. Its adventurous and enterprising programme will mean that its shares are bound to rise. It is very profitable. In 1981, its pre-tax profits were £439 million, and they are bound to rise. It is the sale of BNOC's own production, not its sale of other operators' oil, that makes the profit. That is the part that is to be sold off, and that is the scandalous and disgraceful part of this operation.
The Government will sell off this asset at less than its real value. We now have a world-wide glut of oil and prices are coming down. In March, BNOC cut its price by $4 a barrel. This asset should be kept in national ownership. If the price drops too far, the oil should be kept below the sea for future generations. If we have the sale now, there will be rich pickings for speculators. I hope that Conservative Members will not sneer about that, because it has often happened in the past. In the case of British Aerospace, the shares were sold for 150p a share, and as soon as they reached the Stock Exchange they traded at 171p a share. The speculative gain there was 14 per cent. The Government sold 50 per cent. of Cable and Wireless. The shares were sold at 168p, and when they reached the 1374 Stock Exchange they traded at 203p. The speculative gain there was 21 per cent. In the recent scandal of Amersham, the gain was 32 per cent. In that case, there was a loss to the public purse of £23 million. Now the same thing will happen again, but on a gigantic scale.
I know of no other country which takes this attitude to its oil resources. Norway takes exactly the opposite view. Norwegian Statoil has a minimum stake of 51 per cent in all concessions, rising to 85 per cent. Petrocan in Canada, Petrobras in Brazil, Hispanoil in Spain, Deminex in West Germany, all take a similar view. Only Tory Britain wants to sell off a national resource of this nature.
The efficiencey of BNOC is not in question. It is a major source of income for the future. However, that is to be completely disregarded by this dogmatic and doctrinaire Government, with their mania for handing over profitable public assets for private speculation and exploitation. There will be huge benefits from the North Sea, but they will go to a privileged few, and not to the nation.
British Gas has to sell its oil interests in the North Sea and Wytch Farm in Dorset. It also has to lose its right of first purchase on gas discovered in the North Sea, and that is likely to put up the price of gas. The Government even wanted it to sell off all the gas showrooms. I hope that trade union pressure, mainly from the General and Municipal Workers Union—one of whose members, the Opposition Chief Whip, I see listening to this debate—has brought sanity into the argument, and that we shall hear no more of that madcap scheme.
We know, too, that British Airways, British Transport Docks, parts of British Steel, and British Leyland, if they are made profitable by State enterprise and State money, will all be sold off. We know that British Telecom, the profitable side of what we once called the Post Office, is also too tempting and juicy a target to miss. It is considered to be an ideal candidate for that ugly word and ugly concept "privatisation". One effect of that will be a switch from British to foreign suppliers, meaning more imports and a greater loss of jobs in this country.
The British Labour movement believes in a substantial public sector because the majority of our people would have no chance of decent housing, education, pensions or health care if they were left to private profit. Only the privileged few would have a decent service. Therefore, they must be provided by the public sector and by the community mobilising its intelligence, which is a little more than the hon. Member for Cambridge (Mr. Rhodes James) is doing tonight. I am surprised that he is letting himself down.
§ Mr. Robert Rhodes James (Cambridge)
The Conservative Party, as the hon. Gentleman knows, is the party of State education.
§ Mr. Leighton
I am pleased to hear that. However, if such matters were left to private profit instead of the community, there would be no chance of the ordinary person in Britain getting any decent services. That is why we want an efficient and substantial public sector.
The Government are trying to turn back the clock. They plan to hand back to their friends and supporters in the City many industries that have long been in the public sector. Yet the aim of private capital, I hope the hon. Gentleman agrees, is not the public good or the public benefit. The aim of private capital is the greatest possible private profit, to which the public good would be ruthlessly sacrificed.
1375 I must tell the hon. Gentleman and the Government that we are bitterly opposed, to this selling off of our North Sea assets. They will be taken back into public ownership on terms under which the speculators will get their fingers burnt. We intend to return the inheritance of North Sea oil to its rightful owners—the British nation and its people.
§ 3.2 am
§ Mr. Lawrence Cunliffe (Leigh)
After some bitter experiences in Committee on the Oil and Gas (Enterprise) Bill I can say that the Government's proposals are more extensive and infamous than the Amersham International scandal. The Minister will recall that at the Easter debate on the Consolidated Fund (Appropriation) Bill he had the distressing experience of being at the receiving end of Labour Members' comments with regard to that.
§ Mr. Cunliffe
The Minister was obviously subject to some criticism and attack on that matter.
The House will recall that I recently presented a Bill about the disposal of public assets. Its purpose was to ensure that before any shares in a publicly owned industry are disposed of by the Government they shall lay before Parliament all the commercial calculations on which the judgments regarding price, method of disposal and timing of sales are based, and for connected purposes.
No one can deny that the Government were subject to acute embarrassment. They will have the stigma of Amersham International for ever on their record—[Interruption.] I do not know whether the hon. Member for Cambridge (Mr. Rhodes James) is having an attack of malaria. He has been mumbling away since the debate commenced. If he wishes to intervene, or if he needs attention, we shall try to help him.
I return to the point that the object of my Bill was to prevent any recurrence of the infamous Amersham International share bonanza. That is what it proved to be. I shall dot the I's and cross the t's of what has been said about city sharks and speculators. Overnight they made a killing of about £27 million. I remember a Tory Member saying that he had purchased some shares for two of his children, because it would not have been right to purchase them for himself. I asked the hon. Gentleman whether his children still had the shares, but no answer was forthcoming.
The shares turned over rapidly, because they were a good commercial proposition. That hon. Gentleman and his family took part in that kill. In fairness, it should be said that it was the merchant bankers that undervalued the shares. That was fortunate for some, but unfortunate for taxpayers. Last Wednesday, there was a splendid article in The Times, entitledWhy selling off is a sell-out for the poor.In the atomic energy debate, my hon. Friend the Member for Merthyr Tydfil (Mr. Rowlands) predicted, and to some extent proclaimed, that this sort of thing would happen over the radiochemical factories. We were proved to be right. We warned the Government of what would happen, because we knew their crude methods. The Bank of England should have made the evaluation. That would have been more sensible and in the interest of parliamentary accountability. Again, the Oil and Gas 1376 (Enterprise) Bill gives the Minister discretion to dispose of shares. He does not need to come to the House and that is to abuse ministerial responsibility. There should be more accountability to the House on such matters.
The shares were offered at a very modest price. Tory Ministers made it plain that it would help to encourage the spread of small shareholdings. In all, 65,000 successful applications were made. Only four months later, the number of shareholders in the company had fallen to 8,601 and nearly two-thirds of the company is now held in lots of more than £250,000. The small boys and ordinary people cannot now use their redundancy pay—the only thing that they have got out of the Government—to make a small investment for their futures. The dear old lady who wanted to have a gamble instead of buying Granny Bonds has not got any shares. It is right to have a gamble in that way. People are free to choose.
On average, lots of £250,000 are held and that leaves less than 9 per cent. of the shares in Amersham International in holdings smaller than £12,000. It is pretty obvious that the policy of privatisation is another abysmal failure. The classic example is that there is to be more of this sort of thing on an even greater scale. BNOC and British Telecom will each be another sale of the century. There will still be an ideological and philosophical conflict between the Opposition and the Government.
The Minister and I have had a great deal to do with each other over energy and coal-mining. He has taken a realistic view of our energy problems. Energy is not a product that can be wasted. It must be taken seriously. Our North Sea gas reserves at the current rate of usage are not expected to last much beyond the year 2000. If more reserves are discovered, strict depletion controls will be essential. The British Gas Corporation can ensure that by controlling production levels. Three-quarters of our current energy production is owned by multinational companies. I give the Under-Secretary the facts. If he does not understand them, he must ask the Minister to explain them to him later.
The Government must realise that if they do not control multinational companies the multinationals will control them. There has been an exodus of capital abroad and towns have closed down overnight when multinationals have moved to a more profitable market. The Government do not understand that there must be a licensing system to control multinational companies. Now that they are moving into the energy industry there must be a greater degree of vigilance and control to ensure that they stay in the country until the Government have the sense to get a return on or for the grants that have been made to the multinational companies.
The Opposition have always argued, and will continue to argue, that a fully integrated, publicly owned, gas industry is in the interests of consumers and workers. We are opposed to the removal of the corporation's rights to retail gas appliances and the proposed sale of showrooms to private enterprise.
If the Government succeed in carrying out their proposals, the Opposition make it plain that those rights will be restored by the next Labour Government. We have said that about oil and we shall say it about any other assets that are hived off to private enterprise. Private enterprise is motivated by self-preservation and quick and greater profits. It is the great gulf that divides the Opposition from the Government.
1377 we hear corny remarks from Ministers to the effect that their aim is a private, property-owning democracy. When a Labour Government are returned to office they will maximise on orders for goods and services in the North Sea. My hon. Friend the Member for Newham, North-East (Mr. Leighton) rightly made great play of the fact that North Sea oil is the greatest jewel in the country's crown. It will continue to be if we conserve it and use it wisely. The Minister must acknowledge that we are still foolishly supplying oil which we shall need in 20 years' time to power stations, although we have 300 years of coal reserves in our coal fields.—[Interruption.]—I am not arguing about the price.
§ The Under-Secretary of State for Energy (Mr. John Moore)
I said that oil was not being used at base power station load. I was not talking of the price.
§ Mr. Cunliffe
It is sensible and rational to have a national energy planning policy, and most advanced industrialised nations, such as Japan, are considering one. The Governments of those countries give great energy subsidies. They realise that energy conservation is imperative.
With known technology and at current rates of depletion, the United Kingdom is likely to become a net importer of oil some lime in the next 10 years. The Government should apply strict depletion controls to prolong the life of reserves well into the next century. We should aim to restrict the use of oil by the premium use of conversion from oil to coal and bulk steam-raising in industry. We need more effective grants. As a result of persuasion from the Opposition, the Government have made a minor contribution. Nurseries are being encouraged to change to the fuels that I mentioned. I am sure that a Labour Government will put more money into research and development of satisfactory substitutes, particularly for use in transport, which consumes high quality oil.
It is essential to have a strong and healthy British national oil corporation that can play a major role in developing to the full our North Sea oil resources in the interests of the nation. The Labour Government established BNOC and gave it the power to operate as a fully fledged and prosperous State-owned company. But this Government have removed many of its powers. I shall never be convinced that the free market mechanism, which appears to be the Government's only regulator, will supply the fuel needs of the British and European economies. The Government should review the situation. We need a nationally co-ordinated energy policy, instead of the recent betrayal of the British taxpayer.
§ Mr. John Prescott (Kingston upon Hull, East)
Having just been drafted in from the picket with my nurses beside the Pankhurst statue, I shall attempt to make one or two observations on the public sector nationalised industries and energy privatisation.
The Government wish to pursue privatisation in all sectors. We strongly disagree with that, principle. The problems with the nationalised industries and the principle of them go back further than the past two or three years. We have not faced the problems of how to deal with the great public sector. We disagree with the Government fundamentally because they seek to solve those problems 1378 by selling off the most profitable assets of public sector industries, when the problems facing them require us to look more directly at the role that we ask them to play in our economy.
The Government capitalise on the difficulties of the public sector industries by saying that because they are starved of capital, they must bring in private capital or sell assets to reduce their borrowing requirements. That is the Government's approach to the nationalised industries. They made it clear in their manifesto that they intended to roll back the frontiers of the public industries. What they meant was selling the profitable sectors. The only people who are prepared to buy anything or introduce private capital are those who are prepared to make a profit. My hon. Friend the Member for Newham, North-East (Mr. Leighton) referred to areas where profitable advances are being made. It was suggested that hon. Members had been able to secure some advantage through those deals. I can think of one or two examples. I think that the individual about whom my hon. Friend was talking obtained a capital advantage on local authority housing loans at one stage of his life.
Public sector industries inevitably have been starved of adequate capital. For a considerable period they have been denied sufficient capital. The most evident example, although the Government argue that it is the same with every industry, is British Rail. It has suffered for a long time from the denial of sufficient capital. It is incumbent upon us to ask ourselves what is the role of public sector industries and how we are to deal with them in meeting their tremendous demands on capital, while recognising their powerful role in our economy.
If one looks at the Government's record in the past three years, one sees that their approach has been to concentrate their attention on the privatisation of the profitable parts. That is for obvious reasons. It is intended for those interested in a quick kill—selling the assets, organising their sale or acquiring interest in them. There is the example of BP's shares. Governments are attracted to the acquisition of capital by selling assets. We have to recognise that it becomes an attraction to the Treasury and other Departments to acquire funds in that way.
The Government's arguments appear to be, first, to reduce the public sector borrowing requirement They have not reduced the proportion so far—it has increased since they came to power. Presumably that is because of what the Government are paying out in unemployment pay. Therefore, they have not achieved that target.
Secondly, the Government argue about increased efficiency in the nationalised industries and say that, by bringing in private capital, efficiency will be increased. That has yet to be proved. I shall give an example, again of British Rail. When the Government set up the Monopolies and Mergers Commission inquiry into British Rail that was an example of them setting the MMC loose on the public sector. They prefer doing that to the public than the private sector. The MMC conducted an inquiry into the southern region of British Rail. We are conscious of the arguments on labour practices, especially about flexible rostering. We heard of that disastrous affair, involving the Associated Society of Locomotive Engineers and Firemen. It was made clear by the MMC that, even if one achieves reasonable labour productivity, one cannot achieve proper efficiency without an adequate investment programme. The only reason why we spend so much time talking about labour practices, without looking at 1379 investment, is that we shut our eyes to the contribution of capital and investment to productivity and efficiency. The MMC report concluded that British Rail was starved of investment.
If the Government had been prepared to increase investment in concerns such as British Rail they might have been able to achieve greater efficiency than could be gained by applying pressure on flexible rostering. Those are arguments on the transport industry, but they are relevant to other sectors, though less so in energy and mining, where there has been greater productivity. However, in defence of British Rail, it must be said that reports comparing railways in Europe show that British Rail has a pretty good productivity record, which has not been given sufficient recognition.
One criticism of the Government's approach to the public sector is that it is not entirely consistent. The limits placed on the financing of public industries have been conditioned by the share held by the Treasury in those industries. It is usually said that if the Government have more than a 50 per cent. share of an industry it comes under the control of the Treasury.
The only public sector industry to which that rule did not apply was British Petroleum, but that was because of a special agreement, arranged by a senior civil servant, not a politician, in the early 1920s, that the Government would not interfere with BP, even though the State at one stage held more than 50 per cent. of the shares.
In addition, in airways and aerospace the argument was advanced that the protection of the public interest was involved and the rules of the Treasury, which have been such a blight on our nationalised industries, do not apply. The Government have not been consistent in their approach to nationalised industries.
Another example of the inconsistent approach is the mortgage and leasing arrangements of various nationalised industries. The Government told British Rail that it had to sell its hotels. The argument was that if BR could not raise enough money it should sell its assets. It could be argued that those assets could have been much more profitable if sufficient investment had been provided and the long-term advantage of the industry had been taken into account.
British Rail's hotels, some of the finest in the country, are starved of capital. An easy way to raise capital would be to take out mortgages on the buildings. That is the usual way which the hotel industry finances its capital requirements, but the Treasury said that it would not allow mortgages to be taken out on British Rail hotels.
However, the whole financing of Sealink, the nationalised shipping company, is done through mortgage and leasing arrangements. I concede that that did not start two years ago, but if the Government are interested in exploiting the advantage of the assets they should not sell them at knock-down prices when the market is depressed. Less money will be obtained, because the hotels are undercapitalised and profit returns have been bad in the past few years, reflecting the poor investment. The advantages of those assets have gone to waste because of lack of capital. If the Government had wanted to exploit the assets, all that they had to do was to allow the hotels to borrow on mortgages. Again we come up against the old problem of the public sector borrowing requirement and Treasury control, with the public sector being crucial to monetary controls and monetary policy.
1380 It is clear that the Government were concerned not to develop the assets to their full potential but to sell them off to advantage other people. The financial advisers to the hotel business saw that it was to the hotels' disadvantage to sell off at that stage and at that price, but they were overruled by a British Railways Board that the Government were forcing to sell off its assets because it did not have sufficient capital.
I come from the shipping industry. The result of starving British Rail's Sealink of adequate capital resources is that the ships in Sealink's fleet—in which there are strikes going on around the country—have been allowed to grow old. In another two years 75 per cent. of the Sealink fleet will be over 16 years old. Only 25 per cent. of the fleet of its competitor, Townsend, will be 16 years old. When people travel on the State-owned ships they see that they reflect an investment pattern of 10 or 20 years ago, and they clearly prefer a shipping system in which there has been better investment and which has modern equipment.
The argument is not simply that the private sector does it better. All the innovations in shipping, the new types of ships, were introduced by British Rail and the other nationalised industries. The first interest in hovercraft came from nationalised industries. In both innovation and efficiency, when it had the capital, Sealink was on a par with, if not better than, its competitors. That is on the record.
We have allowed Sealink to stagnate, denying it the capital. Such actions have contributed to the problems faced by many public sector industries, with a Government who wish to be rid of them. The Government are ideologically pleased to sell them off and roll back the public sector. If they sell off the profitable parts of the public sector, is the role of the State simply to be the ambulance, to take up those parts that make a loss, those parts that cannot make a profit, and make the taxpayer pay for all those areas that are to become a social service? Is there not a role for cross-subsidisation?
We see what the Government's policy means in rural areas, where there are no buses because they have decided to license private people to go into the profitable areas—
§ Mr. Deputy Speaker (Mr. Bernard Weatherill)
Order. I am reluctant to interrupt the hon. Gentleman, especially as I know that he has been drafted to reply to the debate on behalf of the Opposition, but the subject is the policy of the Department of Energy towards the privatisation of nationalised industries. I am not certain that the Minister will be able to reply to a number of the hon. Gentleman's comments.
§ Mr. Prescott
I should have stayed on a picket line. I take your point, Mr. Deputy Speaker.
I am sure that the Minister recognises the principle. One of the fortunate aspects of the energy side of the subject is the tremendous amount of resources available. If I am arguing that there is a lack of finance in other areas of the public sector, it could be argued that at least the very profitable areas are much more attractive for raising capital, if the Government are prepared to release them from Treasury control. We are not prepared to do that, or in this sense limit them on the external financing limits. There are arguments about British Telecom and energy. In this one area of energy it is simply an ideological commitment, because here there are certainly considerable 1381 assets, although the mines in some areas may not be as profitable as in others. I do not know enough about the mines to enter that debate, but surely the Government will not be selling off the unprofitable parts of the mines.
Simply selling off the profitable sectors, which is more evident on the energy side, where there is not as much cross-subsidisation as necessary, requires the Government in their broader approach to the nationalised industries to ask themselves about the cross-subsidisation of a number of public sector industries. The Government are arguing about prices as between gas and electricity and between gas and oil, and they impose what is really an energy tax on the gas industry. That is certainly how it is regarded by those concerned. If that is indeed the case, it could be argued that it does not matter whether the Government raise the money through extra tax on the gas industry or use the money to finance less profitable industries that perform a public service. These are important questions about our great nationalised industries and we must address ourselves to them.
I have not commented on the more unsavoury aspects relating to private gain and the various other points made by some of my hon. Friends, but it is as clear in energy as it is elsewhere that the Government's approach to public sector industries leaves much to be desired. The industry's problems did not begin two years ago, but they have been made vastly more difficult by the Government's approach, which is motivated by what the Minister would no doubt say is a purely ideological desire to reduce the frontiers of the public sector but which, as the evidence shows, will in fact bring great profit and advantage to those fortunate enough to be able to acquire the assets.
The Minister should know that, despite all the controversy that we have had, the Labour Party's position is clear. Those people will not gain by their actions. We shall use the power of Government to roll back the areas of advantage and incentive to private greed given by the Government. I hope that anyone who has bought or is thinking of buying into this or any other nationalised industry in this way will watch carefully this year's Labour Party conference. A formula will be laid down on this and the party will be committed. If there was previously any doubt about the Labour Party's attitude to reacquiring these State industries, it should be borne in mind that the Labour Party now takes a very much firmer attitude. We do not believe that taxpayers' assets should be exploited in this way and we shall take all measures available in Parliament to correct it.
§ The Under-Secretary of State for Energy (Mr. John Moore)
First, I thank the hon. Member for Newham, North-East (Mr. Leighton) for enabling us to discuss a matter of great importance not only to those with energy interests, as the debate has made clear.
I should have loved to trespass on the time of the House by responding to the many interesting comments of the hon. Member for Kingston upon Hull, East (Mr. Prescott). Unlike much of the earlier part of the debate, the hon. Gentleman's speech sought to face some of the really tough questions underlying what for all of us are the difficult industrial social and economic problems of the nationalised sector in all its guises. At times, I share the hon. Gentleman's difficulty in understanding the Jesuitical and esoteric nature of what is or is not a public sector 1382 enterpise in Treasury terms. I am sure that he will be conscious of the difficulties in which some of us find ourselves in that respect.
I should have loved, too, to go into detail on the transport aspect, but I should clearly be straying beyond the remit of the debate. Nevertheless, I take the point that these matters go beyond any one sector, although the debate itself concerns the energy industries.
I hope that the hon. Gentleman will not mind my saying that, as the power of Government must come from the ballot box, I trust that those whom he sought to attract to the Labour Party conference will give it their full attention. Indeed, I hope that the whole nation will do so. The balloting consequences can only be a source of gain to the Conservative Party.
The hon. Member for Leigh (Mr. Cunliffe) also contributed to the debate. I appreciate, of course, that some hon. Members are unable to participate in our debates in public, but it was a privilege, as always on these occasions, to have the presence of the Opposition Chief Whip, the right hon. Member for Bristol, South (Mr. Cocks), who at all hours of the night provides a constant series of delightful sedentary interruptions, and I know that his activites would be a great deal more verbal if the opportunity to contribute were available to him.
Large parts of the earlier contributions started from the astonishing supposition that only the Opposition were entitled to the privilege of having something known as a philosophy, however archaic and ineffective in practice and history, and that there was no rationale of any kind behind the Government's policies in this or other areas.
I note that the hon. Member for Kingston upon Hull, East remembered both the words of the Conservative Party manifesto and the fact that there is a philosophy underlying it. It is worth debating philosophy. I hope that those who respect democratic debate do not assume that there is a murky and unfortunate language attached to the motives and attitudes of some of those who, in Government, argue aggressively the philosophy that underlies their decisions.
As the hon. Member for Kingston upon Hull, East rightly said, the Government's actions are backed by a philosophic commitment to free enterprise with the sincere belief that competition in the market place will better allocate and use the resources of a nation than decisions taken through a centralised State monopoly. Knowing our philosophy and our commitment to it, it would be surprising if we had not embarked on a programme of denationalisation.
Three essential questions lie behind our actions. First, does a nationalised rather than a private sector corporation best serve the nation? Secondly, does a nationalised or a private sector corporation better serve the consumer? Thirdly, does such a corporation better serve the employees of that industry? I shall deal with each of those questions before dealing with the specific points that have been raised.
The answer to the first question is clear to all who do not allow hope to triumph over the experience of the past 40 or more years. The figures—we have had sterile figures from both sides of the argument—are legion, so I shall touch on just two to refresh memories. In my ministerial responsibilities I have tried to help and succour nationalised industry structures. Two figures should be tucked in the back of hon. Members' minds as a backcloth. Since 1945, the accumulated subsidies in capital write-offs of our nationalised industry sector are now more than 1383 £8,000 million. Secondly, since 1972 the average rate of return of all the nationalised industries has never been significantly above zero. From 1970 to 1980, the post-subsidy returns have dropped from less than 0.75 per cent. to minus 1 per cent.
We all know that we are dealing with a massive amount of capital, whatever the debate about the needs for new capital. In 1980, £94 billion of capital was employed. I understand the definition that others may have of social good and value as opposed to rates of return on the capital that is employed. We are dealing with the return to the nation in terms of capital and efficiency.
The hon. Member for Kingston upon Hull, East talked of industry's failure to serve the nation as being essentially the result of a lack of capital. I speak in generalities as I know that he has a special interest in a couple of industries. There is failure—this is the philosophical argument that should be debated—because monopolies by definition cannot allocate resources as efficiently as competition in the market place.
I know that Ronald Butt is not a popular commentator with all hon. Members, but recently he wrote what I thought was a rather interesting article in The Times. He wrote of monopoly, private or public:Monopoly is a condition which cannot fail to be exploited by human greed, sloth, fear and self protection".All who are genuinely concerned with how we better serve our country as opposed to other aspects of the debate understand the dilemmas that the hon. Member for Kingston upon Hull, East fairly referred to.
I am staggered by the suggestion that we have consumer satisfaction with our nationalised industries. In common with all hon. Members, I hold weekly surgeries. I have done so for eight or nine years. Most hon. Members have a healthy letter bag and have been politically conscious, whether from political door-knocking or from public surveys, of the attitude of the public to the nationalised industries. I take no pleasure from that. The reality is that I do not have consumers coming to my surgeries to complain about the nature of Sainsbury's or the choice and service they have in the purchase of food products in the United Kingdom. Nor do they complain about the service they receive from Marks and Spencer. [Interruption.] Those who come in late to these debates no doubt want to interrupt from a sedentary position and deny the generality of the statistical evidence that comes from survey after survey. It is sad, but it is a reality. I do not seek to encourage complaints against the nationalised industries. I refer to the reality of the way in which the consumer is served. Monopoly is, for me, monopoly. I stress the word "monopoly" because it is the enemy of consumer choice.
§ Mr. Cunliffe
The British Gas Corporation never had a monopoly. A right was built into the previous order to sell to a private supplier direct. That power was never used. That must be stressed. It is, therefore, not necessary.
§ Mr. Moore
It is not my desire to discriminate against any public corporation. It would be wrong for me to draw excessive attention to the nature, or pattern, of complaints drawn up by the Monopolies and Mergers Commission—not by my Department—and the abuse of its monopoly position by a corporation. I do not seek to continue the debate in that area because it is our job to 1384 remove the aspect of monopoly power that affects consumer choice. I repeat, monopoly is the enemy of consumer choice.
The third, legitimate point is one that the Opposition should heed. Does a monopoly corporation serve the employee in terms of jobs and investment? I again refer to the article by Mr. Butt. He said:It is the public not the private sector that is riven by disputes; where the worker is least happy; where industries are most often in decline; where services most conspicuously fail to satisfy the public; and where workers' resistance to change intensifies decline and inhibits investment.
§ Mr. Leighton
If the State had not put public money into firms such as Ferranti, Fairey Aviation, British Leyland and British Shipbuilders, the workers would not have had any jobs.
§ Mr. Moore
I cannot accept that proposition in arguing my present philosophy. I am not referring to the reality of decisions taken at any particular time. I am arguing philosophically about the nature of what, in the long term, produces successful employment for employees.
Let us suppose that we had lost the key debate yesterday and that all the banks were to be nationalised. Let us consider the number of jobs involved in industries which have been nationalised since the war. There is a genuine dilemma about long-term jobs provided through a single, centralised corporation which seeks to serve the consumer.
The question of capital has been mentioned. In the House on Monday I referred to capital investment in coal as opposed to investment in the North Sea oil industry. The distinction is extraordinary. The coal industry is a massive energy industry. More money has been invested in it than was envisaged in "Plan for Coal", and we welcome that. More than £3 billion has been invested, but investment in the North Sea through the private sector amounts to about £26 billion. There is a dilemma in how best to serve the employee as well as the consumer.
§ Mr. Leighton
The Minister says that he is discussing the topic philosophically. I am not sure what that means. It seems that he is discussing it vaguely and in a woolly fashion. He is not dealing with detail. Will he address himself to my argument—that the industries which have been nationalised since the war, such as Rolls-Royce, have failed in private hands? They collapsed under private ownership. Can the Minister name industries which operated well under private ownership?
§ Mr. Moore
I shall be delighted to do so. I was about to be less woolly and more practical and discuss the British National Oil Corporation which, by anybody's definition, was not exactly unsuccessful. It is peculiar that when a Conservative attempts to argue philosophically that is regarded as woolly, peculiar and strange and when someone argues about something as archaic as Socialism it is thought to be practical and pragmatic.
The hon. Members for Newham, North-East and Leigh (Mr. Cunliffe) asked some specific questions. The hon. Member for Newham, North-East, with a lack of detailed knowledge, talked about the loss of public control through the sale of Britoil shares to the nation. As the hon. Member knows, although he may not say it in public, that will not happen. Controls, as opposed to ownership, are unchanged in terms of the nation by the Government's action in the Oil and Gas (Enterprise) Act. That always philosophically confuses Socialists.
1385 Using rather lurid language, the hon. Gentleman talked about the scandalous nature of our BNOC privatisation plan. I remind the House of the objectives behind privatisation. I acknowledge the legitimate argument from the Opposition Front Bench about our desire to reduce the size of the public sector. We think that no activity should be owned and controlled by the State unless there are positive and specific reasons for it. That is not a denial of some good aspects of State ownership, but no such reasons exist for the State ownership of oil exploration and production. The successful development of the North Sea is the aim and achievement of the private sector. Enterprise, competition and initiative are cental to industrial success. Privatisation is in the best interests of BNOC.
Britoil must be free to develop its potential without the constraints of the public sector. Britoil will be free to develop on its own initiative. The Government still aim to carry out the sale of 51 per cent. of the shares in Britoil before the end of the year, subject to market conditions. It is impossible to foresee what market conditions, including the oil market, will be later this year. No one can sensibly make a final judgment at this stage.
The hon. Gentleman called in aid the right hon. Member for Bristol, South, who has an important GMWU interest in the gas showrooms' debate. The Government said that they were determined to take action, following the criticism in the report of the Monopolies and Mergers Commission, to encourage competition in the domestic gas appliances market to break the dominance of the British Gas Corporation. We considered it essential that any action should be accompanied by measures to maintain existing standards of safety. This will require legislative measures and, therefore, there must be a delay before the Government can proceed. Delay will allow consideration of how to proceed. The Government will examine seriously and carefully any constructive proposals that may be offered, provided that they meet the Government's objective of breaking the monopoly and ensuring effective competition.
§ Mr. Prescott
I can recall a company called Comet in the area that I represent pressing hard for gas showrooms to be sold off because more British products could be sold thereafter. If anyone enters a Comet showroom he will see more foreign products—including gas appliances—than in most other outlets. I have no doubt that that is at the expense of British manufacturing companies. This is what lies behind the unions' fears.
§ Mr. Moore
I take the hon. Gentleman's argument seriously. There will be detailed and lengthy consultations on the British manufacturing factor.
The hon. Members for Leigh and Newham, North-East raised again the Amersham International sale. Their language was almost as lurid as that used on that infamous, or famous, day in March. I thought that we had an exhaustive debate on 16 March. I said that within the context of their commitment to privatisation the Government approached the share sale with four key 1386 objectives—to preserve the firm as an independent company, to maintain the sense of commitment of the staff, an excellent staff which has been a key factor in the firm's success, to ensure as wide a spread as possible of share ownership among the general public and the company's employees, and to achieve a good return for the Exchequer. As we said at the time, maximising the proceeds to the Exchequer was not the sole consideration. We took into account other considerations which were shared by the employees and, I thought, by Opposition Members. Taken as a whole, the objectives were successfully achieved.
The hon. Member for Leigh is usually lucid and learned in coal debates, but he caused us to be rather confused about gas supply. There was terrifying confusion between ownership and controls—for example, depletion controls and licensing controls. These controls will be unchanged by the Oil and Gas (Enterprise) Act. They will not be impacted by that measure. I accept what the hon. Gentleman said about the key importance of controls in the long term. I think that he is arguing for stricter application of the controls, which is a different matter from what we have been debating tonight.
The hon. Gentleman talked about a shortage of supply. That situation has not been changed by Government action. I submit that that action might create better opportunities. We are dependent for more than 25 per cent. of our gas supplies this year from across the median line. That is a much larger percentage than in consequence of a shortage of supply. The Government believe that their action in breaking the monopsony will encourage corporations to develop and produce gas from which the nation will benefit, because additional exploration and development will create new jobs and offset our clear shortage of gas.
The Government's approach throughout this debate and their period in office has been to return as much business to the private sector as possible. Some notable successes have already been achieved with British Aerospace, Cable and Wireless, the National Freight Corporation and, in my Department, Amersham International. We have plans for the privatisation of other companies. The House knows that my right hon. Friend has steered successfully the Oil and Gas (Enterprise) Bill to the Royal Assent and we are pressing on with our plans for returning the exploration and production businesses of BNOC to the private sector, where they belong. We now have powers to dispose of the British Gas Corporation's offshore oil assets. Where possible, we have removed any statutory monopoly—for example, the liberalisation of the telecommunications network—and we plan to remove restrictions on the private generation of electricity.
It is remarkable that in the 30 or 50 years in which Britain has had nationalised industries the trend has been towards ever more public ownership, despite the nationalised industries' evident failure to satisfy the public. We are proud of the fact that the trend is now reversed, the climate changed and that competition again has a chance.