HC Deb 15 December 1986 vol 107 cc766-7
13. Mr. Rost

asked the Secretary of State for Energy if he will make a statement on the public response to the privatisation of British Gas.

14. Mr. Greenway

asked the Secretary of State for Energy how many individuals have purchased shares in British Gas; and if he will make a statement.

18. Mr. Dykes

asked the Secretary of State for Energy if he will make a statement on the results of the public issue of shares in British Gas plc.

Mr. Peter Walker

I am delighted at the public response to the British Gas sale. More than 5 million people have applied to become shareholders in British Gas and more than 2 million people became shareholders for the first time.

Mr. Rost

Does my right hon. Friend agree that the 2 million first-time investors who are the result of the sale of British Gas means that there are at least 9 million investors now compared with 2 million in 1979? Is this not a tremendous achievement, there being as many investors now as there are members of trade unions? Will my right hon. Friend confirm that criticisms of the cost of the privatisation are thoroughly unfounded as the cost of the issue was about 2 per cent. of the proceeds, which is well below the average cost of any new issue that is launched on the stock exchange?

Mr. Walker

I confirm what my hon. Friend asked in the latter part of his supplementary question. The sum spent in informing the public of the details and communicating with them was relatively small compared with the remarkable result that was achieved. There has been a remarkable change since 1979, when on average one home in 12 owned a share. More than two homes in five own shares now, and I hope that soon the majority of homes will own them.

Mr. Greenway

Does my right hon. Friend agree that under nationalisation the British public neither owned nor felt that they owned British Gas in any way? Do we not now have genuine public ownership of this great and important industry?

Mr. Walker

Yes, Sir. It is important to realise that now, for the frst time, 99 per cent. of the employees of British Gas have a share in their own industry.

Mr. Dykes

Does my right hon. Friend agree that, with the attractions of this investment and the concept and principle of share owning in general, the public are manifestly not selling immediately after an issue? They are holding on to their shares instead. They understand the idea of mass share ownership and are enthusiastic about it.

Mr. Walker

The great majority of people who bought British Telecom shares are still shareholders. I am sure that that will be true of British Gas shareholders in several years' time.

Mr. Donald Stewart

In view of the insider dealing scandals on both sides of the Alantic and the drop in profits of British Airways, which is the next industry to be privatised, does the right hon. Gentleman not agree that, instead of trying to widen share ownership, the Government should be advising people that dabbling in shares could damage their financial health?

Mr. Walker

The right hon. Gentleman's party, the Scottish National party, has been totally against privatisation and deeply deplores the millions of people who have taken advantage of it.

Mr. Michael Morris

Is my right hon. Friend aware that, following the privatisation of Britoil, which left a substantial body of stock with the underwriters, the British Gas stock seems to have been launched at about the right level to ensure a fair price for the British people and a reasonable return for small investors?

Mr. Walker

The flotation went well. Basically, 64 per cent. of the shares went to individual members of the British public and 24 per cent. went to British institutions. The fact that 99 per cent. of employees have equity in the business shows that it was the right thing to do.

Mr. Bruce

Does the Minister acknowledge that, given the amount of hype involved in promoting British Gas, there was some resentment among people who did not have an opportunity to be customers of British Gas—such as people living in Northern Ireland, rural areas and some urban areas—because they were excluded from the premium allocation of shares? Was that not an unfair allocation of an asset that belonged to all the people before it was privatised?

Mr. Walker

I watched with interest the position of the alliance on this matter. I hope the country will realise that the alliance was totally opposed to privatisation. I hope that the 2 million gas customers who were guaranteed an allocation and obtained it will notice that the alliance was against them, too.

Mr. Orme

Does the Secretary of State say that, out of the 16 million gas consmers, 2 million have purchased shares? Does that not mean that he has created two classes of ownership and that some of the poorest consumers not only do not have shares but will not benefit from any reduction in prices?

Mr. Walker

The poorest consumers who have no shares are unlike those consumers who, at the time of the previous Government, had about a 20-odd per cent. increase in gas prices to help the Chancellor of the Exchequer.