British Telecom plc (Hansard, 1 August 1984)

§ 6. Mr. Fisher
asked the Secretary of State for Trade and Industry what proportion of the equity in British Telecom plc he intends to sell to individual shareholders.

§ Mr. Kenneth Baker
It will be for the investors themselves to determine. I hope that many individuals will take up the offer.

§ Mr. Fisher
Is the Minister saying that he simply does not have any idea of what the range of private small shareholding will be in British Telecom? In previous Government flotations, a maximum of 150,000 people have purchased shares to a value of £1,000 or less, and within a year of each flotation that number has been reduced to 25,000 people, or fewer. Is he not led to the inevitable conclusion that the market for individual shareholdings in such enterprises is finite and is made up mainly of people looking for a quick turnround on their money? Will he reconsider his plans in the light of this information?

§ Mr. Baker
The sale of BT later this year provides a unique opportunity for a large number of individual private shareholders. On 25 May and on 17 July I announced details of the telephone subscriber scheme. I shall later today be announcing further details of that scheme. Broadly, it will mean that any telephone subscriber who invests £250 in the shares of BT will get a rental voucher of £18. Thus, a subscriber who invests £1,000 will get four quarterly rental vouchers amounting to £72. This will be seen as an attractive scheme by many telephone subscribers, who will have the opportunity to buy shares in BT and share in the success of that great enterprise.

§ Mr. Richard Page
While every effort must be made to allow individuals to buy shares, bearing in mind the huge advantage of the list of telephone subscribers, does my right hon. Friend agree that the trend of share purchase has been away from individuals buying shares? Will he make sure that the huge flotation of BT is not judged by the criteria of how many individuals take up shares?

§ Mr. Baker
There will be an opportunity later this year for many hundreds of thousands of people to become shareholders in BT. To begin with, there are about 240,000 employees, and already the details of the scheme for their owning shares has been announced. It means that any employee of BT, by paying £100, will be able to buy £370 worth of shares. I believe that many of those employees will take that up.

§ Mr. Golding
Will the Minister take steps to ensure that IBM does not become an influential shareholder in BT? Will the right hon. Gentleman—[HON. MEMBERS: 328 "Reading."]—in the interests of ICL and of the British computer industry, ensure that the proposed link-up between BT and IBM in the national network does not proceed?

§ Mr. Baker
The House need not chide the hon. Gentleman for reading on almost any occasion. As for the proposed venture of IBM and BT, they have issued a proposal which we are considering. A separate licence would have to be issued for that. We want public comment on the matter, and my right hon. Friend and I will consider it most carefully. As for shareholdings in BT, there is already a limit on the amounts which can be bought by any one group or groups working in concert.

§ Mr. Chris Smith
Why are hon. Members, such as the hon. Member for Stoke-on-Trent, Central (Mr. Fisher), such wet blankets about this business of individual shareholdings in BT? Should they not be welcoming the imaginative scheme that my right hon. Friend has announced?

§ Mr. Baker
One cannot hope for miracles, even on the last day of the term. There is no doubt that the scheme that I have just announced will be attractive. It will result in a dramatic increase in the number of shareholders in the United Kingdom, who will be attracted as telephone subscribers also to become shareholders.

§ Mr. Ewing
Can the Minister give one example of individual shareholders, having bought shares, continuing to hold on to them beyond a year? Has he not yet come to terms with the fact that 84 per cent. of all employee shareholders sell the shares that they have been allocated within four days of purchase, and that in one case of privatisation, 150,000 individual shareholders at the beginning were reduced to 20,000 by the end of the first year? As the Minister presiding over a great industry such as BT, how does he feel at having to introduce the soap coupon discount voucher principle?

§ Mr. Baker
The proposal that I have announced today has been welcomed by the board of BT, because it wants to have many shareholders.
As regards shareholders not retaining their interest, many thousands of shareholders—for example, in Britoil—have retained their shares because of the loyalty bonus.
As an alternative to the scheme that I announced this morning, we will a loyalty bonus scheme whereby shareholders who hold shares for more than three years will have a bonus of one for 10. I am sure that hundreds of thousands of people will join that scheme.