§ The Secretary of State for Transport (Mr. Nicholas Ridley)
With permission, Mr. Speaker, I should like to make a statement about Sealink.
I have today given my consent under section 1(2) of the Transport Act 1981, to the sale of Sealink UK Ltd., by British Rail to a subsidiary of Sea Containers Ltd. — British Ferries.
The British Railways Board invited tenders, through its advisers Morgan Grenfell and Co. Ltd. for the purchase of the whole of the board's interest in Sealink UK Ltd. Three proposals were received with conditions attached.
The chosen purchaser submitted the bid with the highest value, of some £66 million. The British Railways Board has been advised by Morgan Grenfell and Co. Ltd. that the price fairly reflects the value of the business, and this view is supported by my own advisers, Hill Samuel & Co. Ltd.
Sea Containers, an international seafreight company with its headquarters in London, has wide experience in freight shipping. It has made a number of constructive proposals for improving Sealink's business. It has agreed on firm contractual commitments to maintain rail-linked passenger services. The parties are already in negotiation on new long-term freight contracts for train-ferry and Freightliner services.
Sea Containers has said, first, that it intends to maintain the existing business and to safeguard the rights of employees, including their pension entitlements, which will be protected. It further plans additional capital expenditure to expand the business and increase its profitability. I know that the company will be seeking early discussions with Sealink's trades unions.
Sea Containers has stated its intention to obtain a listing for the company on the Stock Exchange in due course, and that it would expect at that time to give employees an opportunity to purchase shares on favourable terms. Meanwhile, it is planning profit-sharing schemes for all employees.
Arrangements have been made to ensure that the contribution of the Sealink fleet to national defence will not be prejudiced by the sale.
This sale is a successful end to the policy transferring Sealink to the private sector which we agreed with the British Railways Board in 1980, and debated in the House in 1981. The price is good, and the sale makes good industrial logic. Customers and passengers of Sealink will benefit from the continuation of competition in the ferry market. Above all, it will be good for those who work in Sealink, who will now join a progressive and expanding group with the substantial resources necessary to make a real success of this important enterprise.
§ Mr. John Prescott (Kingston upon Hull, East)
The right hon. Gentleman has a remarkable record, because this is the fourth statement that he has made in the past two weeks. He has had to explain to the House how he did not mean what he said about abolishing the National Dock Labour Board scheme. He then had to explain how his Beeching bus policy would not mean the end of rural bus services. He now seeks to explain how selling Sealink at an unfavourable time at a knockdown price to a foreign company with an appalling record of operating under flags of convenience is in the interests of the consumer and the nation.
314 Only last week the Secretary of State told the House:I would not agree to a sale at a price that did not reflect the value of the assets being sold." — [Official Report 9 July 1984; Vol. 63, c. 687.]Will he explain why he has agreed to sell Sealink for £66 million, when the assets are valued at over £170 million? Will the sale include the harbours? Will he confirm that he has not accepted the highest bid and that European Ferries is reported to have been willing to pay more than £80 million? Surely this is just another privatisation rip-off in which the Tories give away assets to their friends.
Will the right hon. Gentleman confirm that the Government have sold Sealink's entire fleet of 30 ships for the price of fewer than two ships? Why has he agreed to sell Sealink to an American-owned, Bermuda-based tax-dodging company with no ships under the British flag and no experience of operating British ferries and ships except during the Falklands war, when it was sufficiently patriotic to employ British crews for a Falklands contract?
Did the right hon. Gentleman have any guarantees from Sea Containers Ltd. that routes to the Channel Islands and across the Irish sea will continue, or is profit to be the sole criterion for providing a public service? Against the background of Sea Containers' dubious past, can the right hon. Gentleman assure us that the guarantees that he has received on jobs ad conditions of service will be of more value than those given at the time of the sale of the British Transport Hotels group?
What assurances has the right hon. Gentleman received over yet another defence facility going to a foreign country? Will the Foreign Secretary be entering into negotiations with Bermuda for a leaseback arrangement in the event of a war?
Finally, is the right hon. Gentleman worried about his survival prospects in the autumn reshuffle? I for one wish to declare an interest in his retention.
§ Mr. Ridley
The hon. Gentleman can be forgiven for over-reacting and for a shortage of knowledge about an extremely good sale. Over the past five years Sealink has lost, on average, £2.5 million a year. As a mixture of asset value and earnings ability, the price of £66 million is a very reasonable one in the opinion of all the advisers and the Government. Sealink will be owned by a new British company called British Ferries, which will be floated on the British stock market. Sealink ships wll be "flagged in", except for two of the present ships, which are already "flagged out".
European Ferries was prevented from acquiring Sealink a few years ago. It asked to buy Sealink at an earlier opportunity and the matter was referred to the Monopolies and Mergers Commission, which came to the conclusion that that combination was against the national interest, on competition grounds.
Furthermore, details of the routes and ports will clearly be for the new owners to explain, but Sea Containers intends to continue all the existing business of Sealink and, moreover, to expand it in various profitable directions where it sees the opportunity to do so.
Sea Containers has already purchased hotels from British Rail — five in number — and the employees of those hotels, who have suffered no redundancies, are sharing in the prosperity that has been created.
Under the arrangements for the sale the Government hold a golden share, which will enable them to prevent the sale of Sealink to any undesirable company in the future. 315 An undertaking has also been given that ships will be available to the Government in the event of any emergency.
§ Mr. Terence Higgins (Worthing)
I congratulate my right hon. Friend on continuing to pursue Conservative transport policies. I especially welcome the passage in his statement which referred to a continuation of the rail-linked services, and the passage about increased investment in an area of the economy which has perhaps suffered from being associated with a nationalised industry which is not preoccupied with that particular part of the business.
There is some concern, however, among the staff, as many of them travel long distances and benefit from the present arrangements for concessionary travel on British Rail. Are those concessions to be continued?
§ Mr. Ridley
I welcome my right hon. Friend's comments. I am grateful for his obvious perception of what is in the interests of Sealink's employees as well as its customers. Over the past five years, more than £100 million of British Rail's finances, which could have been used to develop the railways, has had to be used for Sealink. The private sector has undertaken to modernise and expand Sealink and that is a welcome source of new capital. The question of concessionary travel will be for the two parties to decide. Matters are already subject to contract, and we must leave it to the parties concerned.
§ Mr. Stephen Ross (Isle of Wight)
Is the Secretary of State aware that it was reported in The Observer last Sunday that an offer of £80 million was to be made by Common Brothers? What has happened to that?
Is the right hon. Gentleman also aware that £20 million has been invested in the Isle of Wight services over the past three years by Sealink on new boats and facilities? A bid of £66 million may be satisfactory to the right hon. Gentleman, but it is not satisfactory to me or my colleagues. The right hon. Gentleman gave an undertaking in the House that he would ensure that the work force would have a share in the profits of the company and be given the opportunity to buy up to 20 per cent. of the stake. We have heard a vague promise about that today, but have been given no assurance.
What about the assurances on the Isle of Wight's through services? That is where the profit is. Of the island's economy, 70 or 80 per cent. is dependent on the Sealink services. What undertaking has Sea Containers given on that matter? The situation is most unsatisfactory. If an American gentleman comes to us on the Isle of Wight in a year or so and asks us whether we would like to buy our ferries from him, he will get a rude response.
§ Mr. Ridley
All the bids were properly evaluated and discounted for the conditions made, including the terms of payment, and on the basis of that analysis the bid from Sea Containers was the best of the three that were received.
The hon. Gentleman is not so unrealistic as to believe that companies are sold on their asset value alone. Their profit record is also taken into account. Sealink has made an average loss of £2.5 million a year over the past five years. It is not surprising that we did not get the full asset value.
§ Mr. Ridley
The hon. Gentleman asked me about the Isle of Wight. The new owners intend to operate all the 316 present services, and I am sure the hon. Gentleman will find that there will be great benefits to his constituents. It would be stupid and unwise of him to question an arrangement which may turn out to provide very much better services.
§ Viscount Cranborne (Dorset, South)
My right hon. Friend may rest assured that his statement will be welcome on the Conservative Benches, in contrast to the churlish response from the Labour Benches.
My right hon. Friend has given assurances about future investment and expansion. Will he confirm that the Sealink services from Weymouth will continue at least at their present level? He will be aware that they not only perform a useful service for the public but play an important part in the local south Dorset economy.
§ Mr. Ridley
My hon. Friend is right in what he says about the Labour Benches. It is extraordinary that, when a decision is announced which not only increases competition in the channel but provides probably for more and better services, as well as safeguarding and enhancing the chances of the future prosperity of the employees, it is received with a grudging, doctrinaire reluctance by the hon. Member for Kingston upon Hull, East (Mr. Prescott) and his hon. Friends.
Sea Containers intends to maintain and expand the present activities of the company, but I think it would be right for Sea Containers to inform hon. Gentlemen and the trade unions of its more precise plans for each of the harbours which are sold with the company, as well as each of the routes.
§ Dr. John Marek (Wrexham)
If the plan goes ahead, how much of the £66 million will be available after the costs of the sale have been deducted? Will the net sum then be available to British Rail in its entirety for investment, over and above any other moneys that might be available to British Rail in the course of its functions?
§ Mr. Ridley
Yes, the money will go to British Rail after any expenses have been deducted, as the hon. Gentleman suggests. The money will be very useful to British Rail in reducing any borrowing that it might have, or for further investment. It will be a great help to British Rail, because, instead of having to find money from its resources to invest in and cover the losses of Sealink, it will now have a capital sum to help its investment sources.
§ Mr. Tim Rathbone (Lewes)
Will my right hon. Friend take it from those who are interested in the future of the ports served by Sealink that they will welcome the sale as the best insurance of the future prosperity of those ports?
Will my right hon. Friend elaborate a little on the ownership of the ports, to which he alluded in a previous answer, and most particularly the property adjoining those ports, on which the future port expansion might depend?
§ Mr. Ridley
There has been an agreement between British Rail and Sealink as to the precise nature of Sealink's property and British Rail's property. Some of the deeds go back more than 100 years and it has been a little difficult to determine exactly to what they relate. Indeed, that has been one of the difficulties with the sale.
The harbour land which belonged to British Rail through Sealink now belongs to Sealink and the new 317 British Ferries. That will be available for development for the new company in the way that my hon. Friend said, and I am grateful to him for the welcome that he gave to that.
§ Dr. Norman A. Godman (Greenock and Port Glasgow)
What is the age of the Sealink fleet? Even in these early days, can the Secretary of State say what is the likelihood that the new owners of Sealink will seek replacement vessels from British shipyards?
§ Mr. Ridley
I cannot give the hon. Gentleman a precise answer concerning the age of each of the 37 ships that Sealink owns, but of the £170 million-worth of assets, £80 million are leased. In other words, a fairly large number of the ships are not owned, but leased.
I am sure that the new owners will wish to invest in modern ships as and when that is necessary. Obviously it is not for me to say where the new owners are likely to purchase their ships. I am sure that they will purchase then' where they can get the best value for money.
§ Mr. John Ward (Poole)
Is my right hon. Friend aware that those of us who are genuinely interested in improving links with Europe welcome the sale as providing the best future for Sealink? Will he agree that the worst thing that the Sealink employees could do would be to conduct a series of idiotic strikes which turn away trade from the very asset that we are trying to preserve?
§ Mr. Ridley
I am grateful to my hon. Friend for his comments. The House will perhaps be glad to hear the resolution which the executive council of the National Union of Seamen passed on 22 June. It is rather long, but the crucial phrase isto take all necessary steps required to obtain from the prospective owners all relevant information relative to the individual bidders' intentions on future plans for Sealink in the event of a successful bid".I hope that that will take place now. Sea Containers Ltd. is ready to meet the unions, and the unions say that they want to meet it. That will greatly help to reassure the people concerned that they will have a prosperous, successful and secure future with their new owners.
§ Mr. D. N. Campbell-Savours (Workington)
During discussions on the sale between the Government, their advisers and the management of Sea Containers Ltd., were any undertakings sought by the company on the Channel tunnel development? Were any undertakings given or suggestions made which may have led that company into believing that the Government had taken decisions one way or another?
§ Mr. Ridley
There were no discussions between the Government and Sea Containers Ltd. They were carried out between British Rail and Sea Containers Ltd. So far as I know, there was no mention during those discussions of a fixed link across the Channel and I certainly did not mention any decision on that matter to the chairman of British Rail for onward transmission.
§ Mr. Michael Howard (Folkestone and Hythe)
My right hon. Friend's statement will be warmly welcomed, not least in Folkestone. I particularly welcome his reference to the preferential opportunities to be given to employees to purchase shares in the company and to profit sharing.
Following the point made by my hon. Friend the Member for Poole (Mr. Ward), will my right hon. Friend 318 encourage the new owners of the company to make it plain to the work force that if any attempts are made to persuade or force them to join in industrial action against their will they will be permitted to carry on working without placing their jobs at risk?
§ Mr. Ridley
I am grateful to my hon. Friend for that intervention. Let me say a little more about the arrangements for profit sharing.
§ Mr. Robert Adley (Christchurch)
On a point of order, Mr. Speaker. I am sorry to interrupt, but I distinctly saw the hon. Member for Kingston upon Hull, East (Mr. Prescott) point at my hon. Friend the Member for Folkestone and Hythe (Mr. Howard) and say, presumably on behalf of the National Union of Seamen which sponsors him, "We will remember that." Is that not the sort of threat——
§ Mr. Ridley
The question of profit sharing is of some relevance to the hon. Member for Isle of Wight (Mr. Ross) as well as to my hon. Friend the Member for Folkestone and Hythe (Mr. Howard). It is impossible to arrange for a direct shareholding in the new company in the first place. One reason why Sea Containers is setting up a separate company to be floated on the market is so that there can be preferential shareholding by the employees in that new company. Furthermore, it will try to introduce satisfactory profit sharing agreements for all employees until such time as they can become shareholders.
The question of industrial relations remains with British Rail until the conveyance is absolute. After that it will be the responsibility of Sea Containers Ltd.
§ Mr. Roland Boyes (Houghton and Washington)
Further to part of the question of the hon. Member for Isle of Wight (Mr. Ross), will the Secretary of State tell the House whether he received any cash bids higher than the one that he accepted? If so, where were they from and why did he reject them?
§ Sir Geoffrey Finsberg (Hampstead and Highgate)
Will my right hon. Friend accept that passengers will be delighted that Sealink may at last be brought up to the standard of the Sally Line and Townsend Thoresen? Will he confirm that had it not been for the strange attitude adopted by the Monopolies and Mergers Commission there might have been even more money available for British Rail? Can he also confirm that the microphones in this place are working and that the strange noise does not come from the hon. and bearded Member for Warley, East (Mr. Faulds)?
§ Mr. Ridley
As the Monopolies and Mergers Commission had put a ban on European ferries buying Sealink on an earlier occasion, and was consulted again on this occasion and reaffirmed its decision, it was clearly right that we should accept the decision of the commission just as if the transaction had been one taking place entirely within the private sector.
I do not think that my hon. Friend expects me to be responsible for the microphones, but I hope he will agree with me that there is every chance that the service on the Sealink crossings will be enhanced.
§ Mr. George Foulkes (Carrick, Cumnock and Doon Valley)
What assurances has Sea Containers given about how long the Stranraer to Larne route will continue to be operated? What guarantees have been given about jobs at Stranraer and the train links between Glasgow and Stranraer?
§ Mr. Ridley
I told the House that I do not think I should be called upon to give precise details about every Sealink route. Sea Containers intends to maintain the existing business, and that goes for the Stranraer to Larne route as well as many others.
§ Mr. Ridley
The hon. Gentleman can certainly ask the new owners about their intentions and I think that he will be pleasantly surprised.
§ Mr. Keith Best (Ynys Môn)
Is my right hon. Friend aware that his statement will be welcomed in Holyhead, because it removes the uncertainty that has hung over the work force there? Is my right hon. Friend aware that on 7 June I received a reply from Sea Containers containing certain assurances? One was that it intended to invest in the company and to expand operations. The company also said that, in its view, there was no evidence of overmanning in Sealink, which should be welcomed by the work force. One of my hon. Friends mentioned travel concessions. Sea Containers told me that it envisages a similar arrangement for Sealink employees to that acquired for some British Transport Hotels employees, under which staff are provided with reasonable rail travel privileges, in this case through a special contract between Sea Containers and British Rail.
§ Mr. Ridley
My hon. Friend's information is quite right. I believe that it is correct for the new owners to give assurances about such matters, rather than for me to seek to give assurances on its behalf. I am sure that any hon. Members who wish to inquire about a harbour, a route or any other matter will be welcomed by Sea Containers, which will be able to give them the reassurance that they seek. That goes even further for the staff, because I am quite satisfied in my own mind that there is an expanding, investing, thrusting company here which intends not only to look after present staff, but to create additional jobs as it gets its investment moving.
§ Mr. Speaker
Order. If I call the hon. Member for Warley, East (Mr. Faulds) it will be because we are getting towards the recess, but will he please confine his question to the statement and not to the microphones?
§ Mr. Faulds
I am so grateful for your consideration, Mr. Speaker. I have been rising on a number of occasions, but you managed to avoid my eye.
Is this not simply another stage in the carve-up of British national interests, to the advantage of the Government's buddies in the market of money manipulation?
320 Is not the problem with the hon. Member for Hampstead and Highgate (Sir G. Finsberg), not that he cannot grow a beard, but that his testicles have not yet descended?
§ Mr. Speaker
Order. I ask the hon. Gentleman to withdraw that comment, on the ground of good taste.
§ Mr. Faulds
I might have to check on the matter, Mr. Speaker, which would be very embarrassing. If you wish me to withdraw my later comment I will do so, because I deeply adore and admire you.
§ Mr. Ridley
I think that that shows how frivolous and ill-based is the opposition to this move. I reaffirm to the House that this is a good deal for the Government, for British Rail and for Sea Containers, but above all it is a good deal for Sealink and its customers. I am sure that the House will wish all of them well.
§ Mr. Peter Snape (West Bromwich, East)
Does the Secretary of State agree that since 1979 Sealink has invested £120 million of British taxpayers' money in this company? That investment has meant that Sealink has the most modern fleet on the cross-channel routes—despite what was said by a Conservative Member.
What discussions have taken place with pool operators, such as the Belgians and the French, as well as other operators, about the use of the harbours that are to be sold?
Can the Secretary of State confirm that the adjusted assets of Sealink amount to about £130 million, which, coincidentally, is twice the size of the bid that the right hon. Gentleman has accepted for the company? Does he think that his announcement is fair on the British taxpayer? What has he got against British-owned companies? Why does he want to peddle off another public asset? Is he aware that he brings to his office all the ethical qualities of a back-street pawnbroker?
§ Mr. Ridley
The hon. Gentleman's sense of humour has not borne him out well today, although I congratulate him on his little joke last week.
The pooling arrangements are a matter for decision by the new owners after the current arrangements run out. They can either renew them or not. I must put the hon. Gentleman right on the question of assets. British taxpayers have had to find £2.5 million a year to make up British Rail's losses. In addition, they have had to invest capital in Sealink, with no return. They are now relieved from having to find that money in the future, with the bonus of £66 million to help with investment in the railways. I did not dare mention that this in my statement, but I should have thought that the taxpayers would benefit greatly from the deal.
§ Mr. Prescott
On a point of order, Mr. Speaker. The hon. Member for Christchurch (Mr. Adley) alleged that I made an offensive remark about the hon. Member for Folkestone and Hythe (Mr. Howard). That is not true. For the record, my remarks were to the effect that Folkestone was one of the first areas to come under threat.