HC Deb 17 July 1986 vol 101 cc1164-5
10. Mrs. Clwyd

asked the Chancellor of the Exchequer what are his latest projections for receipts from asset sales for 1986–87.

Mr. Lawson

I expect privatisation proceeds this year to be around £4¾ billion, in line with the projections in the public expenditure White Paper.

Mrs. Clwyd

Does the Chancellor recall that when British Telecom was sold off share prices rose by £1.3 billion on the first day after privatisation? What guarantee can he give that the same thing will not happen when he sells off British Gas, or is his first priority to provide further windfalls for his friends in the City?

Mr. Lawson

So far from those profits going to friends or otherwise in the City, they went to a wide range of ordinary shareholders. Very nearly 2 million people subscribed to the highly successful privatisation of British Telecom and got shares, and 1.5 million shareholders are now told by the Labour party that if by any mischance a Labour Government are returned they would be grabbed back at 130p a share, well below the market value. That is expropriation and confiscation, and the public should know that.

Mr. Yeo

Bearing in mind the substantial proceeds received not only in the current year but in previous years from privatisation and the large increases in the price of these investments which employees and other shareholders have enjoyed, has my right hon. Friend been able to estimate the public expenditure cost of repurchasing all these shares? Does he agree that, if such a repurchase was to take place, it would be one form of public expenditure that would create not a single additional job?

Mr. Lawson

My hon. Friend is right, but it would also plunge the companies that are now doing very much better than they have ever done before back into the dead hand of the state, which would be bad for the companies, bad for their employees and bad for the economy. One of the reasons why nearly every one of the companies has been privatised and stands at a higher price in the market than when it was first privatised is that, almost without exception, they have improved their profitability, their sales and their performance generally now that they are in the private sector. Therefore, we shall continue, undisturbed by these criticisms, with the privatisation of British Gas later this year and a number of other privatisations.

Mr. Hattersley

Having talked about the market value of British Telecom shares, will the Chancellor tell us why he chose to sell them below the market value, and will he give an absolute assurance that he will not waste public money in the same way with the flotation of British Gas?

Mr. Lawson

The right hon. Gentleman clearly knows very little about market values, because there was no market value until they were first offered to the market. They were offered to the market at a price that the most expert advisers advised was the appropriate price at which to offer them. Since then, I am glad to say, they have appreciated. What is more, I recall the Labour party and, indeed, the right hon. Gentleman, predicting confidently that the privatisation would be a flop. In fact, it was an outstanding success, and that is what he does not like.