§ Mr. Fred Silvester (Manchester, Withington)I beg to move,
That leave be given to bring in a Bill to provide for the vesting of all property, rights and liabilities of Manchester International Airport in a company limited by shares; and for related purposes.Manchester international airport began its life on its present site in 1938. It was a product of great courage and foresight by Manchester, which decided by only one vote to carry on, despite previous disappointments. The city raised the money and overcame strong objections, and it has supported the airport ever since. The city is proud of the airport, and the airport has succeeded beyond its wildest expectations. The airport is a great tribute to municipal enterprise, and we should be grateful to the city fathers who seized the original opportunity.There is another aspect to the story. Manchester international airport is no longer a local enterprise but is a national asset. It is third in size in this country, being half the size of Gatwick and nearly three times as large as the next largest airport. It is no longer a city airport. It serves an area covering 20 million people and half the manufacturing business. It is probably the largest single dynamo to economic growth in the northern half of England, yet we fail to recognise it.
The Government and Whitehall, as the recent allocation of freeports clearly shows, regard it as merely another of those regional interests that must from time to time be placated. A further symptom of this disease would be if the Government decided that they could not legislate about Manchester airport unless they did so on a similar basis for all other local authority airports. Some Mancunians fail to recognise the change and insist on seeing the airport as theirs.
The conflict between regional importance and city proprietorship is not new. In 1974 an attempt was made to solve the conflict. Instead, an unsatisfactory compromise was produced. The other districts of the Greater Manchester area were brought in to share equally in the management and profits, although the land and buildings technically still belong to the city. There was opposition at the time. That is not surprising, since it was a solution which surrendered the city's ownership of the airport to a body which had no special claim to it. It is no more a county airport than a city airport. The demise of the Greater Manchester council will give us, once and for all, a chance to get it right.
The Bill aims to bring us—the city of Manchester, the financial and industrial institutions, the people of the north, Members of Parliament and the people in Whitehall —up to date in our perceptions of a great asset. It is based on the reconciliation of two principles: first, that Manchester has made a valuable investment and has the right to draw a good return from it; and, secondly, that Manchester international airport is too important to the north as a whole for its future to be dictated by this historic link, and it is now against the best interests of the airport to maintain the present position.
The circumstances are not new. Many a family business has grown so that the family has been forced to relinquish control and merely retain a share of the greater profits. We have reached that stage. Local pride must not strangle what local pride has created. It is time for Manchester international airport to go free.
142 I am not someone who believes in privatisation for its own sake. We must look at each case by its merits. There can be few functions more open to commercial pressures than an international airport. Its customers have a global view and are disinclined to respond to local perspectives. The airline has a flinty eye on commercial advantage. A recent report by Professor Doganis has confirmed his previous finding that Manchester international airport is
very expensive for aircraft operators and passengersand probably the most expensive airport in Europe. The airport is trying to run with a ball and chain around its leg.I shall give four examples of the way in which local authority control damages the development of the airport. First, profit is paid to the local authorities in a way that is determined in advance. It is already agreed that the contribution will be £5.67 million in 1983–84 and £5.89 million in 1984–85. It becomes, therefore, a fixed charge instead of a profit, and in the past airport charges have been raised to accommodate it.
Secondly, the position is aggravated by the limitation imposed on borrowing powers. The Government have been generous and far-sighted in the loan consent for regional and national schemes, but more schemes must be financed from the airport's own resources than would normally be the case. Whereas in 1975–76 all schemes were financed from borrowing, in 1982–83 the number was down to half. Plans for future investment involve up to £100 million in capital expenditure by 1990.
Thirdly, Manchester international airport is not master in its own house. It is obliged to employ the services of the city. As it is not a legal entity, it has to use the city corporation for contracts. The Greater Manchester council undertakes invoicing for the airport's major accounts. The airport takes services from the city architects, engineers, the town clerk, the city estates and valuations officer, the county personnel department, the treasurer's department, the county engineers and debt management. That costs the airport in excess of £1.5 million a year, and it is in the ludicrous position of not directly controlling the placing of some of its commercial services.
The fourth example shows that the employee terms are linked to those of the city. Local authority rates of pay, for instance, provide high shift allowances because shifts are a less important part of the normal course of events for local authorities than they are for airports. Wage costs are, therefore, unnecessarily high.
My Bill proposes that the airport's assets and liabilities be transferred to a company limited by shares. The airport currently has an asset value at cost price of £58 million. It has a net profit of £7.4 million and a good track record. There is no question but than an airport company could be launched on a sound commercial basis, probably with a market value of about £100 million.
The launch can and should be handled by Manchester's financial institutions. The date of transfer would be the same as that for the ending of the Greater Manchester council, presumably 1 April 1986. The company's articles would be settled after discussions with interested parties, but would provide that the city or its nominees should hold no more than one third of the shares, and the British Airports Authority, its successors and nominees would be precluded from being shareholders. The remaining two thirds of the shares would be held by the Secretary of State on trust for sale to the public within 15 months. I believe that that will be sufficient to prepare the company to go to the market on a normal commercial basis.
143 The shares would, of course, be issued fully paid, leaving the company to raise further equity capital later as it needed it. The proceeds of the sale, together with any profits paid to the Government during their 15 months of ownership, would be paid to the city of Manchester and the other districts. What would be a fair distribution among the districts would be subject to negotiation, no doubt, but my view is set out in the schedule to the Bill. For example, if the company were valued at £100 million, I would expect the city of Manchester, in addition to its one third share, to receive about £44 million and the districts sums ranging from £2 million to about £3.2 million. In view of the fact that the involvement of the other districts has been shorter, and they have put much less into the airport, that distribution seems to be fair.
The result of the Bill would be that the city would receive a large capital sum to help with its many problems. It would continue to receive contributions to the rate fund, almost certainly at an even higher level as the airport flourishes. It would enjoy the benefits of any capital gain on its shareholding, but the airport would be free to run its affairs entirely as a commercial operation, spreading its benefits throughout the region, which badly needs them. There will be a need for wide consultation, but the Bill provides a firm proposal rather than generalised prejudices. I therefore commend it to the House.
§ Mr. Alfred Morris (Manchester, Wythenshawe)I rise to oppose the motion.
Before turning to the issue of privatisation, I must tell the House that the motion has given deep offence to people of all persuasions in Greater Manchester. I am told that Manchester's Liberals are "appalled" by the motion. They are among the more restrained of its critics. Even lifelong Conservatives have reacted with "anger and disgust" at the way in which the hon. Member for Manchester, Withington (Mr. Silvester) launched his so-called Bill. By a non-political source it has been described as a "shoddy and shabby" little Bill which this House should reject with contempt.
Of course, the truth is that there is no Bill. The hon. Member's fine print is not only well-hidden; it does not yet exist. The House has no details of the hon. Member's Bill on which to form a considered judgment. All we have is a proposal that is as sketchy as it is obnoxious to anyone who knows anything about Manchester international airport. On that ground alone it should be rejected.
Manchester's reaction to the motion is hardly surprising. The hon. Member, who sits for a Manchester constituency, had no consultation about it with Manchester city council, which owns the airport; with the Greater Manchester council, which jointly shares in its management; with the airport authority, which runs the airport; or with the 6,000 people who work at the airport.
To all of them, the hon. Member's proposal was a bolt from the blue. The first the airport authority knew of it came in a brief story in the Manchester Evening News of 27 January, after which the authority wrote to the hon. Member to ask him what it was all about. I am told that, up to this morning, there had been no reply from the hon. Member, and I hope the House will agree that it is simply 144 not good enough for him to have treated those who own and run the airport, and the people who work there, so contemptuously.
I turn now to the issue of privatisation. The Secretary of State for Transport, in a recent letter to the leader of Manchester city council, said that
Manchester International Airport is one of the most successful and profitable of our regional airports".He could have gone much further. After Heathrow, Manchester airport is easily the most profitable in Britain today. Its profit in 1982–83 was £7.4 million. In the same year, Gatwick's profit was less than £1 million. With over 5 million passengers in the current year, Manchester is by a considerable margin Britain's third airport. In terms of quality of service it is Britain's best.The airport's success did not happen overnight. It was achieved by courage and foresight, by imaginative planning and patience, by intensely hard work and shrewd business sense. That is the combination that made Manchester international airport as important to the regional economy of the north-west today as our famous ship canal itself was earlier this century. Who were the shrewd business men who brought this about? They were successive generations of Manchester city councillors, public men and women of all parties and of none. Acting together, with the full support of Manchester's ratepayers, they took the investment decisions that are paying off so handsomely today.
There were years when Manchester airport did not make a profit. Only in the last few years have the city and the county taken a return on their ratepayers' investment. Moreover, even that return has been ploughed back into the regional economy. Under the hon. Member's proposal, there can be no guarantee whatever that the airport's profits will stay in the north-west.
Now that the major risks have been taken and an increasingly successful future for the airport seems assured, the hon. Member wants to poach the north-west's most valuable public asset for private profit. That is why there is so much resentment in Manchester about his proposal and such strong determination at the town and county halls to keep the sticky fingers of the profiteer out of the ratepayers' pockets.
Under the existing block grant system, loss of the legitimate return on a public investment would inflict further hardship on ratepayers in the conurbation. Is that what the hon. Member thinks Mancunians want? Is it not only fair that the ratepayers of Manchester should now benefit from the success which they alone created?
Yet the issue is not only one of justice for Manchester's ratepayers. There are other matters of important regional and national interest.
Manchester airport is vital to the economy of the whole north-west. Of the 6,000 jobs it has created, 20 per cent. are in the public sector and 80 per cent. in the private sector. Recent assessments suggest that a further 20,000 workers owe their livelihood, wholly or partly, to the airport's existence. The compelling need now is for further growth, not least of scheduled services. These services, on which commerce and industry depend, are often the least profitable, but they are of the first importance to the regional economy.
Of course, there can be no assurance that a private company, with clear legal duties to shareholders, would want to expand the scheduled services. Nor with private 145 ownership is it likely that the extremely sensitive environmental issues, so important to local residents, would count for much compared with maximising profit.
There can be no assurance either that a private company would build expensive new facilities to avoid overcrowding at the airport; indeed, the reverse is more likely, since overcrowding could be as profitable for the shareholder as it would be uncomfortable for the passenger.
Again, there can be no assurance that the airport's staff and, as we have heard from the hon. Member today, even their wages and salaries will not be reduced in the pursuit of profit. Most important of all, there can be no assurance that the airport will not be milked without any regard whatever for the importance of its wider economic role in the north-west.
There is a hint in the Government's White Paper "Streamlining the Cities"—where it touches on airports—that more private capital must be injected into publicly owned airports, that ratepayers should not have to carry the burden—as it is called—of such undertakings, and that private involvement would sharpen their efficiency.
Manchester airport is already efficient. If anyone doubts that, let him name the private companies in the north-west that showed a profit of £7.4 million last year. Again, Manchester airport now has no difficulty in securing private capital for its investments, nor in arranging for partnership with the private sector for development work at Ringway. Much apart from being a burden on the rates, Manchester airport is quite the reverse.
Let me make it pikestaff plain. The hon. Member's proposal will not of itself bring in one more passenger, create one new job, or add a single penny to either the airport's profits or those of businesses in the region that it serves. In fact, the sheer futility of this motion was conceded by the hon. Member himself when, in a recent interview on Granada Television, he was asked what was wrong with the way in which the airport was now being run. His reply was the cryptic comment, "Well, I think nothing".
The hon. Member seems totally unaware that this is the very worst moment to be causing uncertainty about the future of Manchester airport. Is he not aware, first, that the Government still have to determine the whole deeply controversial question of the third London airport; secondly, that the Civil Aviation Authority is in the middle of a major review of the airline industry; and, thirdly, that the impending proposals for the sale of the British Airports Authority and British Airways will have a major impact on the future of air transport in this country? Everyone who recalls the fiasco at Amersham International will see that the hon. Member's motion coincides with a degree of uncertainty which could be financially disastrous even to the course he proposes.
By common consent, Manchester today has many daunting problems that merit the attention of the House. They are problems that affect people in every part of the city — the constituents of the hon. Member for Withington as well as mine. The city's two longest and most distressing queues are those for jobs and homes. We have one of the gravest problems of youth unemployment in Britain. Among other pressing problems, there is growing child poverty and increasing deprivation among the elderly at a time when our social services are starved of funds. Most of our problems require more resources for 146 their solution. Yet the hon. Gentleman's sole contribution is to suggest what would in effect be a financial mugging of the city's ratepayers.
The best message that we can send to those who own, control and work at Manchester airport is one of warm congratulation on what they have achieved and the best wishes of this House for further success. In the interests of economic revival in the north-west as a whole, their commitment to an expanding international airport must be allowed to succeed. I ask the House to defeat the motion.
§ Question put, pursuant to Standing Order No. 15 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business): —
§ The House divided: Ayes 154, Noes 171.
148| Division No. 162] | [4.45 pm |
| AYES | |
| Adley, Robert | Hanley, Jeremy |
| Alexander, Richard | Harvey, Robert |
| Amess, David | Haselhurst, Alan |
| Ashby, David | Hawkins, Sir Paul (SW N'folk) |
| Aspinwall, Jack | Hawksley, Warren |
| Atkins, Rt Hon Sir H. | Hayes, J. |
| Atkins, Robert (South Ribble) | Heathcoat-Amory, David |
| Atkinson, David (B'm'th E) | Hill, James |
| Batiste, Spencer | Hind, Kenneth |
| Beaumont-Dark, Anthony | Hirst, Michael |
| Bellingham, Henry | Holland, Sir Philip (Gedling) |
| Bennett, Sir Frederic (T'bay) | Holt, Richard |
| Benyon, William | Howarth, Gerald (Cannock) |
| Best, Keith | Hubbard-Miles, Peter |
| Biggs-Davison, Sir John | Hunter, Andrew |
| Bonsor, Sir Nicholas | Jones, Robert (W Herts) |
| Bottomley, Peter | King, Roger (B'ham N'field) |
| Bowden, A. (Brighton K'to'n) | Knowles, Michael |
| Bowden, Gerald (Dulwich) | Leigh, Edward (Gainsbor'gh) |
| Braine, Sir Bernard | Lennox-Boyd, Hon Mark |
| Brandon-Bravo, Martin | Lewis, Sir Kenneth (Stamf'd) |
| Bright, Graham | Lightbown, David |
| Brinton, Tim | Lord, Michael |
| Brown, M. (Brigg & Cl'thpes) | McCurley, Mrs Anna |
| Browne, John | McCusker, Harold |
| Bruinvels, Peter | Macfarlane, Neil |
| Buck, Sir Antony | MacKay, Andrew (Berkshire) |
| Budgen, Nick | Malins, Humfrey |
| Burt, Alistair | Maples, John |
| Carlisle, Kenneth (Lincoln) | Marlow, Antony |
| Chapman, Sydney | Mawhinney, Dr Brian |
| Chope, Christopher | Maxwell-Hyslop, Robin |
| Churchill, W. S. | Merchant, Piers |
| Clark, Sir W. (Croydon S) | Miller, Hal (B'grove) |
| Cockeram, Eric | Mills, Iain (Meriden) |
| Conway, Derek | Moate, Roger |
| Corrie, John | Molyneaux, Rt Hon James |
| Currie, Mrs Edwina | Monro, Sir Hector |
| Dickens, Geoffrey | Morris, M. (N'hampton, S) |
| Dicks, Terry | Moynihan, Hon C. |
| Douglas-Hamilton, Lord J. | Murphy, Christopher |
| Dover, Den | Neale, Gerrard |
| du Cann, Rt Hon Edward | Nicholls, Patrick |
| Durant, Tony | Onslow, Cranley |
| Evennett, David | Osborn, Sir John |
| Eyre, Sir Reginald | Ottaway, Richard |
| Fairbairn, Nicholas | Parris, Matthew |
| Fallon, Michael | Pawsey, James |
| Favell, Anthony | Peacock, Mrs Elizabeth |
| Fookes, Miss Janet | Powell, Rt Hon J. E. (S Down) |
| Forsyth, Michael (Stirling) | Powley, John |
| Fox, Marcus | Price, Sir David |
| Freeman, Roger | Proctor, K. Harvey |
| Fry, Peter | Pym, Rt Hon Francis |
| Galley, Roy | Raffan, Keith |
| Gilmour, Rt Hon Sir Ian | Rathbone, Tim |
| Gorst, John | Rhodes James, Robert |
| Gower, Sir Raymond | Robinson, Mark (N'port W) |
| Griffiths, E. (B'y St Edm'ds) | Rossi, Sir Hugh |
| Hamilton, Neil (Tatton) | Rowe, Andrew |
| Rumbold, Mrs Angela | Thurnham, Peter |
| Ryder, Richard | Tracey, Richard |
| Sayeed, Jonathan | Twinn, Dr Ian |
| Shaw, Sir Michael (Scarb') | Vaughan, Sir Gerard |
| Shepherd, Colin (Hereford) | Viggers, Peter |
| Shersby, Michael | Walden, George |
| Silvester, Fred | Walker, Bill (T'side N) |
| Sims, Roger | Wall, Sir Patrick |
| Skeet, T. H. H. | Watts, John |
| Spencer, D. | Wells, John (Maidstone) |
| Squire, Robin | Wheeler, John |
| Stanbrook, Ivor | Winterton, Mrs Ann |
| Steen, Anthony | Winterton, Nicholas |
| Stern, Michael | Wood, Timothy |
| Stevens, Lewis (Nuneaton) | Yeo, Tim |
| Stevens Martin (Fulham) | |
| Sumberg, David | Tellers for the Ayes: |
| Terlezki, Stefan | Mr. Barry Porter and |
| Thorne, Neil (Ilford S) | Mr. Tom Sackville |
| NOES | |
| Abse, Leo | Corbyn, Jeremy |
| Alton, David | Cowans, Harry |
| Anderson, Donald | Craigen, J. M. |
| Archer, Rt Hon Peter | Crowther, Stan |
| Ashdown, Paddy | Cunningham, Dr John |
| Ashley, Rt Hon Jack | Dalyell, Tam |
| Ashton, Joe | Davis, Terry (B'ham, H'ge H'l) |
| Atkinson, N. (Tottenham) | Deakins, Eric |
| Bagier, Gordon A. T. | Dixon, Donald |
| Barnett, Guy | Dobson, Frank |
| Beckett, Mrs Margaret | Dormand, Jack |
| Beith, A. J. | Douglas, Dick |
| Bell, Stuart | Dubs, Alfred |
| Bennett, A. (Dent'n & Red'sh) | Duffy, A. E. P. |
| Bermingham, Gerald | Dunwoody, Hon Mrs G. |
| Bidwell, Sydney | Eadie, Alex |
| Boyes, Roland | Eastham, Ken |
| Brown, Gordon (D'f'mline E) | Edwards, Bob (W'h'mpt'n SE) |
| Brown, Hugh D. (Provan) | Ellis, Raymond |
| Callaghan, Jim (Heyw'd & M) | Evans, John (St. Helens N) |
| Campbell, Ian | Fatchett, Derek |
| Campbell-Savours, Dale | Field, Frank (Birkenhead) |
| Canavan, Dennis | Fields, T. (L'pool Broad Gn) |
| Carlile, Alexander (Montg'y) | Fisher, Mark |
| Carter-Jones, Lewis | Flannery, Martin |
| Cartwright, John | Forrester, John |
| Clark, Dr David (S Shields) | Foulkes, George |
| Clay, Robert | Freeson, Rt Hon Reginald |
| Cocks, Rt Hon M. (Bristol S.) | Freud, Clement |
| Cohen, Harry | Godman, Dr Norman |
| Coleman, Donald | Golding, John |
| Conlan, Bernard | Gould, Bryan |
| Cook, Frank (Stockton North) | Hamilton, James (M'well N) |
| Cook, Robin F. (Livingston) | Hamilton, W. W. (Central Fife) |
| Corbett, Robin | Hardy, Peter |
| Harrison, Rt Hon Walter | Park, George |
| Hart, Rt Hon Dame Judith | Patchett, Terry |
| Hattersley, Rt Hon Roy | Pendry, Tom |
| Haynes, Frank | Penhaligon, David |
| Heffer, Eric S. | Pike, Peter |
| Hogg, N. (C'nauld & Kilsyth) | Powell, Raymond (Ogmore) |
| Home Robertson, John | Prescott, John |
| Howells, Geraint | Randall, Stuart |
| Hoyle, Douglas | Redmond, M. |
| Hughes, Dr. Mark (Durham) | Rees, Rt Hon M. (Leeds S) |
| Hughes, Robert (Aberdeen N) | Richardson, Ms Jo |
| Hughes, Roy (Newport East) | Roberts, Allan (Bootle) |
| Hughes, Sean (Knowsley S) | Roberts, Ernest (Hackney N) |
| Hughes, Simon (Southwark) | Robertson, George |
| Janner, Hon Greville | Robinson, G. (Coventry NW) |
| John, Brynmor | Rooker, J. W. |
| Johnston, Russell | Ross, Ernest (Dundee W) |
| Jones, Barry (Alyn & Deeside) | Rowlands, Ted |
| Kaufman, Rt Hon Gerald | Sedgemore, Brian |
| Kennedy, Charles | Sheerman, Barry |
| Kilroy-Silk, Robert | Sheldon, Rt Hon R. |
| Kirkwood, Archibald | Shore, Rt Hon Peter |
| Lambie, David | Skinner, Dennis |
| Lamond, James | Smith, C.(Isl'ton S & F'bury) |
| Leighton, Ronald | Smith, Rt Hon J. (M'kl'ds E) |
| Lewis, Ron (Carlisle) | Snape, Peter |
| Lewis, Terence (Worsley) | Soley, Clive |
| Loyden, Edward | Spearing, Nigel |
| McCartney, Hugh | Stott, Roger |
| McDonald, Dr Oonagh | Strang, Gavin |
| McGuire, Michael | Straw, Jack |
| McKay, Allen (Penistone) | Thomas, Dafydd (Merioneth) |
| McKelvey, William | Thomas, Dr R. (Carmarthen) |
| McNamara, Kevin | Thorne, Stan (Preston) |
| McTaggart, Robert | Tinn, James |
| McWilliam, John | Wainwright, R. |
| Madden, Max | Wallace, James |
| Marek, Dr John | Warden, Gareth (Gower) |
| Marshall, David (Shettleston) | Wareing, Robert |
| Martin, Michael | Weetch, Ken |
| Mason, Rt Hon Roy | Welsh, Michael |
| Maxton, John | White, James |
| Meacher, Michael | Wigley, Dafydd |
| Meadowcroft, Michael | Williams, Rt Hon A. |
| Michie, William | Winnick, David |
| Mikardo, Ian | Woodall, Alec |
| Millan, Rt Hon Bruce | Wrigglesworth, Ian |
| Mitchell, Austin (G't Grimsby) | Young, David (Bolton SE) |
| Morris, Rt Hon A. (W'shawe) | |
| Morris, Rt Hon J. (Aberavon) | Tellers for the Noes: |
| Nellist, David | Mr. Robert Litherland and |
| O'Brien, William | Mr. Tony Lloyd. |
| Orme, Rt Hon Stanley |
§ Question accordingly negatived.