Amendments made: No. 41, in page 50, line 17, leave out from "warrant" to end of line 25 and insert
to enter and search the premises specified in the information at any time within one month from the date of the warrant
§ No. 42, in page 50, line 28, leave out from "section" to end of line 31.—[Mr. Butcher.]
§ Mr. Fisher
I beg to move amendment No. 43, in page 51, line 14, leave out clauses 56 to 68.
These clauses vest the property of BT in a company nominated by the Secretary of State. In normal language, they are the clauses that privatise British Telecom. They are what the Bill is about—the selling-off of £4,000 million of public assets. This is a company that you, Mr. Deputy Speaker, and I, and every other private residential subscriber to the telephone system, have built up with our contributions through our phone bills over the years. It is our company. It is paid for by us, and it is providing a universal service to every person, a universal quality of service at a universal price, and it has been doing that extremely well for the past 71 years.
Above all, it is a service — this should be particular interest to hon. Members—that is accountable to us in the House. That is a responsibility that the House should jealously guard but one that the Government seek to remove from the House. Not only are the Government and the Secretary of State, by the Bill, seeking to sell off, completely irresponsibly, valuable public assets that do the public and the country good; they are doing no service to the House by removing from it the responsibility for a vital public service.
Why are the Government doing this? In Committee the Minister gave us a checklist of what he considered to be the reasons for privatising BT, and it was a pretty puny list. He said that it was consequential on the breaking up of the exclusive privilege of the monopoly, that it would free BT 1102 from state control, that it would allow it free access to the money markets, that it would give commercial freedom to the management and that it would spread share ownership. Those were the five reasons why the Government are selling off £4,000 million of public assets, and the Minister is confirming them visually now, although that does not give them any more force. Let us go through these reasons to see how they stand up to any scrutiny.
The first two reasons are token, even for a Minister whom the Committee has cross-examined and whose actions it scrutinised for over 100 hours of Committee. We know that his heart is not in this, and all Conservative Members with any sense of public service do not have their hearts in it either. Both the Minister and the Under-Secretary, possibly unlike the Secretary of State, understand the public service, and do not believe in the Bill. Therefore, the first two reasons are not sufficient.
The first reason — that it is consequential on the breaking up of the exclusive privilege —is a load of nonsense. Privatisation does not inevitably follow from liberalisation. Labour Members have varying degrees of enthusiasm for liberalisation, but it has been proceeding for the past three or four years. There would be no need for privatisation if the Government considered that what was exclusive was good. There are mixed opinions. I am not saying that liberalisation has not been in the consumers' interest, particularly as there has been a more forceful marketing approach by BT. Liberalisation could easily have continued without privatisation. To try to make the one consequential on the other is complete eyewash, and will not bear even the most rudimentary scrutiny.
As for the suggestion that privatisation would free BT from state control, that is just as bad. It is desirable to free a company from state control only if the Government of the day are using that company badly. Intelligent, enlightened and responsible Government is useful control, and a means of making a public corporation accountable. For the Government to say that they consider that their executive power is detrimental to a public corporation is a gross admission of maladministration, incompetence and futility.
The Minister of State says that the Government cannot manage BT's affairs competently, and that therefore they must sell BT and leave it to someone who can manage its affairs. That is an admission of defeat. It is amazing that the Minister of State was sufficiently naive to bring this measure forward as a reason for privatising BT. I should have thought that that would be something of which the Minister would be ashamed and that he would have tried to disguise from us the fact that in their heart of hearts the Government are prepared to admit that they cannot competently manage BT's affairs. It is extraordinary that the Government can come before a Standing Committee and admit that they cannot run a public corporation like BT. The Government's reasons do not stand up to scrutiny.
Financial affairs are matters of greater substance, although when we scrutinise them they become more complicated and the waters become more murky. The Minister of State and the Government tried to give the impression in public and through advertisements— an extremely expensive campaign, which was paid for out of BT's purse—that BT was a drain on the public, that it ought to be removed from public concern and left private industry. Nothing could be further from the truth. To give that impression to the public was to mislead it totally. BT 1103 has large loans. In the last account, BT had £3,395 million worth of loans over various terms. All of them were at the full market rate of interest.
BT pays its way and, far from being a drain on the public purse, it is a net contributor. It is making profits. It has an external financing limit, but for the last few years that limit has been negative — BT contributes to the Treasury and to the State. It is of benefit to us all. In the autumn statement two or three weeks ago the Chancellor announced that BT's external financing limit for 1984–85 was a negative limit of £250 million. This country, the Government and all of us are benefiting from BT's extremely good management, under public ownership. That is a record of which we should be proud. We should not be using BT as a type of milk cow for the public purse
§ Mr. Fisher
I take that correction. At this time of night my enunciation may not be all that it should be
§ Mr. Golding
I am sure that my hon. Friend would realise that in Staffordshire many of us say "milk cow". We have not had the education of the hon. Member for Leeds, West (Mr. Meadowcroft)
§ Mr. Fisher
With such an external financing limit, BT, under this Government, has been used as a form of rather devious public taxation. It is wrong for the Government to give any other impression, and to try to say that in some way BT should be hived off because it is not operating in the public interest. Of course BT operates in the public interest. Apart from providing services and fulfilling the interests of the customer, in cold commercial terms, BT stands in the Government's balance books as asset to the public in terms not only of fixed capital assets but profits from turnover and revenue. It is nonesense in commercial and financial terms to sell BT.
Not satisfied with milking BT dry through negative external financing limits, the Government are getting greedier and, as their economic policies fail, they are becoming more desperate for capital to bolster up the inadequacies and ineptness of those policies. They are desperately looking around for capital. During questions on the autumn statement, the hon. Member for Mid-Sussex (Mr. Renton) said that it was a question of flogging the furniture to pay for the food. Even on the most simplistic financial analysis that is a ludicrous way of proceeding and a most irresponsible way for the Government to conduct economic affairs.
Selling off BT is just one part of that. It shows up in the autumn statement, in the Chancellor's assessment of the amount of money that would go to the Exchequer in 1984–85 from the sale of Government assets as being £1.9 billion, most of which is likely to be from BT. That leaves a number of questions unanswered, however, as the capital receipts from the sale of BT are expected to be about £4 billion. We shall come to the other questions about that statement in due course. Selling off capital assets to balance the revenue incompetence of the Government is a desperate and fatal weakness at the heart of the Government's economic policies. The sale of BT is a perfect example.
There is a bitter irony in the sale of the shares on which the City, the stock exchange and the people of this country 1104 should ponder. It has not been fully appreciated by everyone, perhaps not even by Sir George Jefferson and the management of BT, that privatisation and the selling of the shares will not benefit BT at all. The only people to benefit will be the Government. When any other company goes to the stock exchange for a quotation to sell shares, the company benefits from the sale, but all the proceeds from the sale of BT will go to the Exchequer and none will assist the future financial policy and capital structure of BT. That has not been made sufficiently clear so far. The Minister has not pointed that out, but the City and BT would do well to recognise it because they will not make a penny out of the sale
§ Mr. Golding
My hon. Friend is being rather soft on some people in the City who will certainly make money out of the sale. They will try to make money out of it whether it is in the interests of BT or not. One of the indictments of the Government is that they will hand over the sale of the shares to people without any interest in telecommunications or the health of the industry in Britain
§ Mr. Fisher
My hon. Friend is right. At this stage BT looks likely to provide a healthy carcase and there will be plenty of scavenging birds of prey in the shape of stockbrokers and bankers seeking to make a quick kill when the time comes. Those people are beneath consideration in this debate. They are the dross, the flotsam and jetsam of the private stock exchange system. We are dealing here with important matters of public service.
§ Mr. Golding
Surely my hon. Friend is not suggesting that we should not expose the antics of the City in relation to the sale of BT shares, as it must be our responsibility now to ensure that the British public, those who work in BT and the customers, know how the sale will be exploited by the City
§ Mr. Fisher
I look forward to my hon. Friend's contribution on that when we debate the sale of the shares in more detail. At that stage we must, of course, examine the way in which previous sales of public assets by the Government have lead to sordid and less that than creditable quick profits and killings by a few individuals at the public expense. I am sure that such an argument will be deployed admirably by hon. Members in the debate.
The principal issue in the debate is whether the shares should be sold and who will benefit? I believe that the Government and not BT will benefit.
§ Mr. Hayward
The hon. Gentleman has been extremely scathing about one group of persons within the City. Does he realise that that group contributes more to the Exchequer than does BT?
§ Mr. Fisher
If the debate is allowed to range to such matters as invisible exports and earnings perhaps we should debate the autumn statement. We must return to the amendment involving privatisation.
I do not disregard the role performed by the City of London. It contributes much to our invisible earnings. When private or public companies wish to exchange shares, merchant banks and stockbrokers have a perfectly respectable role to perform. My hon. Friends and I object to the Government—the stockbrokers and the merchant bankers are not primarily guilty in this affair—allowing 1105 a valuable public asset, which provides a good service to the customer and to every person who is lucky enough to have a telephone, to be sold for a quick and cheap profit. The Government are guilty in this matter. Their agents, the stockbrokers and merchant banks, are mere accessories after the fact. The guilty men on the Government Front Bench are guarding their larynxes. Perhaps tomorrow they will find a voice, but their lack of voice will not disguise the fact that they cannot answer the case and have nothing to say.
The Minister said that BT will have access to the market for raising capital. Should it go to the market? The Minister, when elaborating on this point in Committee, said that BT will be more flexible and able to raise capital faster. BT has, for the past 10 years, been self-financing its capital investment, and it has a large capital investment programme.
One would have thought that the good solid Victorian value of self-help that it followed would have been ideologically attractive to the Government. I suspect that "Self-Help" by Samuel Smiles would have been on the shelves of a Grantham greengrocer's shop. "Neither a borrower nor a lender be." The injunction is "Invest in thine own self. Make your fortune that way."
Some senior Conservative Members have expressed unhappiness about the Government borrowing money for the public good, but the Government now say that BT's method of self-financing does not make good sense. When the Opposition ask the Government to borrow money to finance capital investment projects which the infrastructure of our country desperately needs, why do the Government decline to do so and say that the public sector borrowing requirement is too high and cannot be increased, even if that meant people returning to work, increase output, greater exports and recovery. Why do the Government say that the PSBR cannot be increased by a penny? It is strange that the Government have a different opinion when they refer to the financial structure of BT.
In spite of that, I do not entirely disagree with the Minister of State. There are undoubtedly snags with self-financing. The pressures that arise when it is practised exclusively are considered as snags by customers. These pressures have their effect on bills and prices. It is true that BT's self-financing has been extremely successful over the past few years, but a certain amount of external financing is not unappealing. That argument is supported by the BT unions, which are in favour of self-financing. The concept is already being put into effect in small ways. For example, there is leasing and sale and leaseback. If BT had been allowed to develop Buzby bonds as it wished to, they could have been a success. I have referred to the attempts to find ways of external financing at an embryonic stage.
The Opposition have no ideological resistance to the idea of external financing. Equally, there is no reason why external financing should be only a consequence of privatisation. It is not necessary to flog shares to raise finance externally. If the Government had chosen, they could have changed definitions within the PSBR. They could have allowed BT to borrow in the market place. However, they chose not to do so, and the Minister of State or the Secretary of State will answer that charge tomorrow. The Government have chosen not to allow BT to borrow in the market place in the absence of privatisation, and there is no logic, rhyme or reason for that.
I accept that external financing of the sort that BT has followed over the past two years creates pressures, but 1106 BT's price increases throughout the 1970s have always been behind inflation. That is a good record, especially when we recognise the pressure that external financing places on price increases. The policy has worked well for BT, for the customer and for Britain.
The Government would have found the best possible world if they had refrained from privatising BT and had allowed it to continue to raise money externally. Thai would have allowed public service, public accountability and public control of a valuable public asset. Some liberalisation would have allowed greater flexibility and would have encouraged management to market more vigorously. It would have led to some financial flexibility. That could have been achieved without going private. However, the Government were obsessed with corn-petition. Their ideological blindness has made them inexorably determined to privatise, come hell or high water or any other barrier.
I do not object to ideology. The Opposition have their ideologies, because that is part of the political arena and political background. I object to the blindness, not the ideology. The result is that we have the worst of all possible worlds. We shall have no public service and no greater financial flexibility. Indeed, we shall have some insecurity. The sale of shares will create insecurity. Which is the more hazardous or which is the more desirable: should we let BT stay public and borrow in the market place or should we force BT to go private and flood the stock exchange with shares that it cannot absorb?
I note that the Minister is making almost silent interjections from a sedentary position because of the condition of his larynx. I have the impression that they are framed in thoroughly unparliamentary language. The Minister knows only too well that, in asking the stock exchange to sell £4,000 million of shares on our behalf, he is asking the technically impossible. Last year, the stock exchange sold £3,000 million of new business. That was a great increase on the previous year and was one of the best years that the stock exchange had had for 10 years. But we are asking just one sale of shares to be 25 per cent. up on that. The Government are being naive, disingenuous or simply inconsiderate. What would it do to their borrowing, or to the whole gilts market? Either the Government have not thought things out, or they have a very devious way of selling the shares and they have not had the courtesy to include it in the Bill, or in its schedules.
If the Government have some other way of selling the shares, they should have told the House quite openly, and should have allowed us to consider the proposal. However, they chose not to do that, and so we must assume that they will sell the shares mainly on the London stock exchange. If that is so, they have a duty to tell the House how they intend to do so, and over what period of time
§ Mr. McWilliam
Why does my hon. Friend make that assumption when the evidence is that the Minister's officials have been in America and Japan exploring ways of flogging off the shares there? Has my hon. Friend considered that the Minister is trying to do a little bit of damage limitation on the London gilt market by exploring ways of promoting them on the New York and Tokyo stock exchanges?
§ Mr. Fisher
In the early days of the Committee, hon. Members made that very point to the Minister. My hon. Friend the Member for Blaydon (Mr. McWilliam) was 1107 foremost among them in asking the Minister on which stock exchanges shares would be sold. My next-door-neighbour from north Staffordshire, my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding), coined a phrase that suitably sums up the Government's attitude to BT. He said it was the Yankee, Arab, Nippon, Anglo something or other—
§ Mr. Golding
The name is the Yankee Nippon Arab Telephone Company. The word "Anglo" would not be recognised by the Government lot
§ Mr. Fisher
I must correct my hon. Friend. The customers will be "Anglo". It is only the shares that will be foreign-owned.
We pressed the Minister on that point. To be fair, in some embarrassment and after a certain amount of consultation with his officials, he returned to the Committee and appeared to give an undertaking that only a few shares—about 10 to 15 per cent.—would be sold on foreign stock exchanges. I think that my memory serves me right, but I shall give way to the Minister if he can find his voice and wishes to correct me. However, that is 10 to 15 per cent. too many. It is disgraceful, but a lot less disgraceful than the 50 per cent. or 60 per cent. of shares that was, I suspect, in the Minister's mind at the beginning
§ Mr. Golding
See all, hear all but say nowt did not give an undertaking. His words were hedged round, just as they are over the sale of shares to Japan. He said that that was not under active consideration at the moment. My hon. Friend is again falling into the danger of committing the sin of Stoke-on-Trent, Central, which is to take the Minister on trust. I do not think that my hon. Friend will find the word "undertaking" in the report of our Committee proceedings. There may have been all sorts of nods, winks and nudges, but, unless I am very much mistaken, my hon. Friend will not find the word "undertaking" there. The Minister does not work like that. He leads hon. Members up the garden path. Someone from Stoke-on-Trent, Central might go up that path, but someone from Newcastle-under-Lyme stays at the garden gate, and reads what the Minister actually said
§ Mr. Fisher
I stand corrected. I plead my inexperience, kind-heartedness and trustful nature in mitigation. I take my hon. Friend's point that one has to scrutinise the Minister of State's words rather more carefully. Without the record in front of me, I cannot recall his precise words on the first day of our proceedings, but the spirit of what he said was clear to everyone. Whereas at the start of the morning he appeared to be saying that a substantial amount of shares would be sold abroad, by the end of the day I believe he had to admit that few, if any, or a small amount only, would be sold. As my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) indicated, we on the Opposition Benches oppose totally any sale of shares to foreign ownership of this valuable public asset that is the rightful property of every person in this country. If the Government are determined to overrule us and sell some, then let it be as few as possible. But we object to any sale of shares.
§ Sir John Biggs-Davison (Epping Forest)
I have learnt a great deal from the hon. Gentleman. I have an interest in the debate, although I did not have the privilege of sitting on the Standing Committee.
Can the hon. Gentleman tell me whether it would be possible for me, if I had the money, which I have not, to obtain shares in Standard Telephones and Cables in the United States?
§ Sir John Biggs-Davison
The company does not matter. Would it be open to a British subject to obtain shares in a telephone company in another country? Why is it so wrong for there to be a foreign shareholding in a British telephone undertaking?
§ Mr. Fisher
I believe that there are controls on foreign shareholdings in AT and T, but I give way to my more experienced hon. Friend
§ Mr. Golding
If the hon. Gentleman had had the privilege to serve on the Committee, he would have heard that in Japan there is an absolute bar and in America only the most negligible holdings are permissible. Those countries will allow us to hold no stock in their companies, apart from negligible holdings. The Government are hell-bent on selling as much as they can abroad
§ Mr. Fisher
It is always informative when the House considers Japan's handling of its affairs as against our handling of our affairs. In spite of protestations from the Government, not only has Japan built up its home market since the war by very strong, often non-tariff, barriers against imports into Japan—the very policy that this Government refuse to recognise as being the only way out of the recession for this country; some flexible, variable and probably non-tariff barrier to protect our industry as we recover—but the Government do not recognise that in the matter of ownership of companies, Japan jealously guards the right to control its own economy. This country should do likewise.
Let me come to the fourth point of commercial freedom that the hon. Gentleman would be greatly extended by privatisation. The Minister of State, when he had a voice, spoke very eloquently on this point. Indeed, it was one of his favourite speeches. He gave it to hon. Members several times in Committee and each time the Committee enjoyed it a great deal. He would say that this aspect of commercial freedom was what it was all about, this was the new world opening up to BT, the very essence of the challenges for BT. Then he would rhapsodise about this commercial freedom. After this great barrage of beautiful poetic language, he gave an example of the commercial flexibility it would provide. He said, for instance, that Cable and Wireless had recently done a deal with the Texas Railroad Company. [Interruption.] Hon. Members may laugh, but the best is yet to come. The purpose of the deal was to gain a contract in the Guang Dong province of China. Is that why the Government believe that we should privatise BT—to bring telephones to a part of China? Obviously the Minister of State's missionary zeal has been hidden up till now. I hope that he tells that—the real reason why the Government are privatising BT 1109 —to his constituents of Mole Valley. In other words, our 300 hours in Committee were about bringing telephones to China
§ Mr. Hayward
The hon. Gentleman's sneering references to Guang Dong province display his ignorance of the fact that the Chinese are hoping to use that as their economic cockpit during the next 25 years
§ Mr. Fisher
My ignorance on many matters is very large—[HON. MEMBERS: "Hear, hear."]—and I readily acknowledge the enormous, even encyclopaedic, knowledge of the hon. Member for Kingswood (Mr. Hayward) of the Chinese economy. That he kept it hidden throughout our proceedings in Committee is a testament to his modesty. No doubt he will regale the House with his great expertise on Chinese economic affairs in the future.
The final point that the Minister of State made was that privatisation would spread share ownership. It was a totally phoney argument because those who benefit from the sale of public corporations are not the small investors. The Government continually talk about helping the little man, about making sure that employees have a chance and about enabling people such as the hon. Member for Epping Forest (Sir J. Biggs-Davison) as an individual to acquire shares, but the facts prove otherwise.
In February 1982, when Amersham International was sold, there were 65,000 lots on the day of sale. Four months later there were 8,601; two thirds of the shareholdings in Amersham International were in lots of more than £250,000. The Minister of State's idea of small shareholdings is very different from ours, and he knows in his heart of hearts that such sales do not spread share ownership at all. He adduced a totally phoney argument.
The Government's case for privatising BT does not begin to hold water. The Minister made some play with the financial impact of privatisation, and that bears analysis. Shareholders will require dividends, and in this company those dividends will be substantial. The Minister has been coy about discussing the result of the demands of dividends on the cash flow and outflow of BT. When it is considered that the fixed assets, based on the sale price, will be about £8 billion, the return on that capital, even a modest return, will be considerable. Even allowing for a considerable capital appreciation, and therefore perhaps reduced dividend expectations by shareholders, it is not over-greedy to suggest that shareholders will be looking for a 4 per cent. annual dividend. That will be £320 million and that will place an enormous pressure on the financial performance of a privatised BT. Quite apart from unbalancing services, the needs of a small number of firms in private ownership, some of them foreign, will take priority over the needs of some 15 million private shareholders.
The more one looks at the Government's case the more flimsy and insubstantial it appears to be. When one considers how the shares are to be sold, where they will be sold, on what exchanges and on what terms, the Government's case does not add up. In Committee the Minister of State was remarkably reticent on many of those subjects. He was elusive about what he meant. When questioned about the massaging of the capital reconstruction of the company, about the sudden 24 per cent. increase in depreciation last year, conveniently in the penultimate year before privatisation, and about the price rises that will come next year to boost profits in the year 1110 of the sale—subjects that will undoubtedly brighten the image of BT prior to the sale, but on which the Minister was inconvenienced and on which he spoke rather faster — his answer became less and less coherent and Less substantial.
The Minister of State should answer the questions about the capital reconstruction of BT, the pension fund, depreciation and the way in which price rises will be managed by BT next year. All those will have a substantial effect. We have a right to expect from the Minister of State clear statements on what exchanges will be used to sell the shares and how they will be sold
§ Mr. Hayward
The hon. Gentleman has yet again referred to the exchanges that will be used. Earlier in his speech he seemed to recall easily the question that the hon. Member for Blaydon (Mr. McWilliam) put to the Minister. He seems to have conveniently forgotton the very clear answer that the Minister gave about the exchanges on which the stocks would be floated
§ Mr. Fisher
On the contrary, the Minister of State was extremely elusive on this. We want to know not only about the exchanges that will be used but about the method of sale. When questioned about the methods of convertible bonds and so on that have been leaked and floated in the press he was very elusive. The time has come for him to make a clear statement about how BT will be sold and over what period. The House, the public and the employees and customers of BT have a right to know now how the company will be disposed of.
The Government's case has crumbled. I leave the floor for any attempt that they may make at this eleventh hour to win the argument. They could not win it in Committee, however hard they tried. Conservative Members sitting behind the Minister of State did not try very hard and did not make much of a case. We make one promise to potential buyers: we will be the next Government and we will bring back into public ownership without speculative gain this valuable public asset. That will be done in the interests of a universal public service, of the employees and certainly of the customers
§ Mr. Golding
Can my hon. Friend give us the assurance that tomorrow afternoon he will savage the Government and not treat them so kindly as he has tonight? Will he get behind their motivation and talk less of the techniques that they will use and more of the sordid nature of the business they will be conducting?
§ 12 midnight
§ Mr. Fisher
I shall have to leave that to hon. Members who are more capable of doing it than I. Even on the basis of this wholly inadequate scrutiny, the case that the Minister presented to the Committee does not bear analysis. It is not a responsible or adequate explanation for the sale of £4 billion of public assets. It will stand as a black mark against the Government's economic mismanagement of the country and its public assets
§ It being Twelve o'clock, further consideration of the Bill stood adjourned, pursuant to the order [21 November]
§ Bill, as amended (in the Standing Committee), to be further considered this day.