§ 'The Secretary of State may not dispose of any securities issued to him as a result of the making of a scheme under section 1 to any person who is not resident in the United Kingdom of Great Britain and Northern Ireland and any subsequent transfer of such securities by any person whatsoever to any such person shall be null and void.'.—[Mr. Denzil Davies.]
§ Brought up, and read the First time.
§ Mr. Denzil Davies (Llanelli)I beg to move, That the clause be read a Second time.
Mr. Deputy SpeakerWith this it will be convenient to take amendment No. 5, in clause 3, page 4, line 44, at end insert,
'and unless such disposal has been authorised by an affirmative resolution of the House of commons.'.
§ Mr. DaviesNew clause 1 attempts to prevent the foreign takeover of ordnance factories or parts of them.
536 Amendment No. 5 is not directly related, but seeks a debate in the House before the Secretary of State sells to the private sector shares in the companies that will be formed by him if the Bill becomes law.
I hope that the Parliamentary Under-Secretary of State for Defence Procurement will not make as heavy weather of this new clause as did the Minister of State for Defence Procurement on new clause 4. This is a difficult area of drafting and of substance. How will it be possible to prevent ordnance factories or any privatised defence establishments from becoming controlled by someone outside the United Kingdom? That control could be exercised either by owning shares in the company, which is primarily what the new clause addresses—perhaps it is defective for that reason—or, as my hon. Friend the Member for Walsall, South (Mr. George) suggested, the factory could be sold to foreign interests.
The Minister has given hon. Members some assurances on the Floor of the House and in Committee that the Government understand this problem. However, the Bill contains nothing to prevent shares from being sold to foreign interests. At the end of the day we are concerned with legislation, not with company articles of association, fancy shares, or whatever arrangements the Government are concocting to solve their dilemma. Once they move into the private market place, it is illogical for the Government to say that some people cannot own shares. The purist's view of privatisation is that it does not matter who owns shares. But the Government are worried because they do not want Colonel Gaddafi, for example, to own a huge chunk of the Enfield factory, or any other factory, through trusts or nominees. We put down this amendment because we want not only assurances but written guarantees in the Bill.
We saw yesterday how difficult this subject is in the statement on the proposed takeover of British Aerospace by Thorn-EMI, as it likes to call itself. Even if we ensure that the shares in the company are not sold to foreign interests, how can we prevent mergers or takeovers? No doubt the Under-Secretary will tell us that the Government will manage to insert safeguards in the articles so that foreigners cannot own more than 15 per cent. of the shares. But what if there is a takeover by a conglomerate—a company making crisps, which seems to be the way that we are going? Will the 15 per cent. rule apply to the other company? There are great difficulties in relying on juggling articles of association and share rights to solve the problem.
I am grateful for the letter that I received from the Minister—no doubt he will outline it during his speech—which talks about a 15 per cent. limit and about what is called a golden share. It is extraordinary that capitalists and those who are apparently concerned with the law of the market place should insert a provision that, in some circumstances, the Secretary of State can deem himself to own more shares than everyone else put together. My hon. Friends will wish to scrutinise the articles carefully. Perhaps we should have thought of this when we were in Government; it would have made some of the nationalisation Acts of 1945 much easier. The Secretary of State for Trade and Industry could have been deemed to own 1 million shares and could have swamped everyone else.
We are not sure whether those arrangements conform to company law. They were tried only once in the case of Britoil, and it was not clear from the Secretary of State's 537 statement yesterday whether they would apply to British Aerospace. The courts have never decided whether it is legal to have special shares or a 15 per cent. limit on foreign ownership. That is why we would prefer a cast-iron guarantee written into the Bill.
§ Mr. Nicholas Soames (Crawley)Does the right hon. Gentleman agree—we went through this in great detail in Committee — that many structures in the private sector within the capital and articles of association of companies have been frequently tried in the High Court? Shareholdings and guarantees such as the right hon. Gentleman mentioned are readily and frequently available.
§ Mr. DaviesIn Committee we deferred to the great expertise of the hon. Gentleman in these matters. I am sure he knows of large numbers of companies where foreign people have bought 15 per cent. and then have been forced to sell their shares. I do not know of any. Perhaps he knows of a lot of companies which have something called a gold share by which one person can be deemed to have more shares than anyone else. I would have thought it was slightly unusual even in regard to the stock exchange.
In his letter the Under-Secretary said that the proposal would have to be approved by the stock exchange. Has he asked the stock exchange for approval? Has he asked it what its rules are in this regard? What if the stock exchange does not approve it? This is not the way to prevent a major defence manufacturing company from going into the hands of people outside the country who at some time may wish to act contrary to the national interests of Britain.
I accept entirely the difficulty of drafting, but the Under-Secretary will have the same difficulty with the drafting of the articles of association as I have had with the new clause. It would be better to have something in the Bill. Unless we get cast-iron assurances we shall still want a provision in the legislation, however much the Under-Secretary wishes to play around with the articles of association.
The purpose of amendment No. 5 is to have a debate in the House, albeit of only one and a half hours, which is all we can have on a motion for affirmative resolution, before the Secretary of State sells off the shares. Apart from a technicality in the winding up of the trading fund, once the Bill is passed the House will have no opportunity to debate the next step which is even more important. While we object to the first step, at least it still means that the ordnance factories remain totally in Government control.
We are concerned about the second step, which the Bill does not cover. The second step involves the selling off of shares to private industry. A host of problems arise. Price is one of them. At the end of the day, what price will the Government get for the shares? We know that it will cost £250 million merely to safeguard the pension rights of existing employees. Whatever sleight of hand the Government may wish to perform, in effect that figure has to come out of the purchase price they will get. On top of that there will be vast expenses for their friends in the city, people with great expertise in fiddling around and drafting different share articles. Up to now privatisation has cost the taxpayer in fees and commission £16 million, a very large sum, so these matters should be debated in the House before the Secretary of State goes off to the City to sell the shares.
538 In Committee the valuation of the assets of the ordnance factories caused great difficulties and we did not get satisfactory answers. Valuation impinges upon the price.
This may seem to be a simple matter of looking at the balance sheet and finding out what the values are, but we are in a completely different situation. There is a trading fund and not even a company. It is purely an accountancy device. We were told by the Under-Secretary that the assets in the trading fund will never be valued on the basis of market value, but according to some internal valuation. It will be a bureaucratic valuation carried out within a Government Department. As I understand it, when a factory is sold off to the public there will be no point at which its assets will be valued by independent valuers so that we can see exactly the worth of the ordnance factories.
§ The Parliamentary Under-Secretary of State for Defence Procurement (Mr. John Lee)If we move towards privatisation by way of flotation, which is the most likely course, and which was talked about frequently in Committee and on Second Reading, the stock exchange itself would require independent valuations to be made and disclosed in any prospectus of the fixed assets.
§ Mr. DaviesI am coming to that. The hon. Gentleman made some point of this in Committee. He mentioned only fixed assets and not all the other assets. Stock exchange requirements are limited. Our concern is that it is not just fixed assets that will be involved. The ordnance factories have intangible assets such as copyrights, patents and designs, many of which are shared with the Ministry of Defence. These do not appear in the balance sheet and will never be valued. All that will be valued will be the fixed assets such as plant and machinery and perhaps some land. Why do the Government not concede that all assets over a minimum value of, say, £5,000 should be valued properly by an independent firm of valuers so that we may find out, as far as one can in these matters, the worth of the company?
§ Mr. Lewis Carter-Jones (Eccles)The Minister knows that in a factory he has visited there are things which could not be given a value because of the secrecy involved. How will the stock exchange deal with such a proposition?
§ Mr. DaviesI am sure the Under-Secretary will have an answer to that. I do not think he can hide behind the stock exchange because it does not concern itself too much with these matters, as he knows very well. My fear is that the ordnance factories will be valued purely on the basis of their profits over the last few years. That is one yardstick of valuation which has to be taken into account but it should not be the only yardstick, especially when there are very important assets, particularly intangible assets of intellectual property or however they are described, which can never be valued. In fairness to the taxpayer they should be valued. I do not understand why the Government resist this proposal. I should have thought that the Government would want a proper independent market valuation so as to get the best price and reduce the PSBR.
§ Mr. John Golding (Newcastle-under-Lyme)Did the chairman not let the cat out of the bag by telling us what the valuation was and how it would be downgraded?
§ Mr. DaviesI am not aware how much the chairman let out of the bag, but figures have been bandied about. We 539 have heard a figure of £300 million on the basis of the profits of the last couple of years and multiplying or dividing by five, or however these things are done. That is not the proper way to value a public asset in the defence sector. There are other methods. We are not asking for very much. We are asking the Government only to get an independent firm of valuers to value the assets properly. Then the company can be valued on the basis of its profits and also of its assets. In that way we can all be satisfied.
We dislike and oppose what the Government are doing but we do not wish private interests to make a killing. They should not acquire a company at a low price because the Government have not bothered to get a proper valuation of the assets. That is one reason why we wish to have a debate before the shares are sold. There are other reasons which I shall not go into now because other hon. Members wish to speak.
New clause 1 is concerned about putting into the Bill whatever cast-iron guarantees the Under-Secretary has. I do not think he has cast-iron guarantees. Our purpose is to prevent foreign control or take over of the ordnance factories.
§ Mr. Martin M. Brandon-Bravo (Nottingham, South)In his opening remarks the right hon. Member for Llanelli (Mr. Davies) said that he hoped new clause 1 was not defective. Sadly, I must tell him that it is. We went through this exercise in Standing Committee, when the Opposition sought to draft an amendment to give precisely the protection for the national interest which all hon. Members on both sides of the House agree we need.
I am not a lawyer, and I stand to be corrected, but I suggest that if the new clause were carried as drafted it would in no way deliver the security that we are all seeking. I believe that a person can be a citizen of this country, but resident overseas and that one can be resident but not a citizen. I hope that we are seeking to ensure that the shareholding, such as we will allow, will be held by citizens of this country. We would not wish an over-large investment in our royal ordnance factories to be held by "residents" who are not citizens.
Another angle in the way in which the new clause is drafted also causes me concern. The presumption is that there will always be direct shareholding by individuals in ROF plc. It is possible that ROF plc will be a wholly-owned subsidiary of a large group. Therefore, there would be no direct shareholding — there would be only the ownership by the parent company of the subsidiary.
I sympathise with the Opposition's intentions, but the new clause will not realise them. My hon. Friend the Parliamentary Under-Secretary is correct in providing that very necessary protection by limiting foreign shareholding through the articles of association of the new company. That is the only way in which it can be done.
§ Mr. Spencer Batiste (Elmet)I have the privilege of representing a considerable number of employees at the ROF at Barnbow. When discussing amendments that look beyond the change of status of the ROFs to the means of privatisation that will follow, it is right to acknowledge that there is widespread concern and mistrust among employees about the effect of the legislation. It is equally fair to say that that mistrust and concern arise from the long delays in the legislative process, which is now 540 reaching culmination. It arises also from the unrelenting propaganda from the unions seeking to link privatisation with asset stripping rather than with opportunity.
Amendment No. 5 touches upon an extremely important matter relating to what the Government propose the private introduction of capital to mean. Much propaganda has come from the trade unions on this. For example, one leaflet says of the ROFs:
Their long record of successful production and profitability is threatened by the piecemeal sale of factories and the danger of asset-stripping.If that was an accurate reflection of Government motives and intentions amendment No. 5 would be important, because we would need the opportunity to debate again the details of the method of privatisation.However, on 30 January my right hon. Friend the Secretary of State wrote to all the employees of the ROFs, saying:
The preferred solution is that the holding company itself should be the vehicle for outside shareholders and employees to take a stake in the business. But as time passes it may be possible that one or more of the subsidiary companies would wish to attract direct investment. One thing must be clear from my point of view. I do not envisage a situation where these subsidiary companies could be sold to someone who would wish to close them down to eliminate competition with their existing business. I wish to increase competition not to reduce it, so I would not be attracted by such offers.I hope that my hon. Friend can give assurances in unambiguous terms that that remains the Government's policy and that employees can look forward to continuing employment in the ROFs in their privatised status. It is better to get that sorted out before Third Reading rather than postpone such a debate into the long future.It is important that we now bring to an end the fears and concerns among the work force, and that can be done only by an unambiguous statement about the preferred method by which the Government will proceed to introduce private capital. The Government must reject the idea of any asset stripping, which is the root cause of concern among employees.
Having been a solicitor dealing with companies of varying sizes, I am amazed that the Opposition are surprised that company articles can be used to achieve the results sought by the Government. It is a perfectly standard, routine matter of drafting, from the smallest to the largest companies, to give differential rights to different shares in specified circumstances. There can be no real objection to that process.
My overwhelming preference for the method of privatisation is the flotation of the shares in the ROFs on the stock exchange. Therefore, new clause 1 is wholly defective, because it would undermine such flotation. It would place artificial restrictions on the marketability of the shares on the stock exchange, without achieving the result sought by the Opposition.
I seek assurances that the Government stand firmly by the undertaking given by the Secretary of State in his letter to employees on 30 January regarding the method of privatisation. Given that, I shall oppose both the new clause and the amendment.
§ Mr. FisherIf the hon. Member for Elmet (Mr. Batiste) had served on the Committee, he would not have made the naive request for an unambiguous statement from the Government. Throughout the debate on Second 541 Reading and in Committee we have had nothing but the most vague assurances. When we have asked for unambiguous statements, we have not had them.
I welcome some of the hon. Gentleman's comments about asset stripping. But again he displays his naivety because that must be one of the purposes of people acquiring shares in the ROFs. When the ROFs are privatised there must be a temptation for the assets to be stripped. In Committee we considered several tempting areas, such as the 268 freehold houses that will be sold with the ROFs. Other areas will be tempting for asset stripping.
The Parliamentary Under-Secretary shows courage in coming here to answer the debate. Both valuation and foreign ownership — and the two are intimately connected—were raised in Committee, when he took a terrible battering from the Opposition. To his credit, he took that, but he had no answers. His hon. Friends in Committee sat behind him in embarrassed silence. It takes courage for him to come to the House and take more medicine. I hope that he will learn something and include some controls in the legislation.
The Government have been extremely shaky about the question of ownership and foreign control. When the Parliamentary Under-Secretary replied to the Second Reading debate, he said:
There is no reason why foreign investment … should be prevented simply because it is foreign investment." — [Official Report, 16 January 1984; Vol. 52, c. 105.]We had to tell him then, and we tell him now, that the ROFs are British defence interests. If he will not protect the national interest and ensure that the ROFs are kept in British hands, we will have to do that for him. He should have learnt by now that the country, the employees in the factories and the Opposition are not content to allow ownership of shares in the factories to be held by foreign nationals and foreign companies. That is a wholly unacceptable proposition.Control is of crucial importance. On Second Reading the Parliamentary Under-Secretary sought to give some assurances. He referred to the Industry Act 1975, and said:
the statutory powers are complex. They have never been used, and it might be inadvisable to rely solely upon them." —[Official Report, 16 January 1984; Vol. 52, c. 105.]He was right. After the debate I looked at the Act, and it specifies a 30 per cent. holding before the Secretary of State can act. If the Government sell 51 per cent. of the shares in the ROFs, 30 per cent. of the whole company means total control. The Government have already said, to their discredit, that they do not intend to discharge their responsibilities and act for the 49 per cent. shareholding that they will continue to hold. Therefore, 30 per cent. of the entire company will, effectively, be 60 per cent. of the voting shares. Even before the Industry Act technically could be triggered, foreign nationals could have control.
§ Mr. LeeThe hon. Gentleman is most unfair in his selective quotation. He should have continued to quote my speech, when I said:
An alternative course would be to include in the articles of association of the company an article conferring on the Secretary of State, who for this purpose would always retain a stated minimum shareholding of the company, certain powers exercisable in the event of an attempted take-over of the company by overseas interests." — [Official Report, 16 January 1984; Vol. 52, c. 105.]
§ Mr. FisherThe Parliamentary Under-Secretary gave two assurances, one about the Industry Act—which he 542 virtually torpedoed by saying that it was unreliable and too shaky—and one in relation to the articles of association. My right hon. Friend the Member for Llanelli (Mr. Davies) pointed out that we had since had a letter from him about that. I agree that the articles of association method is better so far as it goes, but the Under-Secretary cannot let us labour in the belief that the changes in the articles of association will be sufficient.
How will the Minister prevent the laundering of the ownership of shares; how will he identify ownership; and how will he ensure that the activities of holding companies will not result in foreign capital effectively owning and controlling the new company? It is extremely difficult authoritatively to identify the ownership of companies. Indeed, what is the definition of a British company? How will the Minister react to multinationals?
For example, would Procter and Gamble, which has been in this country since before the war and is well established in the north-east, be considered a British company or part of an American multinational corporation? If that company bought it, would he consider that to be a British company in ownership? There are many other foreign multinational companies in Britain which might see an attractive investment opportunity here. He should, therefore, define British ownership, British shareholdings and the phrase "British company". If he cannot do that, any change in the articles of association will not be sufficient.
If the Government are prepared to use the idea of the golden share, does the Under-Secretary not accept the logic that they should also use their responsibilities for the 49 per cent. of the shares which, I hope, the Government will own, even if they sell 51 per cent., so giving control to non-governmental sources? If the Government are prepared to use the golden share, why are they not prepared to accept their responsibilities for appointing directors and controlling the policy of the company to the extent of that 49 per cent.?
I do not see what protection the Minister is offering and what powers he has to prevent the resale of shares after their initial sale. Bearing in mind the complex ownership of shares that may follow, while we accept his good intent in relation to the changes in the articles of association, he cannot logically say, "We assure the House that ownership of the royal ordnance factories will remain in British hands."
My right hon. Friend the Member for Llanelli pointed out that it was a matter not simply of ownership but of unanswered questions and issues over which the House must retain scrutiny. That is particularly true of the question of valuation, and on that the Government have much to answer. We may not have time to deal with that today; perhaps we shall return to it on Third Reading.
On the valuation of the assets, the preparation of the new balance sheet, about which the Under-Secretary told us in Committee, the depreciation policy, and the question of valuing both the assets of the company and the shares for flotation, the Government have not even begun to answer the outstanding questions.
We see clearly from the dilatory way in which the Government have addressed the same problems in relation to the privatisation of British Telecom — where suddenly, in the last half-yearly accounts, £993 million has been depreciated from that company—that the House of Commons must maintain tight scrutiny of the way in which this company is prepared for flotation. We must see how 543 the Comptroller and Auditor General inspects those matters, remembering, of course, that the Inland Revenue is involved. We have every right, in protecting the public purse, to keep the closest watch over these matters, and only by an affirmative resolution of this House should any further action be taken.
§ Mr. LeeThe House will know that it has always been the Government's intention to prevent any possibility of the new ROF company coming under foreign control. We made that clear on Second Reading and many times in Committee. We have always taken the view that the most satisfactory means of achieving that is by way of appropriate provision in the articles of association of the company, after it has ceased to be under Government control, and I am glad that my hon. Friend the Member for Elmet (Mr. Batiste) expressed agreement with that course. One can in that way tailor the provisions to the precise needs of the company as they are seen at the time.
We undertook in Committee to produce a draft of the relevant articles of association, and that we did in a letter dated 26 April, which was distributed at the 23rd sitting of the Committee. The draft articles are, of necessity, detailed and may not immediately be easy to understand, but the principle behind them is simple. The company is required to maintain a register of shares which, or interest in which, are held by people who are not British citizens. The number of shares so held must be entered in the register and must not exceed 15 per cent. of the total issued share capital of the company.
If the transfer of shares to non-British citizens, and their subsequent entry on to the register, raises the number of such shares above the 15 per cent. limit, the directors of the company are empowered to sell so many shares as are necessary to reduce the number so registered to the maximum of 15 per cent.
Normally, the shares so sold will be those most recently acquired, but the directors are empowered to sell others if adherence to the normal rule should, in any particular case, cause injustice. In the meantime, the voting rights attached to the surplus of shares above 15 per cent. are removed from the holder of the shares and are vested in the chairman of any meeting at which any such vote might be cast. By these means, foreign interest in the company is limited to a comparatively small proportion of the total share capital, and the possibility of foreign control is thereby avoided.
The articles which contain these provisions are protected from subsequent alteration by means of a special share, to be held by the Secretary of State, the effect of which is to give him a power of veto over any attempt to change the articles in question. The special share also enables the Secretary of State to veto the sale of any substantial—"material"—part of the business, meaning more than 15 per cent. by value of the business, or producing more than 15 per cent. of the profits. It would be open for consideration at the time whether he should exercise this power in the case of a projected sale to a British interest, but he would certainly do so to prevent a sale to any foreign interest. These articles are based on earlier privatisation precedents.
Under article 223 of the Treaty of Rome, any member state 544
may take such measures as it considers necessary for the protection of the essential interests of its security which are connected with the production of or trade in arms, munitions and war material".All this was explained to members of the Standing Committee when the draft articles were given to them.The right hon. Member for Llanelli (Mr. Davies) explained why the Opposition would prefer to see the new clause in the Bill rather than rely on the articles of association. Apart from the fact that, in the view of the Government, a provision in the Bill would be inappropriate, the Opposition's proposal would not achieve what I thought all interested parties wished to see—the prevention of any foreign control of the new ROF company.
The clause would preclude the sale of shares in the company only to non-residents of the United Kingdom. It would not prevent the sale of shares to foreigners who were resident here, as my hon. Friend the Member for Nottingham, South (Mr. Brandon-Bravo) pointed out. It would not render void the purchase of shares by a company registered in the United Kingdom but wholly owned, and therefore controlled, by a foreign company. It would be a simple matter for the control of the new ROF company to pass out of British hands in that way, and the new clause would do nothing to prevent it.
The new clause would be unhelpful, because it would not merely fail to achieve its evident objective, but would impose such a restriction on the marketing of shares in the new company as would be likely seriously to impair the chances of successful privatisation by the flotation of shares on the market. I emphasise to my hon. Friend the Member for Elmet, who accompanied me when I visited the factory in his constituency, that we have every intention of handling the privatisation by way of the flotation of the combined ROFs' operations.
There is nothing wrong with foreign investment as such. We should welcome it as long as it falls well short of foreign control. Opposition Members appear to be disagreeing, but when we have wider debates on defence there is always pressure from both sides of the House for collaboration in defence. Let us not forget that the ROFs sell about 40 per cent. of their output overseas. There is nothing wrong with individual foreigners or foreign companies owning certain shares in the new ROF organisation, as long as such ownership does not go over the 15 per cent. figure. There is much to be said for it. We look to the ROFs to develop and expand their business and to supply new overseas markets. The Opposition should not be so narrow and protective.
6 pm
Given our undertakings to take steps in the articles of association of the privatised company to prevent the company from falling under foreign control and to grant the Government continuing powers to determine the appropriateness of any company proposal to sell to a third company a significant part of its business, I hope that the Opposition will accept that the main objective has been satisfactorily secured and will not therefore press their new clause to a Division. If they do, I reiterate that the Government will advise the House to resist it.
§ Mr. FisherDoes the hon. Gentleman not understand that ROF employees are proud to be servants of the Crown and do no want any part of the company to be foreign owned?
§ Mr. LeeOf course the employees are proud to work for the ROFs, and one is aware of that because of their desire to remain civil servants. They are also proud of selling about 40 per cent. of their products overseas. They are proud of their export record and of the Queen's Award for Exports, which they have won on a number of occasions. They look to the wider world market.
We emphasise that we are determined to keep the new ROF company under British control. We are not prepared to see foreign investment go beyond the 15 per cent. mark.
§ Mr. Denzil DaviesThe Parliamentary Under-Secretary has worked himself up into a bit of a lather. We did not see such emotion in Committee, so we are glad to see it now. He obviously feels stongly about this matter. The hon. Gentleman is on the horns of a dilemma. He says on the one hand that he wants foreign investment, but on the other that he does not want too much. He says that our new clause will not affect anything and will not stop any foreign control, but he also says that if the new clause is passed the shares will not be marketable. I do not quite understand how he can reconcile the two.
I accept that the drafting of the new clause is not perfect, but the articles of association are not perfect either, and we both recognise that this is a difficult problem. Nobody can see into the future and the different machinations of the solicitors, who will draft different articles, and it may be possible to get around these articles. The whole history of drafting shows that whatever one drafts somebody will find a hole in it. Our main objection is to frustrate that in this case.
If the hon. Gentleman does not want our new clause in the Bill, why does he not put in the articles of association? We would accept that, because it is better to enshrine something in legislation. One's objectives are less likely to be defeated or overturned if that is done than if they are left in articles of association, which can be overturned. It is no good the solicitors and the stockbrokers on the Conservative Benches telling me that it is normal and natural to have such articles of association. Of course it is not. The Government worked very hard, but they could not do this for their first privatisation measure.
§ Mr. Nicholas Baker (Dorset, North)Ask a merchant banker.
§ Mr. DaviesThat would cost far too much money. The Government may be prepared to pay these large fees—their immediate instinct seems to be to ask a merchant banker and pay him a large fee. If the hon. Member for Dorset, North (Mr. Baker) wishes to say something, he should get up for the first—or is it the second? —time to make a point.
§ Mr. Frank Haynes (Ashfield)Do not encourage him.
§ Mr. DaviesI shall follow my hon. Friend's advice and not encourage the hon. Member for Dorset, North.
There is no absolute guarantee on this, but it is better to enshrine something in the legislation than to fiddle around with articles of association, creating funny and bogus share rights which could be challenged in the courts by anybody who was determined to challenge them. The Government could lose such a case and we might end up with foreign control.
I believe that the Government's intentions are honourable, so let us have them clearly enshrined in the Bill, which is the proper place for them to be. We shall 546 vote for new clause 1, not because we think that it is perfect — it is not, but nor is the Under-Secretary's drafting—but because this is the proper constitutional way to proceed, by having such a provision debated in the House and passed as part of the Bill.
§ Question put, That the clause be read a Second time: —
§ The House divided: Ayes 111, Noes 215.
548| Division No. 304] | [6.04pm |
| AYES | |
| Abse, Leo | Lamond, James |
| Archer, Rt Hon Peter | Lewis, Ron (Carlisle) |
| Ashley, Rt Hon Jack | Lewis, Terence (Worsley) |
| Atkinson, N. (Tottenham) | Lloyd, Tony (Stretford) |
| Barnett, Guy | Lofthouse, Geoffrey |
| Barron, Kevin | Loyden, Edward |
| Beckett, Mrs Margaret | McCartney, Hugh |
| Bell, Stuart | McCrea, Rev William |
| Bennett, A. (Dent'n & Red'sh) | McDonald, Dr Oonagh |
| Blair, Anthony | McKay, Allen (Penistone) |
| Brown, Gordon (D'f'mline E) | McNamara, Kevin |
| Brown, N. (N'c'tle-u-Tyne E) | Madden, Max |
| Caborn, Richard | Marek, Dr John |
| Callaghan, Rt Hon J. | Marshall, David (Shettleston) |
| Callaghan, Jim (Heyw'd & M) | Mason, Rt Hon Roy |
| Campbell-Savours, Dale | Maxton, John |
| Carter-Jones, Lewis | Meacher, Michael |
| Clay, Robert | Michie, William |
| Cocks, Rt Hon M. (Bristol S.) | Mikardo, Ian |
| Cohen, Harry | Mitchell, Austin (G't Grimsby) |
| Corbett, Robin | Morris, Rt Hon A. (W'shawe) |
| Corbyn, Jeremy | Morris, Rt Hon J. (Aberavon) |
| Cox, Thomas (Tooting) | Nellist, David |
| Craigen, J. M. | O'Brien, William |
| Crowther, Stan | Park, George |
| Dalyell, Tam | Parry, Robert |
| Davies, Rt Hon Denzil (L'lli) | Patchett, Terry |
| Davis, Terry (B'ham, H'ge H'l) | Pike, Peter |
| Deakins, Eric | Prescott, John |
| Dewar, Donald | Radice, Giles |
| Dixon, Donald | Randall, Stuart |
| Dormand, Jack | Redmond, M. |
| Dubs, Alfred | Roberts, Allan (Bootle) |
| Duffy, A. E. P. | Roberts, Ernest (Hackney N) |
| Dunwoody, Hon Mrs G. | Robinson, P. (Belfast E) |
| Eastham, Ken | Rooker, J. W. |
| Fatchett, Derek | Shore, Rt Hon Peter |
| Fisher, Mark | Short, Ms Clare (Ladywood) |
| Foot, Rt Hon Michael | Silkin, Rt Hon J. |
| Forrester, John | Skinner, Dennis |
| Foster, Derek | Snape, Peter |
| George, Bruce | Soley, Clive |
| Gilbert, Rt Hon Dr John | Spearing, Nigel |
| Godman, Dr Norman | Stewart, Rt Hon D. (W Isles) |
| Golding, John | Straw, Jack |
| Hamilton, W. W. (Central Fife) | Thompson, J. (Wansbeck) |
| Hardy, Peter | Warden, Gareth (Gower) |
| Harrison, Rt Hon Walter | Wareing, Robert |
| Hattersley, Rt Hon Roy | Welsh, Michael |
| Healey, Rt Hon Denis | Wilson, Gordon |
| Hogg, N. (C'nauld & Kilsyth) | Winnick, David |
| Home Robertson, John | Woodall, Alec |
| Hoyle, Douglas | Young, David (Bolton SE) |
| Hughes, Dr. Mark (Durham) | |
| Hughes, Robert (Aberdeen N) | Tellers for the Ayes: |
| Hughes, Roy (Newport East) | Mr. James Hamilton and |
| Janner, Hon Greville | Mr. Prank Haynes. |
| Kaufman, Rt Hon Gerald |
| NOES | |
| Aitken, Jonathan | Baldry, Anthony |
| Alexander, Richard | Batiste, Spencer |
| Alison, Rt Hon Michael | Beggs, Roy |
| Alton, David | Berry, Sir Anthony |
| Ashdown, Paddy | Biggs-Davison, Sir John |
| Atkins, Robert (South Ribble) | Blaker, Rt Hon Sir Peter |
| Atkinson, David (B'm'th E) | Boscawen, Hon Robert |
| Baker, Nicholas (N Dorset) | Bottomley, Peter |
| Bottomley, Mrs Virginia | Knight, Gregory (Derby N) |
| Braine, Sir Bernard | Knight, Mrs Jill (Edgbaston) |
| Brandon-Bravo, Martin | Lang, Ian |
| Brown, M. (Brigg & Cl'thpes) | Latham, Michael |
| Bryan, Sir Paul | Lawler, Geoffrey |
| Buck, Sir Antony | Lawrence, Ivan |
| Budgen, Nick | Lee, John (Pendle) |
| Butler, Hon Adam | Leigh, Edward (Gainsbor'gh) |
| Carlisle, Kenneth (Lincoln) | Lennox-Boyd, Hon Mark |
| Carttiss, Michael | Lewis, Sir Kenneth (Stamf'd) |
| Cash, William | Lightbown, David |
| Chapman, Sydney | Lloyd, Peter, (Fareham) |
| Chope, Christopher | Lord, Michael |
| Churchill, W. S. | McCrindle, Robert |
| Clarke, Rt Hon K. (Rushcliffe) | McCurley, Mrs Anna |
| Cope, John | MacKay, Andrew (Berkshire) |
| Couchman, James | MacKay, John (Argyll & Bute) |
| Crouch, David | Madel, David |
| Currie, Mrs Edwina | Malins, Humfrey |
| Eggar, Tim | Malone, Gerald |
| Emery, Sir Peter | Maples, John |
| Evennett, David | Marlow, Antony |
| Fallon, Michael | Marshall, Michael (Arundel) |
| Fenner, Mrs Peggy | Mather, Carol |
| Forman, Nigel | Mawhinney, Dr Brian |
| Forsyth, Michael (Stirling) | Maxwell-Hyslop, Robin |
| Forth, Eric | Mayhew, Sir Patrick |
| Fowler, Rt Hon Norman | Merchant, Piers |
| Fox, Marcus | Miller, Hal (B'grove) |
| Fraser, Peter (Angus East) | Mills, Iain (Meriden) |
| Freeman, Roger | Mills, Sir Peter (West Devon) |
| Freud, Clement | Moate, Roger |
| Gale, Roger | Molyneaux, Rt Hon James |
| Galley, Roy | Montgomery, Fergus |
| Goodhart, Sir Philip | Moore, John |
| Goodlad, Alastair | Morris, M. (N'hampton, S) |
| Gorst, John | Morrison, Hon C. (Devizes) |
| Greenway, Harry | Murphy, Christopher |
| Griffiths, Peter (Portsm'th N) | Neale, Gerrard |
| Ground, Patrick | Needham, Richard |
| Gummer, John Selwyn | Nelson, Anthony |
| Hamilton, Hon A. (Epsom) | Neubert, Michael |
| Hamilton, Neil (Tatton) | Nicholls, Patrick |
| Hanley, Jeremy | Onslow, Cranley |
| Harris, David | Osborn, Sir John |
| Harvey, Robert | Ottaway, Richard |
| Haselhurst, Alan | Owen, Rt Hon Dr David |
| Hawkins, C. (High Peak) | Page, Richard (Herts SW) |
| Hawkins, Sir Paul (SW N'folk) | Parkinson, Rt Hon Cecil |
| Hawksley, Warren | Parris, Matthew |
| Hayes, J. | Pattie, Geoffrey |
| Hayhoe, Barney | Penhaligon, David |
| Hayward, Robert | Pollock, Alexander |
| Heathcoat-Amory, David | Porter, Barry |
| Heddle, John | Powell, William (Corby) |
| Henderson, Barry | Powley, John |
| Heseltine, Rt Hon Michael | Prentice, Rt Hon Reg |
| Hickmet, Richard | Price, Sir David |
| Hill, James | Proctor, K. Harvey |
| Hind, Kenneth | Raffan, Keith |
| Hirst, Michael | Rathbone, Tim |
| Hogg, Hon Douglas (Gr'th'm) | Rees, Rt Hon Peter (Dover) |
| Holland, Sir Philip (Gedling) | Renton, Tim |
| Holt, Richard | Rhodes James, Robert |
| Hooson, Tom | Ridsdale, Sir Julian |
| Hordern, Peter | Robinson, Mark (N'port W) |
| Howard, Michael | Roe, Mrs Marion |
| Ho wart h, Gerald (Cannock) | Rossi, Sir Hugh |
| Howell, Ralph (N Norfolk) | Rowe, Andrew |
| Hubbard-Miles, Peter | Rumbold, Mrs Angela |
| Hunt, David (Wirral) | Ryder, Richard |
| Hunt, John (Ravensbourne) | Sainsbury, Hon Timothy |
| Hunter, Andrew | Sayeed, Jonathan |
| Hurd, Rt Hon Douglas | Shaw, Sir Michael (Scarb') |
| Jessel, Toby | Shelton, William (Streatham) |
| Johnson-Smith, Sir Geoffrey | Shepherd, Colin (Hereford) |
| Jones, Gwilym (Cardiff N) | Silvester, Fred |
| Kershaw, Sir Anthony | Sims, Roger |
| Key, Robert | Skeet, T. H. H. |
| Kirkwood, Archibald | Smith, Tim (Beaconsfield) |
| Soames, Hon Nicholas | Waddington, David |
| Speed, Keith | Walden, George |
| Spicer, Michael (S Worcs) | Waller, Gary |
| Squire, Robin | Ward, John |
| Stanbrook, Ivor | Wardle, C. (Bexhill) |
| Stanley, John | Watson, John |
| Stern, Michael | Watts, John |
| Stevens, Lewis (Nuneaton) | Wells, Bowen (Hertford) |
| Stewart, Allan (Eastwood) | Wells, John (Maidstone) |
| Stewart, Andrew (Sherwood) | Wheeler, John |
| Stradling Thomas, J. | Whitfield, John |
| Sumberg, David | Whitney, Raymond |
| Taylor, John (Solihull) | Wilkinson, John |
| Taylor, Teddy (S'end E) | Wolfson, Mark |
| Thompson, Donald (Calder V) | Wood, Timothy |
| Thompson, Patrick (N'ich N) | Yeo, Tim |
| Thorne, Neil (Ilford S) | Young, Sir George (Acton) |
| Thurnham, Peter | |
| Townend, John (Bridlington) | Tellers for the Noes: |
| Tracey, Richard | Mr. Tristan Garel-Jones and |
| Twinn, Dr Ian | Mr. John Major. |
| van Straubenzee, Sir W. |
§ Question accordingly negatived.