§ 'The Articles of Association of any subsidiary established under sections 1 and 9 shall be laid in draft before both Houses of Parliament and shall be subject to an affirmative resolution.'—[Mr. Merlyn Rees]
§ Brought up, and read the First time.
4.38 pm§ Mr. Merlyn Rees (Leeds, South)I beg to move, That the clause be read a Second time.
We have just passed the business motion and very amicably it was done. I suspect that, had we known that we would have a statement lasting an hour and a Te n-Minute Bill, we might well have re-jigged our agreement. We tried to arrange discussion on one of the most important aspects of the Bill right at the beginning. We shall just have to see how we go.
At last we have the articles of association. We had them towards the end of the Committee stage, but by then it was, of course, too late to discuss them. It is, therefore, appropriate that we discuss them today because it is the first time we have been able to do so. It is equally appropriate that we will eventually discuss the final copy, which is the reason for the new clause.
We should, as of right, be given the chance to debate the articles of association of companies that are to be privatised. That debate should take place as they pass from being "shell" companies. If a company was being nationalised the House would expect the legislation m contain details of the rules by which the company was to be run. Equally, the articles of association of denationalised companies should be put into an order, discussed and voted on.
Nothing in the Bill tells us about the nature of the company or its relationship with the Government. I shall come back to that when we discuss Government directors. Such details are central to legislation which, in effect, sets up a company as this Bill does. The articles should be dealt with by Parliament.
We are talking only of draft articles. It would be appropriate that the final articles—I do not know to what degree they are to be changed—of Britoil and any other company privatised under the legislation should be dealt with in the way suggested in the new clause. That is the full purpose of the new clause.
The new clause allows us to discuss the articles. Upstairs we should have had to contrive a way to discuss them. At the beginning of the articles is the memorandum of association of Britoil. It says what the objects of the company are. The House is setting up the company. We are entitled to look at its objects.
Paragraph (C) on the first page of the memorandum states:
To carry on all or any of the businesses of developers, producers, refiners".325 I go no further at this point. The new company, Britoil, must have the right, if it so wishes, to move into refining. It may not be clever to do that at the moment. In setting up the company on behalf of the Government, does the Secretary of State see it as being able, if it wishes, to move into refining?As I read the continuation of the paragraph, it appears that Britoil can not only deal in coal but produce it. The Secretary of State had the articles drawn up. I am not raising the problem of the National Coal Board. It has a monopoly, with small companies at the edges. I presume that Britoil could go into coal production in other parts of the world. Will the Secretary of State confirm that?
On page 8, clause 3 (LL) states:
It is hereby declared that in this clause:(i) 'petroleum' means any of the following (other than coal) namely:— (a) mineral ore, natural gas and bituminous shales. Why is natural gas included in that way? I could guess. In the Bill as a whole the ability to produce oil has been taken away from the British Gas Corporation. Here Britoil is being allowed to go into the production of natural gas.
§ Mr. ReesThe issue arose in another discussion on the Bill. If a company goes for one, it may get the other. Is that the reason? I am only seeking knowledge and not making a profound point. It is difficult to make profound points on articles of association.
I turn to page 23 of the articles. It is important to get this clear. What on earth are the directors of these and other firms supposed to be doing? I raise a personal point. I have always been sceptical about what a Government director does in these companies. It would be useful to know what the Secretary of State has in mind. He is to appoint the Government directors.
Article 85(E) states:
The number of Directors referred to in paragraph (A) of this Article is:—Article 10(E) on page 4 states:
- (i) two, at any time when the voting shares registered in the name of the Secretary of State represent more than 35 per cent. of the issued voting shares;
- (ii) one, at any time when the voting shares registered in the name of the Secretary of State represent more than 20 per cent., but not more than 35 per cent., of the issued voting shares;
- (iii) none, at any time when the voting shares registered in the name of the Secretary of State represent not more than 20 per cent. of the issued voting shares."
The Special Share holder may require the Company to redeem the Special Share at its nominal amount at any time.Is it the Government's long-term intention completely to withdraw from a shareholding in the company? If so, will the Secretary of State come back to the House and tell us why? He has powers over the number of directors and to redeem the special share. We have been told that the special share is an important element in protecting the national interest.I find article 71 (B) on page 19 intriguing. It states:
If there are, in the opinion of the Special Shareholder reasonable grounds for believing that any person or relevant persons has obtained or is attempting to obtain, directly or indirectly, control over the Board or its composition, the Special Shareholder, whether or not he has received any notice pursuant 326 to paragraph (A) of this Article 71, shall give written notice to the Board that he believes that there are such grounds, specifying them.There is then set out action that the special shareholder can take. What are the reasonable grounds? Why has the Secretary of State put in the words "reasonable grounds"? I read constantly in the newspapers of early morning coups, secret board meetings—[AN HON. MEMBER: "Dawn raids."] Yes, dawn raids—that is a much gentler way of putting it.If the grounds are reasonable, the Secretary of State will not know anything about it. It will all be over before he can do anything. What has the Secretary of State in mind? Will there be in the Department of Energy an office with a notice on the door "Reasonable grounds office"? Will there be a little chap going around the companies where there are special shareholders listening to find out whether anyone is to do anything so quickly that the special shares cannot be used?
On the same point of control, in regard to article 71(B)(i) I turn to the EEC and its rules, if that is the right word. On the basis of a 51 per cent. shareholding by the Government, as I understand it, the EEC assumes that we have control of the company. Can the Secretary of State be absolutely sure that if we are below that—as we will be initially and even more so afterwards, I anticipate—the European Court will not rule that we are no longer in control of the company, with all the consequences of that?
Even so, I am advised that Stock Exchange rules say that when a certain percentage of share ownership has been reached the owner of those shares has the right to buy the rest of the shares. I am seeking knowledge. Has that been taken into account in the drawing up of the articles of association? We want an assurance from the Secretary of State that legal problems will not arise.
§ Dr. J. Dickson Mabon (Greenock and Port Glasgow)I should like to get one point clear when the Secretary of State replies. The right hon. Member for Leeds, South (Mr. Rees) has raised a good point. As I understand it, there is no way in the present arrangements whereby we can have a special share. I know of no company—Government owned or privately owned—that has a special share system. Certainly I know of no company which has a special share system whereby the shareholders do not actually own any equity in the company. There is an attempt to make European company law. I am advised that there is no way in which this system can be integrated into that. Is it not possible that the Secretary of State is embarked on a perilous voyage of company law that will not stand up either in the British system or in the European system of company law?
§ Mr. ReesI am grateful to the right hon. Gentleman for reinforcing the question I asked. No doubt we shall get an answer at the end of the day.
In regard to directors, there are many basic arguments about what the Government are doing in the Bill. However, over the years under the National Enterprise Board, the industrial relations commission and the Industry Act 1972, there has been a mix of ownership of companies. In some instances I would not want it, but in other instances it is appropriate.
As long ago as 1964 the Labour Party manifesto said that a Labour Government would
Go beyond research and development and establish new industries, either by public enterprise or in partnership with private industry.327 In Opposition we are talking about the investment of funds in companies which are publicly owned and partially publicly owned. I am talking not about nationalised industries with appointed directors in a non-Company Act atmosphere, but about companies with a Government shareholding of 100 per cent., 51 per cent. or even 49 per cent., in which the Government appoint directors. In what way will the Secretary of State seek to influence the Government directors?Article 85(A) says that the Secretary of State has the right to appoint directors. I am interested to know why it is put that way rather than that he will appoint directors. The greatest number he can appoint is two out of seven or two out of 20 if the Government have more than 35 per cent. of the shares.
The degree of control in Britoil will be no greater than in BP, but I accept that that is a separate position. BP happens to have two Government directors and I have always been sceptical about their role.
For the moment let us stick to the role of directors in mixed economy firms that will arise out of privatization—or the other way round, for the reasons that I quoted in our 1964 manifesto. What is the role of these directors to be? Is there an analogy with The Times where there are independent directors? They are all publicly appointed with a clear role to look after the national interest, but, as someone said, however, "You could have fooled me".
I ask about the role of directors in this company because once we start going more broadly into the role of directors in this growing range of companies there might be ifs and buts. I can ask the Secretary of State directly about this because he has put it in the articles of association. I am dealing with Britoil, although the new clause is wider. At least, this will enable the Secretary of State to concentrate on why he told the drafters of the articles of association that he wanted Government directors.
Will the task of these directors be exactly the same as that of the other directors who will be elected by the shareholders? Will the directors whom the Secretary of State appoints represent the Government's view? The Secretary of State may say, after consultation with his advisers, "We need somebody on that board who is good on receivership. The company does not look healthy so let us have someone who understands that sort of thing". Or he might decide to appoint someone with great financial acumen or someone who knows a lot about research in oil supply.
A Government appointed director is of that sort. He carries on in the same way as any other director but a Government director is surely there to look after the Government's interests. What sort of person does the Secretary of State have in mind? I would be interested to go further, but I suppose it is too difficult.
Another question that has arisen in the last year or two is whether the Government directors will have fiduciary responsibility in that their job will be to look after the interests of the firm on the basis of the articles of association, and they will be there for that purpose alone.
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§ Mr. ReesThat may be so, but a Government might wish to do something directly against the narrow, but important, interests of shareholders. Why was the 328 provision for Government directors included in the articles, and what is the intended meaning of the Secretary of State's responsibility? That is important, as there will be more Government directors. It is a growing occupation. Whatever Governments have done, the number of such directors has increased in the past 10 years. The mix of the economy will continue and people will be appointed to boards, whether it be with 51 per cent., 30 per cent. or 75 per cent. of the shares. We should be clear about that. Some believe cynically that such positions are sinecures for people who behave themselves. I reject that entirely. I am sure that the Secretary of State has in mind a purpose for Government directors.
§ Dr. MabonIf the Secretary of State has fewer than half the company's shares, the directors whom he appoints will be obliged by company law to act in the interests of all the shareholders. As the majority of shareholders are not represented by the Secretary of State, directors appointed by him will therefore be bound to act differently from the Secretary of State if they feel that the other shareholders are suffering as a consequence of the decisions that he is urging on his appointed directors. I do not believe that Government appointed directors will necessarily do what the Government want them to do.
§ Mr. ReesIf that is the case, why are the Government bothering? Nevertheless, the Secretary of State has the special share. We should clear the matter up. In doing so, we shall do a good turn to those who work in other firms with Government directors.
I turn now to the national interest and foreign shareholders. Is the special share intended to protect the national interest? Is it intended, for example, that nonresidents should not have shares? There are other ways of achieving the same result.
When British Aerospace was privatised, the Government included a provision which, however incompetently it was drawn up, served that purpose. Would that not be a better way than depending on a special share which might disappear? The day must surely come when the special share disappears, so if the national interest is involved in this way it will suffer. I accept, of course, that the articles are not drawn up in the same way as those for British Aerospace.
Those are the major points arising out of the articles of association. They are important and this is the first time that we have discussed them. The House should have a further opportunity to examine the articles when they are no longer in draft. The Opposition propose that
`The Articles of Association of any subsidiary established under sections 1 and 9 shall be laid in draft before both Houses of Parliament and shall be subject to an affirmative resolution 'This is particularly important, as the articles may change fundamentally over the years. If such a change took place, the new clause would provide for the articles to be embodied in a Bill if the Government continued to proceed in the present way. The Opposition believe that this is the right way to proceed. The new clause should be adopted in the interests of parliamentary accountability.
§ Mr. Dick Douglas (Dunfermline)The articles of association are novel. I have a few brief points to put to the Secretary of State.
329 First, have the articles been submitted to the council of the Stock Exchange? Has it expressed a view on the matter? I put that point in Committee to the Secretary of State, whose interest in financial matters was exhibited in a previous incarnation as the writer of the Lex column in the Financial Times. Would memorandum and articles of association of this type suffer the scrutiny of the council of the Stock Exchange and others interested in protecting shareholders?
I well understand that the articles are drafts, that we are discussing a shell £100 company, and that there will be considerable embellishment before the articles become part of a prospectus. Nevertheless, it is shabby for a Government who purport to believe in enhancing private enterprise and releasing ensnared shareholders to embattle shareholders almost totally by means of a golden share. It is like being in President Lincoln's Cabinet when, apocryphally, he sat back and said:
The Ayes are 10 and Noes are one, but the Noes are the President, so the Noes have it.The articles will enable special shareholders to outvote the majority of shareholders on practically everything if they think fit. That is not in the interests of all shareholders. It does not wash with the established conventions or, indeed, with the legal position of companies now. I accept that other objectives have been put upon company directors. They must now look after the interests not only of shareholders, but, and rightly, the interests of employees, but the traditional view remains that directors should look after the interests of all shareholders and protect them.By the articles, the special shareholder, if he or the Secretary of State sees fit—we do not know what he will be pressed to do or how he will be persuaded to use that special share—may look after the national interest as opposed to what may be thought to be the interests of all shareholders.
Article 10(E) states:
The Special Shareholder may require the Company to redeem the Special Share at its nominal amount at any time.How can that square with article 10(A), which states:The Special Share may be transferred only to the Secretary of State or to a Minister of the Crown or to the Treasury Solicitor.That seems to suggest that the special share may be redeemed by the company. What is the consideration for the special share? There is no sign in the articles of association of what consideration may be offered to the special shareholder for that privilege.That either has a meaning or it does not. Either special shares can only be transferred to the Secretary of State and his nominees, or they can be redeemed. If they can be redeemed, what is the consideration for the redemption? An extraordinary privilege is being given away. I am not a lawyer and these are legalistic points, but either that has a meaning in the articles of association, or it does not.
This is an attempt by the Secretary of State to square the circle. He is hiving off an important Government-owned enterprise. I shall not go into the case of Amersham International Ltd. and its present valuation. There may be opportunities to do that later in the debate. We are examining the logic and the benefit to the nation of this measure. The Secretary of State, in his strong-willed way, is entitled to get his policy, but we are entitled to say that it is wrong-headed.
§ Mr. T. H. H. Skeet (Bedford)The hon. Gentleman must recognise the difference between an equity investment, which is entitled to profitability, and what would be a purely voting share, which has control but no profitability attached to it.
§ Mr. DouglasThat is an absurd suggestion from the Conservative Benches. We are talking about having all the power without much of the responsibility in terms of equity. The council of the Stock Exchange and the CBI have been irate about class A shares and have deprecated them. Yet, as a result of this shareholding, in many instances the Government will outvote those who hold the equity and take the risk.
§ Mr. DouglasNo, I shall not give way again at this stage. The Government will outvote those who take the risk. That is an appalling suggestion.
I give warning on this. The Secretary of State has made a very interesting suggestion. If, as I hope, the next Government is a Labour Government, the Secretary of State's example will be examined further. It is a wonder that my right hon. Friend the Member for Bristol, South-East (Mr. Benn) is not already delving into it. We might consider the possibility of taking a golden share in the 100 largest companies in the country and outvoting everyone. What is the use of planning agreements and all the paraphernalia of committees if we can simply follow the Secretary of State's example and take a golden share? It is no wonder that my right hon. Friend called him the East European Minister. He is now outclassing East European Ministers.
This is an absurd suggestion in terms of the operation of the traditional joint stock company in this country. I know that there are variations, but the Secretary of State must give precedents. He cannot do so because he is creating his own precedent, in which those taking the risk in terms of equity capital can be outvoted. I know that the articles of association are in draft and can be altered, but the Government must answer these questions. If the council of the Stock Exchange has examined the articles of association, we should have its views on them. If it has not, the Secretary of State should throw them in the wastepaper basket.
§ Mr. Gordon Wilson (Dundee, East)The demand was frequently made in the Standing Committee that the articles of association should be produced, in view of the problems which arose over how to safeguard the national interest following the disposal of the equity oil assets of BNOC and the formation of the acquiring company, Britoil.
Having examined the articles of association, particularly those on page 19, I do not think that there is much more than a fig-leaf of protection. As the Monopolies and Mergers Commission showed in relation to the Royal Bank takeover, doubt must always be expressed about any assurances given about control and so on once the equity in a company has been disposed of. The Government intend to dispose of the equity but to try to retain some minimal control over Britoil through the special shareholder.
I believe that the Government's efforts may be impotent in terms of paragraph 71(B). The Minister referred to the provision there that 331
If there are, in the opinion of the Special Shareholder, reasonable grounds for believing that any person or relevant persons has obtained or is attempting to obtain, directly or indirectly, control over the Board or its composition,the special shareholder would then have certain powers.5.15 pm
Leaving aside for the moment the difficulties that the special shareholder may sometimes have in determining whether there is an indirect attempt to take over control of the company, there is still a problem in the wording dreamt up by the Department's lawyers. They must be "reasonable" grounds. If this had been worded in such a way as to give the Secretary of State, or his other persona, the special shareholder, absolute discretion to intervene at any time, there would be less difficulty. Having used the term "reasonable", however, the Secretary of State and the special shareholder, if challenged, will be under an obligation to defend the discretion being used as "reasonable"
. If the procedure set in motion by article 71(B) were attacked, the attacker would presumably be able to go to the courts. What would be the "reasonable grounds" on which the Secretary of State or the special shareholder could intervene? To judge from the speeches and arguments in Committee and on Second Reading, it is patently clear that the objective of the reasonable grounds would be to maintain the national interest in relation to the oil assets being disposed of.
If anyone can take the Secretary of State or the special shareholder to court, it follows that the objective of the national interest may not be found by the courts to be "reasonable". The United Kingdom courts, including the Court of Session, if the jurisdiction of the Scottish courts were invoked, might find it reasonable, but if there were a subsequent reference, or indeed an initial reference, to the European Court and it appeared that the special shareholder had been trying to block an attempt by European companies or interests to take control of the company, I am sure that the European Court would regard the action of the special shareholder as unreasonable.
In those circumstances, the protection that the Government seek to build in by the extraordinary means of having a special shareholder would become utterly nugatory. I am not sure what legal advice the Minister has had on this, but it seems to me that, once having disposed of the equity, he will in effect have lost control of the company, especially if European interests within the EEC were seeking to establish control over it.
I shall not go into detailed criticism of the wording of article 71(B)(i), in which the attempt to secure control is couched in extraordinary gobbledegook. Those who play cards might express it more simply as giving the special shareholder the power to "trump" any opponents taking a view different from his own.
My second question to the Minister is practical rather than legal. What kind of experience would the Government directors have? Does the Minister intend that they should be business men or people with knowledge of the oil industry, or does he intend that they should be civil servants, whether retired or active? I recall that civil servants were the equivalent of directors in BNOC. Or do the Government intend to select from their placement list of the great and the good those who, for a small fee, would be willing to take up the onerous duty of safeguarding the public interest? As we are disposing of equity oil assets, 332 it would be of interest to know what expertise the Government seek to place on the board of directors to safeguard the Government's interests in those assets.
§ Mr. LawsonThree main points have been made in this brief debate. The right hon. Member for Leeds, South (Mr. Rees) expressed concern about the understanding of the memorandum, the Government directors, and the powers that reside in the special shares. The right hon. Gentleman's understanding of the memorandum is correct in every respect. He asked about the definition of petroleum. There had to be a definition, and we have simply taken the definition that appears in the Petroleum and Submarine Pipe-Lines Act 1975. That seemed sensible and as far as I am aware has caused no problems.
The hon. Member of Dundee, East (Mr. Wilson) asked about Government directors. There is no intention that these should be civil servants, unlike the Government directors on BNOC. The analogy was made, and it is a familiar one, with the Government directors on BP. It seemed appropriate that as the Government have a large shareholding it should be represented by directors on the board. However, these directors will have exactly the same duties and obligations under company law as any other directors of the company. The right hon. Member for Leeds, South may ask what point there is in having them. While the Government retain a substantial shareholding in Britoil, there is a value in having on the board directors who can keep the Government fully informed—there are, of course, other channels of information—and perform, in general, the job that the directors of BP perform.
The right hon. Gentleman correctly said that I have the right to appoint the directors. However, I am not obliged to do so. If he is developing the strong argument that I should not exercise that right, it is one that I am prepared to consider. However, I am not yet persuaded. I believe that we should exercise the right to appoint Government directors.
§ Mr. J. Grimond (Orkney and Shetland)Can the right hon. Gentleman tell the House whether the Government directors on BP have made any great contribution to the company? How often have they been called upon to defend public interest?
§ Mr. LawsonThey perform their duties in the same way as other directors of BP. That is their job. They are a link between the Government, who have a significant shareholding of 39 per cent.—the Government will initially have a 49 per cent. shareholding in Britoil—and the company. There is a good precedent, and it is sensible to have such directors. It is not the heart and core of the matter—the special shareholding is a great deal more important and I shall come to that shortly—but on balance it is a sensible power to have in the articles. I am not sure of the right hon. Gentleman's position, but, if he believes that it is wrong to have Government directors, he should say so. I am prepared to consider not exercising that right, but at the moment I have not been so persuaded.
A number of questions were asked about the special share. Attention was drawn to the power under the articles for the Government's special share to be redeemed. The hon. Member for Dunfermline (Mr. Douglas) asked at what price the share would be redeemed. The articles clearly show that the share will be redeemed at par—at the nominal price. If the shares are £1 each, they will be redeemed at £1 However, we have no intention of having 333 the share redeemed. The power is included because it is customary for articles of association to cover a range of contingencies. Those who are acquainted with articles of association will be aware of that. I give an undertaking to the House that not only do the Government have no intention of having the share redeemed, but that they have every intention of retaining it. If circumstances arise—I cannot envisage any—in which the Government feel that it is right that the share should be redeemed, we shall come to the House first. I give that undertaking freely, because it is the Government's intention to retain the special share.
§ Dr. J. Dickson MabonIs it not true that under the Bill in its present form the Secretary of State, whoever he may be—probably not the right hon. Gentleman—can dispose of the share without parliamentary consent? The undertaking is, therefore, nonsense. It does not mean a damned thing.
§ Mr. LawsonThat is an unwise and improper suggestion. I hope that the right hon. Gentleman, who was a former Minister, will withdraw it. When a Minister gives an undertaking at the Dispatch Box, it means something. To say that it means nothing is wrong. Ministers make such statements on many occasions.
It is true that redemption will not require parliamentary consent. I do not suggest otherwise. However, if the Government of the day at any time feel that circumstances have changed and that the share should be redeemed, the House will be informed before redemption takes place. More importantly, we have no intention of having the share redeemed. The whole point of the share is that it is held, and retained.
§ Mr. Merlyn ReesI accept the Minister's word. There may be other arguments to deploy, but I want to be clear that he is giving the undertaking on behalf of the Government.
§ Mr. LawsonI give that undertaking on behalf of the Government.
The hon. Member for Dunfermline asked whether the articles had been approved by the Stock Exchange council. The answer is "Yes, they have". I should not put before the House articles of association, and an important proposition, which had not been cleared by the Stock Exchange council. This is not the first time that the hon. Gentleman has suggested that this is a terrible proposal. He will recall that, although the power is slightly different, in Amersham International Ltd. there is a special share which has special powers. I was not aware that that put off investors. [Interruption.]
§ Mr. Douglasrose—
§ Mr. LawsonI shall now reply to the main point of the right hon. Member for Leeds, South on how the system is meant to work, the share and the rights attached to it, and why articles 70 and 71 have been included.
We have three key considerations and objectives in mind. We wanted to create effective safeguards which would enable the Government to prevent any unacceptable change in the future control of the company, whatever the nationality of the parties involved. That deals also with the issue raised by the hon. Member for Dundee, East. It is 334 important to protect the character of Britoil as an independent company, responsible for its own management and business strategy.
The second point that lies behind the Government's thinking in devising this form is that it is essential, in the Government's opinion, that the special rights should not provide an opportunity for backdoor interference in the affairs of the company. I think that I made it clear on Second Reading—I certainly did so in Committee—that the Government do not intend to use their rights as a shareholder to intervene in Britoil's commercial decisions, except in the specific safeguard circumstances.
The Government do not expect to vote with their shareholding—that is the whole of their shareholding, leaving aside the special share—in opposition to resolutions supported by a majority of the board, although they will retain the right to do so. We have tried to construct safeguards that will operate as reserve powers. They will come into force only in the event of an attempt to take over voting control of the company, control of the board or of its compositions, or to alter the safeguards or any other key articles of the company.
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The powers are passive. They will need to be triggered by outside events beyond the Government's control before they can be brought into play. In practice, it is highly unlikely that they will ever need to be brought into play. The very existence of these powers will act as the most formidable deterrent to anyone who tries to take over control of the board, of the company or of the majority of its shares, and who the Government consider to be unacceptable.
It is possible that at some future date the Government will seek to reduce their shareholding below 49 per cent. It is important to make it clear that the powers will remain however much the ordinary shareholding is reduced. That is why the safeguards are attached entirely to the single special share with a nominal value of £1 fully paid, which is held by the Government and which is separate from the rest of the shareholding.
§ Mr. DouglasIs that right?
§ Mr. LawsonThe hon. Gentleman is not fully acquainted with Stock Exchange terminology.
The safeguards will remain fully active even if the Government have no other shareholding. It is right that there should be safeguards. There is concern on both sides of the House about the ownership of Britoil and its future ownership. The provisions that we are discussing meet that anxiety. They meet the will of the House on Britoil's crucial independence. We have given, as has BNOC and its advisers, considerable thought to the articles to ensure that they are an effective means of protecting Britoil's independence against unacceptable changes in control. Therefore, I commend the articles to the House.
§ Dr. J. Dickson Mabonrose—
§ Mr. LawsonNo, I shall not give way. Time is limited and the right hon. Gentleman has intervened more than once.
It is the Government's opinion that it would not be appropriate to provide for the articles of Britoil, or any other subsidiary established under the Bill, to be subject to the affirmative resolution procedure or to any other parliamentary procedure. The Government take that view 335 for two main reasons. The central purpose is to make Britoil like any other independent private sector oil company. It would be contrary to that purpose to make its articles of association subject to some form of parliamentary procedure when those of other oil companies are not.
Secondly, the procedure that the Opposition wish to introduce would be ineffective. If the new clause were to be accepted, Parliament could approve articles of association, but those articles could be changed. The feature that will prevent them from being changed as matters stand is the special share. That is what is important, and that is why it is part of the articles of association. There is no point in the procedure which the new clause seeks to introduce. It is both unnecessary and impracticable. I hope that the House will approve the arrangements that we have made to secure Britoil from unacceptable changes in control and that it will reject the clause.
§ Dr. J. Dickson MabonI wish to protest at the way in which the Secretary of State has dealt with the debate. It is novel to have a special share system. If I understand the Secretary of State aright, Amersham International is the only other organisation that has such a system. Of course, that is an extremely bad example. The right hon. Gentleman's invention may prove in the course of time to be both novel and lasting. I suppose that we might apply it to BP and other institutions in which the taxpayer has a formidable if not an overweening interest. I agree that the right hon. Gentleman may have invented something that proves to be considerable. However, I object to his unwillingness solidly to argue on the articles of association.
In Committee we were not allowed to discuss the articles of association. It would have been desirable to do so. We were not allowed, rightly, as a matter of procedure, to discuss them. We have been able to discuss them only in the short period since half past four. The right hon. Gentleman is uncomfortably aware that his articles are so delicate that they should not be subject to any buffeting. There are rumours of hybridity and of many other difficulties in the public market place. I am not responsible for them. I do not know who Lex is today—I do not know who is the right hon. Gentleman's successor—but he, whoever he is, is probably speculating on the rumours. The right hon. Gentleman should try to bring all the rumours to an end and try to ensure that Britoil is launched comfortably and properly on its course. Unfortunately, he has not done that. It is the form of the guillotine that prevents him from so doing.
§ Mr. LawsonThe right hon. Gentleman was not in Committee when the guillotine was introduced.
§ Dr. MabonI certainly was. I was in Committee for the entirety of its discussions on part I, which was a complete bore. As the right hon. Member for Leeds, South (Mr. Rees) knows, we had to extract tooth by tooth the various issues arising from the articles of association that we now see in their full form.
The House has been allowed only one hour to debate what we are told by the right hon. Gentleman will be the greatest act of privatisation in British history. We are supposed to debate the articles of association in one hour. The new clause is designed to allow the House to debate them prior to the company going to the public exchange, 336 to the money markets. I do not understand why the Secretary of State refuses to accede to the terms of the new clause, which do not seek to damage his Bill. There will be no doctrinaire infringement of his concept. We are not challenging him on the fundamental issues. He might be right, but we are arguing that he might conceivably be wrong.
That is what the House is all about. Ministers can be wrong and that is all we are saying. This conceited Secretary of State is so sure of himself that he did not allow the Committee, which was appointed by the House, to examine the articles. He refuses to give the House time to do so. He has presented them to us too late. He allows us only one hour to discuss them—he will have the backing of the Whips—and he expects us to accept them.
The right hon. Gentleman is making a fundamental error in parliamentary procedure and is misjudging the good sense of the British people. What he has done is wrong and he knows that it is wrong.
§ Mr. Merlyn ReesIt is said that there is only one other example of a company in which there is a special share. I merely say to the Secretary of State that I have known other conceited Secretaries of State and Ministers of State. Unfortunately, they are not unusual. We have not had time to discuss the issues properly. It would have been very much better if we had been able to discuss them in Committee. We did not have time today to do so. We have heard some interesting points today, but I did not think that the Secretary of State was answering new clause 1. It refers to
The Articles of Association of any subsidiary established under sections 1 and 9.Therefore, it is not just this but all the other matters that could arise in the Bill. The articles of association should be laid before the House. That is all that we are asking for—nothing more or less. The Bill is short in parliamentary accountability all the way through. I strongly recommend to my right hon. and hon. Friends that we vote for the clause.
§ Question put: That the clause be now read a Second time:
§ The House divided: Ayes 219, Noes 278.
339| Division No. 113] | [5.40 pm |
| AYES | |
| Abse, Leo | Campbell, Ian |
| Allaun, Frank | Canavan, Dennis |
| Alton, David | Cant, R. B. |
| Anderson, Donald | Carmichael, Neil |
| Archer, Rt Hon Peter | Cartwright, John |
| Ashley, Rt Hon Jack | Clark, Dr David (S Shields) |
| Ashton, Joe | Cocks, Rt Hon M. (B'stol S) |
| Atkinson, N.(H'gey,) | Coleman, Donald |
| Bagier, Gordon A.T. | Concannon, Rt Hon J. D. |
| Barnett, Rt Hon Joel (H'wd) | Cook, Robin F. |
| Beith, A.J. | Cowans, Harry |
| Benn, Rt Hon Tony | Cox, T. (W'dsw'th, Toot'g) |
| Bennett, Andrew(St'kP'tN) | Craigen, J. M. (G'gow, M'hill) |
| Bidwell, Sydney | Crowther, Stan |
| Booth, Rt Hon Albert | Cryer, Bob |
| Boothroyd, Miss Betty | Cunliffe, Lawrence |
| Bottomley, Rt Hon A.(M'b'ro) | Cunningham, G.(Islington S) |
| Bradley, Tom | Cunningham, Dr J. (W'h'n) |
| Bray, Dr Jeremy | Dalyell, Tam |
| Brown, Hugh D. (Provan) | Davidson, Arthur |
| Brown, R. C. (N'castle W) | Davies, Rt Hon Denzil(L'lli) |
| Brown, Ronald W. (H'ckn'y S) | Davies, Ifor (Gower) |
| Brown, Ron(E'burgh, Leith) | Davis, Clinton (Hackney C) |
| Buchan, Norman | Davis, Terry (B 'ham, Stechf'd) |
| Callaghan, Rt Hon J. | Deakins, Eric |
| Callaghan, Jim (Midd't'n & P); | Dean, Joseph (Leeds West) |
| Dixon, Donald | Magee, Bryan |
| Dobson, Frank | Marks, Kenneth |
| Dormand, jack | Marshall, D(G'gowS'ton) |
| Douglas, Dick | Marshall, Dr Edmund (Goole) |
| Douglas-Mann, Bruce | Marshall, Jim (Leicester S) |
| Dubs, Alfred | Martin, M(G'gowS'burn) |
| Duffy, A. E. P. | Mason, Rt Hon Roy |
| Dunn, James A. | Maxton, John |
| Dunwoody, Hon Mrs G. | Maynard, Miss Joan |
| Eadie, Alex | Meacher, Michael |
| Eastham, Ken | Mellish, Rt Hon Robert |
| Edwards, R. (W'hampt'n S E) | Millan, Rt Hon Bruce |
| Ellis, R. (NE D'bysh're) | Miller, Dr M.S.(E Kilbride) |
| Ellis, Tom (Wrexham) | Mitchell, Austin (Grimsby) |
| English, Michael | Mitchell, R.C. (Soton Itchen) |
| Evans, Ioan (Aberdare) | Morris, Rt Hon A. (W'shawe) |
| Evans, John (Newton) | Morris, Rt Hon C. (O'shaw) |
| Field, Frank | Morris, Rt Hon J. (Aberavon) |
| Fitt, Gerard | Moyle, Rt Hon Roland |
| Fletcher, Ted (Darlington) | Newens, Stanley |
| Ford, Ben | O'Halloran, Michael |
| Forrester, John | O'Neill, Martin |
| Foster, Derek | Owen, Rt Hon Dr David |
| Foulkes, George | Park, George |
| Fraser, J. (Lamb'th, N'w'd) | Parker, John |
| Freud, Clement | Parry, Robert |
| Garrett, John (Norwich S) | Pendry, Tom |
| George, Bruce | Penhaligon, David |
| Golding, John | Powell, Raymond(Ogmore) |
| Graham, Ted | Prescott, John |
| Grant, George(Morpeth) | Race, Reg |
| Grant, John (Islington C) | Rees, Rt Hon M (Leeds S) |
| Grimond, Rt Hon J. | Richardson, Jo |
| Hamilton, W. W. (C'tral Fife) | Roberts, Albert(Normanton) |
| Harrison, Rt Hon Walter | Roberts, Gwilym(Cannock) |
| Hart, Rt Hon Dame Judith | Robertson, George |
| Hattersley, Rt Hon Roy | Robinson, G. (Coventry NW) |
| Haynes, Frank | Robinson, P. (Belfast E) |
| Healey, Rt Hon Denis | Rooker, J. W. |
| Heffer, Eric S. | Roper, john |
| Hogg, N. (E Dunb't'nshire) | Rowlands, Ted |
| Holland, S. (L'b'th, Vauxh'll) | Sandelson, Neville |
| HomeRobertson, John | Sever, John |
| Homewood, William | Sheerman, Barry |
| Hooley, Frank | Sheldon, Rt Hon R. |
| Horam, John | Shore, Rt Hon Peter |
| Howell, Rt Hon D. | Short, Mrs Renée |
| Howells, Geraint | Silkin, Rt Hon J. (Deptford) |
| Hoyle, Douglas | Silkin, Rt Hon S. C. (Dulwich) |
| Huckfield, Les | Silverman, Julius |
| Hughes, Mark(Durham) | Skinner, Dennis |
| Hughes, Robert (Aberdeen N) | Smith, Rt Hon J. (N Lanark) |
| Janner, Hon Greville | Soley, Clive |
| Johnson, Walter (Derby S) | Spearing, Nigel |
| Jones, Rt Hon Alec (Rh'dda) | Spriggs, Leslie |
| Jones, Barry (East Flint) | Stallard, A.W. |
| Kaufman, Rt Hon Gerald | Steel, Rt Hon David |
| Kerr, Russell | Stewart, Rt Hon D. (W Isles) |
| Kilfedder, James A. | Stoddart, David |
| Kilroy-Silk, Robert | Stott, Roger |
| Lambie, David | Strang, Gavin |
| Lamborn, Harry | Straw, Jack |
| Lamond, James | Summerskill, Hon Dr Shirley |
| Leadbitter, Ted | Taylor, Mrs Ann (Bolton W) |
| Leighton, Ronald | Thomas, DrR. (Carmarthen) |
| Lewis, Arthur (N'ham NW) | Thorne, Stan (Preston South) |
| Lewis, Ron (Carlisle) | Tinn, James |
| Lofthouse, Geoffrey | Torney, Tom |
| Lyon, Alexander(York) | Varley, Rt Hon Eric G. |
| Lyons, Edward (Bradf'dW) | Wainwright, E. (Dearne V) |
| Mabon, Rt Hon Dr J. Dickson | Wainwright, R.(Colne V) |
| McCartney, Hugh | Walker, Rt Hon H.(D'caster) |
| McDonald, DrOonagh | Wellbeloved, James |
| McElhone, Frank | Welsh, Michael |
| McKay, Allen (Penistone) | White, Frank R. |
| McKelvey, William | White, j..(G'gow Pollok) |
| MacKenzie, Rt Hon Gregor | Whitehead, Phillip |
| McNally, Thomas | Whitlock, William |
| McNamara, Kevin | Wigley, Dafydd |
| McTaggart, Robert | Willey, Rt Hon Frederick |
| Williams, Rt Hon A.(S'sea W) | Wright, Sheila |
| Wilson, Gordon (Dundee E) | |
| Wilson, William (C'try SE) | Tellers for the Ayes: |
| Winnick, David | Mr. James Hamilton and |
| Woodall, Alec | Mr. George Morton. |
| Woolmer, Kenneth | |
| NOES | |
| Adley, Robert | Eyre, Reginald |
| Aitken, Jonathan | Fairbairn, Nicholas |
| Alexander, Richard | Fairgrieve, Sir Russell |
| Alison, Rt Hon Michael | Faith, Mrs Sheila |
| Amery, Rt Hon Julian | Farr, John |
| Ancram, Michael | Fell, Sir Anthony |
| Arnold, Tom | Finsberg, Geoffrey |
| Aspinwall, Jack | Fisher, Sir Nigel |
| Atkins, Rt Hon H. (S'thorne) | Fletcher, A. (Ed'nb'gh N) |
| Atkins, Robert (Preston N); | Fookes, Miss Janet |
| Baker, Nicholas (N Dorset) | Forman, Nigel |
| Banks, Robert | Fowler, Rt Hon Norman |
| Beaumont-Dark, Anthony | Fox, Marcus |
| Bendall, Vivian | Fraser, Rt Hon Sir Hugh |
| Benyon, W. (Buckingham) | Fraser, Peter (South Angus) |
| Best, Keith | Fry, Peter |
| Biffen, Rt Hon John | Gardiner, George(Reigate) |
| Biggs-Davison, SirJohn | Gardner, Edward (S Fylde) |
| Blackburn, john | Garel-Jones, Tristan |
| Blaker, Peter | Gilmour, Rt Hon Sir Ian |
| Body, Richard | Glyn, Dr Alan |
| Bonsor, Sir Nicholas | Goodhew, Sir Victor |
| Boscawen, Hon Robert | Goodlad, Alastair |
| Bottomley, Peter (W'wich W) | Gorst, John |
| Bowden, Andrew | Gow, Ian |
| Boyson, Dr Rhodes | Grant, Anthony (Harrow C) |
| Braine, Sir Benard | Gray, Hamish |
| Bright, Graham | Griffiths, E.(B'ySt.Edm'ds) |
| Brittan, Rt. Hon. Leon | Griffiths, Peter Portsm'thN) |
| Brooke, Hon Peter | Grist, Ian |
| Brotherton, Michael | Grylls, Michael |
| Brown, Michael(Brigg & Sc'n) | Gummer, John Selwyn |
| Browne, john(Winchester) | Hamilton, Hon A. |
| Bruce-Gardyne, John | Hamilton, Michael(Salisbury) |
| Bryan, Sir Paul | Hampson, Dr Keith |
| Buck, Antony | Hannam, John |
| Budgen, Nick | Haselhurst, Alan |
| Bulmer, Esmond | Havers, Rt Hon Sir Michael |
| Burden, Sir Frederick | Hawkins, Paul |
| Butcher, John | Hawksley, Warren |
| Butler, Hon Adam | Hayhoe, Barney |
| Cadbury, Jocelyn | Heddle, john |
| Carlisle, John (Luton West) | Henderson, Barry |
| Carlisle, Kenneth(Lincoln) | Heseltine, Rt Hon Michael |
| Carlisle, Rt Hon M. (R'c'n) | Hicks, Robert |
| Chalker, Mrs. Lynda | Higgins, Rt Hon Terence L. |
| Channon, Rt. Hon. Paul | Hill, James |
| Chapman, Sydney | Hogg, HonDouglas(Gr'th'm) |
| Churchill, W.S. | Holland, Philip(Carlton) |
| Clark, Hon A. (Plym'th, S'n) | Hooson, Tom |
| Clark, Sir W. (Croydon S) | Hordern, Peter |
| Clarke, Kenneth(Rushcliffe) | Howe, Rt Hon Sir Geoffrey |
| Cockeram, Eric | Howell, Rt Hon D.(G'ldf'd) |
| Colvin, Michael | Howell, Ralph (N Norfolk) |
| Cope, john | Hunt, David (Wirral) |
| Corrie, John | Hunt, John(Ravensbourne) |
| Costain, Sir Albert | Hurd, Rt Hon Douglas |
| Cranborne, Viscount | Irving, Charles(Cheltenham) |
| Critchley, Julian | Jessel, Toby |
| Dean, Paul (North Somerset) | JohnsonSmith, Geoffrey |
| Dickens, Geoffrey | Jopling, Rt Hon Michael |
| Dorrell, Stephen | Joseph, Rt Hon Sir Keith |
| Douglas-Hamilton, Lord J. | Kaberry, Sir Donald |
| Dover, Denshore | Kershaw, Sir Anthony |
| du Cann, Rt Hon Edward | Kitson, Sir Timothy |
| Dunn, Robert(Dartford) | Lamont, Norman |
| Dykes, Hugh | Lang, Ian |
| Eden, Rt Hon Sir John | Latham, Michael |
| Edwards, Rt Hon N. (P'broke) | Lawrence, Ivan |
| Eggar, Tim | Lawson, Rt Hon Nigel |
| Elliott, Sir William | Lee, John |
| Emery, Sir Peter | LeMarchant, Spencer |
| Lennox-Boyd, HonMark | Rossi, Hugh |
| Lester, Jim (Beeston) | Rost, Peter |
| Lewis, Kenneth(Rutland) | Royle, Sir Anthony |
| Lloyd, Ian (Havant & W'loo) | Sainsbury, Hon Timothy |
| Lloyd, Peter (Fareham) | St. John-Stevas, Rt Hon N. |
| Loveridge, John | Shaw, Giles (Pudsey) |
| Luce, Richard | Shaw, Michael (Scarborough, |
| Macfarlane, Neil | Shelton, William(Streatham) |
| MacGregor, John | Shepherd, Colin(Hereford) |
| MacKay, John (Argyll) | Shepherd, Richard |
| Macmillan, Rt Hon M. | Silvester, Fred |
| McNair-Wilson, M. (N'bury) | Sims, Roger |
| McNair-Wilson, P. (New F'st) | Skeet, T. H. H. |
| McQuarrie, Albert | Speed, Keith |
| Marland, Paul | Speller, Tony |
| Marshall, Michael (Arundel) | Spence, John |
| Marten, Rt Hon Neil | Spicer, Jim (West Dorset) |
| Mates, Michael | Spicer, Michael (S Worcs) |
| Maude, Rt Hon Sir Angus | Sproat, Iain |
| Mawhinney, Dr Brian | Squire, Robin |
| Maxwell-Hyslop, Robin | Stainton, Keith |
| Mayhew, Patrick | Stanbrook, Ivor |
| Mellor, David | Stanley, John |
| Meyer, Sir Anthony | Steen, Anthony |
| Miller, Hal (B'grove) | Stevens, Martin |
| Mills, Iain (Meriden) | Stewart, A. (E Renfrewshire) |
| Mills, Peter (WestDevon) | Stewart, Ian (Hitchin) |
| Miscampbell, Norman | Stokes, John |
| Moate, Roger | Stradling Thomas, J. |
| Monro, Sir Hector | Tapsell, Peter |
| Montgomery, Fergus | Taylor, Teddy (S'end E) |
| Moore, John | Tebbit, Rt Hon Norman |
| Morris, M. (N'hampton S) | Temple-Morris, Peter |
| Morrison, Hon C. (Devizes) | Thatcher, Rt Hon Mrs M. |
| Mudd, David | Thomas, Rt Hon Peter |
| Murphy, Christopher | Thompson, Donald |
| Myles, David | Thornton, Malcolm |
| Neale, Gerrard | Townend, John(Bridlington) |
| Neubert, Michael | Townsend, Cyril D,(B'heath) |
| Newton, Tony | Trippier, David |
| Normanton, Tom | Trotter, Neville |
| Nott, Rt Hon John | van Straubenzee, Sir W. |
| Onslow, Cranley | Vaughan, Dr Gerard |
| Oppenheim, Rt Hon Mrs S. | Viggers, Peter |
| Osborn, John | Waddington, David |
| Page, John (Harrow, West) | Wakeham, john |
| Page, Richard (SW Herts) | Waldegrave, Hon William |
| Parris, Matthew | Walker, B. (Perth) |
| Patten, Christopher(Bath) | Walker-Smith, Rt Hon Sir D. |
| Patten, John (Oxford) | Wall, Sir Patrick |
| Pattie, Geoffrey | Waller, Gary |
| Pawsey, James | Walters, Dennis |
| Percival, Sir Ian | Ward, John |
| Peyton, Rt Hon John | Warren, Kenneth |
| Pollock, Alexander | Wells, Bowen |
| Porter, Barry | Wheeler, John |
| Prentice, Rt Hon Reg | Whitelaw, Rt Hon William |
| Proctor, K. Harvey | Whitney, Raymond |
| Pym, Rt Hon Francis | Wickenden, Keith |
| Raison, Rt Hon Timothy | Wiggin, Jerry |
| Rathbone, Tim | Wilkinson, John |
| Rees-Davies, W. R. | Winterton, Nicholas |
| Renton, Tim | Wolfson, Mark |
| Rhodes James, Robert | Young, Sir George(Acton) |
| RhysWilliams, Sir Brandon | Younger, Rt Hon George |
| Ridley, Hon Nicholas | |
| Rippon, Rt Hon Geoffrey | Tellers for the Noes: |
| Roberts, M. (Cardiff NW) | Mr. Anthony Berry and |
| Roberts, Wyn (Conway) | Mr. Carol Mather. |
§ Question accordingly negatived.