HC Deb 09 April 1986 vol 95 cc282-9
Mr. Ashby

I beg to move amendment No. 71, in page 11, line 20, after 'providing', insert '(a)'.

Mr. Deputy Speaker

With this we may take the following amendments:

No. 72, in page 11, line 23, at end insert—

'(b) for the placement on offer to the public of not less than two-thirds of the equity of the company.'. No. 73, in page 11, line 29, at end insert and to any employees' share scheme as defined in section 19(6).'.

Mr. Ashby

The effect of the amendments is to force municipal authorities that are the owners of the airport plcs to provide within the scheme for the Secretary of State to offer to the public not less than two thirds of the equity of the company. Within the scheme there should be included an employees' share scheme as defined in clause 19(6).

There is a provision in part II of the Bill which has been described as having the effect of privatising municipal airports, but it will do nothing of the sort. It will merely make the companies subsidiaries of the councils. They will be quasi quangos and they will be 100 per cent. owned by the councils. Many of the councils are of a political nature which is such that they will never give up one share or ever introduce any private capital into the airports.

I heard the speech of my hon. Friend the Member for Southend, East (Mr. Taylor), and I praise the Southend council. It must be a sheer delight to have a council which has reduced rates and is running its affairs as well as has been described by my hon. Friend. However, councils throughout the country, left, right and centre, are not doing what they are supposed to be doing, which is providing services. They are straying more and more into areas to which they are not suited. If an airport company is well run, it is wrong that it should be a subsidiary of the council and part of the services of the council. That is not what a council is supposed to do. The airport company should be floated and should go properly into the private sector, which is what my amendments propose.

Unlike Southend, I suffer in Leicestershire from a hung county council where the Conservatives wanted to put up rates by 10 per cent. but the Liberals combined with Labour to put them up by 31 per cent. I suffer from a hung district council within which is the East Midlands airport, where the Conservatives wanted to put the rates up by a modest 9 per cent. and the Liberals combined with Labour to put them up by 28 per cent. I applaud the Southend council, but my hon. Friend the Member for Southend, East must realise that not all councils are run like the Southend council. The Bill has to make provision for everyone if it is not to be a hybrid Bill, which is why I propose my amendments.

On Second Reading the Secretary of State set out the objectives for privatising the British Airports Authority. He said: It is high time that we changed the regime under which it operates to liberate management from the constraints of public ownership. Our objective must be to remove the burden of political interference and state control so that airports, airlines and their customers can reap the benefits. I fail to understand why there should be one rule for the BAA and another for the municipally run airports. In the public's eye, there is little difference between a Government-run airport and municipally-owned airport. If those are the reasons for privatising BAA, how much more must those reasons prevail in the case of most of the municipal airports?

Many of the municipal airports are run by local authorities which are Labour controlled and will perhaps remain Labour controlled for some time. The Labour party is a byword for "political interference" in commercial decisions. What hopes are there of no "political interference" in the running of the airports under a Labour-controlled council? The phrase to liberate management from the constraints of public ownership has little meaning when we look at Labour-controlled councils up and down the country. We never see a liberated management. We see control after control.

Therefore, the Bill as drafted gives very little hope for the plcs and airports. They will not have liberated management or be free from political control. Most airports will be run in much the same way as they have been hitherto. I can see no logical or coherent reason why those airports should not be privatised.

12.15 am

On Second Reading, the Secretary of State said: The Bill also ensures that there is a proper ars's length relationship between the new airport companies and their parent authorities". As I know that Hansard is always totally correct, I must assume that that is a proper reflection of what the Minister feels about that part of the Bill. I agree with him that there is a proper ars's length relationship between the new airport companies and their parent authorities".—[Official Report, 27 January 1986; Vol. 90, c. 691–5.] Frankly, that reflects the way that I feel about the Bill. That was no Freudian slip. Truth will out in the end.

Let us consider the many measures that have been taken. The local authorities are always servants of Government and subject to the law. The Government have done a great deal, rightly, to control local authorities. They have attempted to control some of their most profligate expenditure. In council housing, legislation has forced local authorities to sell local authority housing—

Mr. Deputy Speaker

Order. The hon. Gentleman must relate what he is saying to the amendment.

Mr. Ashby

With great respect, I am referring to the sale of a council's shares to the public.

Mr. Deputy Speaker

The hon. Gentleman is referring to the sale of council houses, as far as I can hear.

Mr. Ashby

With respect, I am relating the sale of council shares to, and comparing it with, the Government's legislation that has ordered local authorities to sell houses. Obviously, I expressed myself very badly. I shall start again.

If there is any complaint that my amendment forces local authorities to sell property that is theirs, one has only to look at housing legislation to see that there are precedents for that. The Government have forced local authorities to sell houses to those who live in them. There are many precedents. My amendment provides for an employees' scheme, which is almost exactly the same as the sale of council houses.

Mr. Robert Hughes

If I follow the hon. Gentleman's analogy correctly, is he arguing that the people who work at the airports should be sold the airports at discount prices?

Mr. Ashby

Employees at an airport should be part of any such scheme. There is provision for it in clause 19(6) of the Bill. I am merely asking that any sale of the shares should embrace clause 19(6). It is already in the Bill. I am asking for nothing more than is in the Bill. There is plenty of precedent for such sales. The inclusion of an employees' scheme is almost exactly as provided in the sale of council housing.

I refer to my authority, the East Midlands airport authority. In north-west Leicestershire, we have East Midlands airport owned by Derbyshire, Nottinghamshire and Leicestershire county councils—not in equal shares. It is largely owned by Nottinghamshire and Derbyshire. Leicestershire owns only a few shares. The benefit for Leicestershire is that it gets the rates from the airport.

The East Midlands airport makes a profit of about £2 million, but what happens to that money? Most of it goes to Derbyshire or Nottinghamshire and little stays in northwest Leicestershire. It appears that Nottinghamshire county council has spent £20,000 on CND and £600,000 on revamping the market square—it is a fine market square and I do not see the need for the work. That is an absolute disgrace. It is also spending £120,000 on modernising the already fine council offices. They are examples of the recent profligacy of the Nottinghamshire county council.

Where does Derbyshire's share of the £2 million go? It has taken on 700 new staff. It has spent £50,000 on recalling the school stationery to overprint on it "Derbyshire supports a nuclear free zone". It has circulated a free newspaper, a party political paper, called Insight. That is where the money is going.

Those councils pay lip service to the airport and they are creaming off the profits and using them to offset their profligate spending. There are no benefits for the people living in the area.

The councils will argue that there has been some capital investment, but it is always too little too late. The airport is in the centre of a road network—just off the M1 and close to the M6. It is in the centre of England and is ideally placed to be a cargo airport. It is a successful airport, but it could be more successful. It needs a dynamic approach. A plc with a number of councils as shareholders and directors will not do much good.

What sort of people will be the directors of the company? Largely they will come from the Derbyshire and Nottinghamshire county councils. They will be social workers who have never run a business in their lives and who do not have a clue how to do so. It is wonderful to be a bus driver, but one has to know something to be a director.

Mr. Snape

I notice from one of the reference books that the hon. Gentleman is a company director. Perhaps he could tell us what qualities he possesses which make him more suitable to be a company director than, for example, a bus driver or a social worker?

Mr. Ashby

My qualification is that I have some experience of running a business.

The directors of the plc must have experience of running a business. We are told that some of the existing directors of the airport will be on the board, but there will be others representing the owners, the shareholders. They have control, but they have no business experience. The present chairman of the joint airports authority is a very nice man with "love" and "hate" written on the knuckles of each hand. I often wonder what the airport director feels when he sees those words when decisions are being taken. We must have people with business acumen and experience.

Mr. Deputy Speaker

Order. I am having great difficulty in relating what the hon. Gentleman is saying to the amendments. We are discussing not the principles of the Bill but the amendments.

Mr. Ashby

If the shares are offered to the public, the directors will reflect the ownership of the shares. In the natural course of events, like any public limited company, one would expect to see directors with a wide range of business experience: people who have put money into the company. That is why I say that the sort of people who will be on the board will be people with that business experience. That is what the airports will require. They will require the business experience which they do not have at the moment. Being run as a service at the moment is doing them a disservice because they are not able to achieve their full management or investment potential. There are great limitations on the investment which they can get unless they are prepared to go out for private investment. Unless they are prepared to do that, they will have no future.

As the airports are set up at the moment, there is little hope for them. We see no change, just disadvantage. We simply have to make those local authorities part with their shares to the general public to be able to free the airports from their constraints, otherwise we are wasting our time.

Mr. Tony Favell (Stockport)

I rise to support my hon. Friend the Member for Leicestershire, North-West (Mr. Ashby). I have been consistent from the time that the Bill was first published and debated within the Department in suggesting that the municipal airports should be released from the dead hand of the local authorities.

The Bill is a great missed opportunity for the municipal airports. Its main thrust has my heartfelt support. One of the Government's great achievements has been their privatisation programme. That will go down in history. The privatisation of the BAA will go down as an enormous success. But success for the BAA will mean dismal failure for the municipal airports which are being put at an enormous disadvantage as a result of the Bill.

Stansted, Gatwick and Heathrow, in the hands of Sir Norman Payne and his gang will be an enormous success. They are all good business men who know what they are doing. The running of an airport is big business. It is not like running a bus station or even a small railway station. It needs to be run by people who know the business intimately and know what they are doing.

Mr. Stephen Ross

Will the hon. Gentleman give way?

Hon. Members

Oh no.

Mr. Ross

Yes, because it is about time somebody stood up for local government. What is wrong with the present management of Manchester or Birmingham or Newcastle airports? Answer that.

Mr. Favell

They are run as good municipal airports at the moment. They are run for the benefit of the local people. But the people who run them do not have the expertise to run airports as big business and to attract business from elsewhere in the country.

Let us take the example of Atlanta in the United States. That has a population of about 1 million, yet the airport sees 12, 13 or 14 times as many people go through that airport each year because it is run as a business. The people who run it bring prosperity, people and jobs to the area. For Manchester, the Bill is a great lost opportunity. Enormous employment opportunities could be brought to Manchester airport if only it was run as a business, not merely as a municipal facility.

There are other disadvantages in the Bill for the municipal airports. For example, being turned into plcs, they will now have to pay corporation tax. That will be an enormous disadvantage. They are being put at great disadvantage as against the BAA airports. It is a tragedy. If there was any chance of Ken Livingstone running Heathrow, Gatwick or Stansted, all hell would be let loose. There would be no question of the GLC or its successors running the three main airports of the southeast. It is a tragedy that Manchester and other municipal airports should be put in the hands of Left-wing authorities such as Manchester city council. We shall live to rue the day. We are giving the south-east an advantage over the regions. I support my hon. Friend's amendment.

12.30 am
Mr. Michael Spicer

The Government sympathise very much with what my hon. Friends are saying. In particular the Government agree about the desirability of privatisation. We have already made that clear. Clause 24 makes it clear that the local authorities, when they sell their shares in airports, cannot impose within the memorandum and articles of association restrictions on who may buy the shares. One of the aspects of the original Manchester scheme with which we were not happy was the fact that it seemed to restrict the sale of shares to the public sector. We agree, therefore, about the objective.

I am not as pessimistic as my hon. Friends about the possibility of even Labour councils eventually seeing some of the benefits of privatisation. The development of the airport would be outside public sector controls. There could be employee participation in shareholding. It would be possible to attract capital and turn loss-making airports into profit-making ones, and to use the moneys currently used to subsidise airports—10 out of 16 make losses at the moment—for better social purposes. Even Labour councils may eventually see the advantages of either partial or total sale of shares in their airports.

My hon. Friend the Member for Leicestershire, North-West (Mr. Ashby) asked why there should be one rule for the BAA and another rule for municipal owners. The answer is that the Government own the BAA and therefore have the right to sell the airports. Depending on one's view about local authority independence, one may or may not take the view that one should compel local authorities to act against their will. I concede that that is a matter for debate among my hon. Friends. However, giving people the right to buy the houses they live in is a different matter from compelling airport owners to sell their assets when, for instance, there may not be a ready buyer. That may well be the case with the 10 airports that are making a loss. For those reasons, I would—

Mr. Ashby

I thought that I had covered that. It would be part of the scheme, would it not? If the airport was a loss-maker, that would be part of the scheme, and there would have to be provision perhaps for the sale of the shares in two or three years' time on a given scale, when one could see the way in which things were going.

Mr. Spicer

My hon. Friend must at least concede that he made a direct comparison with the sale of council houses and that, in that case, it is a question of the right to buy. There is implicit in that system a buyer. Such a buyer is not implicit in the compulsory sale provisions that he wishes to introduce. So because we have taken the view that we cannot, to this extent, interfere with the independence and autonomy of local authorities—and that is a pretty fundamental decision that we have had to take—we could not, therefore, go along with these amendments, which are aimed precisely at compelling local authorities to sell.

Having said all that, however, I must repeat to the House and to my hon. Friends that it is, of course, our objective—and it is one of the reasons for setting these companies up as public limited companies—that a very large proportion of the shares should be owned by the private sector.

I hope, therefore, that on the basis of what I have said my hon. Friend will feel able to withdraw his amendment.

Mr. Ashby

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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