Royal Ordnance plc

HC Deb 24 July 1986 vol 102 cc620-30

5 pm

The Secretary of State for Defence (Mr. George Younger)

With permission, Mr. Speaker, I wish to make a statement about Royal Ordnance plc.

On 17 June, I announced the Government's decision not to proceed with the planned flotation of Royal Ordnance plc. I also made it clear in answer to questions on 18 June that we would review all the various options to decide how best to achieve our aim of privatisation. That review is now completed and I can tell the House that, with the exception of one factory, it remains our firm preference to sell the company as a whole. We would hope to do so by a private sale if that proves practicable. Over the coming weeks, we shall be inviting bids on the basis of a selling memorandum and I shall report further to the House when we have made some concrete progress.

The exception is the tank-building business at Leeds. Following discussions between the Ministry of Defence and Vickers, an offer has been made by Vickers plc to purchase Royal Ordnance Leeds, which the Government and the board of Royal Ordnance have accepted, subject to detailed discussions now taking place between Royal Ordnance and Vickers to finalise the agreement. The price will be related to an audited net asset value but we expect it to be about £11 million. As part of the agreement, Vickers will build a major new facility at the Leeds site, similar to its factory at Newcastle. That reflects its faith in the business and its determination to win the export orders that are critical to the continuing future of the factory.

I can also tell the House that in the light of the agreement, the way is now clear for a decision to order a seventh regiment of Challenger tanks, subject to detailed contract terms. Vickers has agreed that the tanks will be manufactured at Leeds and we have negotiated with Vickers prices that represent an improvement on the terms offered by Royal Ordnance. I am satisfied that the competitive pressures that have operated on both companies during our various negotiations have ensured that the Ministry of Defence will receive good value for money for this important order.

Mr. Denzil Davies (Llanelli)

The most significant and perhaps the most disturbing announcement in the statement, which was leaked heavily in this morning's newspapers, is the sale of the tank factory at Leeds to its main and only competitor, Vickers. We believe that that sale is another step in what will turn out to be the dismemberment of the Royal Ordnance factories. The Secretary of State's "firm preference" and fine words mean nothing at all after the way in which the Government and his Department have treated both the management and employees of the Royal Ordnance factories.

It is extraordinary that a policy of privatisation that was supposed to encourage competition within the British defence industry is eliminating that competition and creating a monopoly supplier in the British economy for main battle tanks. Is the Secretary of State aware that his predecessor wrote a personal letter to all the employees of all the Royal Ordnance factories assuring them that their factories would not be sold off to a competitor, which could, by the very nature of being a competitor, close down those factories? That assurance has now been cynically and brutally abrogated by the right hon. Gentleman.

If two private sector companies were to merge the important sectors of their business in that way, a Government of the day, rightly, would refer the matter to the Monopolies and Mergers Commission. The Government are doing exactly the same thing; they are promoting a merger between two competitors and thereby creating a monopoly. Why should not that be considered by the Monopolies and Mergers Commission, in the national interest?

Is the right hon. Gentleman still persisting, as we think he is, in his policy of competitive tendering for defence contracts? If so, the only competition in future for the building of tanks will come from foreign competitors. In view of the amount of support that is given by foreign countries to their defence industries, there is a real danger in future that the next generation of the main battle tank for the British Army will be built not in Britain, but in France, Germany or the United States. The right hon. Gentleman's policy on the ordnance factories is in a mess, and he knows it. What he should do now is keep them in the public sector, where they have been profitable, efficient and competitive.

Mr. Younger

I am surprised that the right hon. Gentleman did not give a welcome to this encouraging announcement. I think that he will find that not only he but others will regret the fact that they have made that move at this time without looking more carefully at it. If one looks at the deal from the point of view of those whose livelihood is in building tanks, one sees it as a most important and positive step in giving those people a more secure future.

The undertaking that my right hon. Friend the Member for Henley (Mr. Heseltine), my predecessor, gave the employees in the letter that he wrote is maintained by the decision that I have made today. It is exactly the case that the undertaking that he gave still applies. We do not envisage, as he did not, parts of Royal Ordnance being sold to someone who would wish to close them down to eliminate competition. That is most certainly not the case in this instance. The deal improves Leeds's future prospects and involves the commitment by the owners to build a major new factory in Leeds, to build those tanks. Therefore, no one can say that that commitment is not being fully carried out.

Of course, we wish to encourage competition in every way we can. One should bear in mind—I hope that the right hon. Gentleman will — that if there are two different tank manufacturers and nothing like enough business for both of them, one does not get meaningful competition except for a very short time. It follows that the new company, with the two factory sites together, should be able to be a much more powerful competitor agaist foreign competitors or, indeed, a more powerful component in collaborative ventures for the future.

With regard to the Monopolies and Mergers Commission, under the Fair Trading Act it is the duty of the Director General of Fair Trading to consider and refer to my right hon. Friend the Secretary of State for Trade and Industry anything that he considers should be referred to him. Any further decision thereafter will be for my right hon. Friend to make. I have n6 reason to think that there is any difficulty about that. No doubt that will be raised if it is thought appropriate.

Whichever way one looks at the statement, it is an important and positive announcement for the future of those who make tanks. I think that the right hon. Member for Llanelli (Mr. Davies) will greatly regret having been so sour about it.

Dr. Keith Hampson (Leeds, North-West)

My right hon. Friend knows that many of us have felt that Royal Ordnance has been unsatisfactorily handled, but what he said about the commitment of Vickers to further investment is welcome in part. As the details have not been finalised, will my right hon. Friend try to ensure that Vickers has a long-term commitment and that the investment is not simply to quicken up the Challenger tank order, after which the factory might have little to do? Surely an investment in the longer-term to diversify the product range is the answer. As many of us want to keep Royal Ordnance as an integrated company, was there no chance of a private sale that involved the whole of Royal Ordnance, including Leeds?

Mr. Younger

I am grateful to my hon. Friend. His extremely close interest in the factory and everything to do with it is well known. I agree that the longer-term the commitment can be the better, but the length of any commitment for tank manufacture in Britain is bound to be affected by the likely ordering pattern for tanks. In the long term, I do not see any substantial increase in the number of tanks that are likely to be ordered by my Department. It follows that the long-term future for all those who make tanks is crucially dependent on having a highly competitive way of operating and therefore a better chance of getting foreign business. The combined arrangement will be much better placed to achieve that.

Mr. Denis Healey (Leeds, East)

Let me, as the constituency Member of Parliament, cheer up the Secretary of State a little. I welcome the Government's belated recognition that Barnbow is the best heavy tank factory in Britain, and the recognition by Vickers that the Barnbow work force is the best tank force in Britain. I deeply regret that the Government's 12-month delay in placing this order has made redundancies inevitable at Barnbow this autumn. However, if Barnbow is, as the Government admit, the best tank factory with the best work force, why on earth have the Government decided to sell it off to a firm with an inferior capacity, thus creating a private monopoly in which the British taxpayer is the only customer? How on earth can the Secretary of State reconcile that with his predecessor's statement that he wished to see competition—a statement that followed the passage that the right hon. Gentleman read out from his predecessor's statement?

On price, would not Vickers be able to recover the £11 million that the right hon. Gentleman says that it will pay for the factory out of the profits from the Challenger order alone? Will the right hon. Gentleman assure the House that if an auditor finds that the factory's assets are worth more than £11 million — this morning The Times suggested that they are worth £16 million—Vickers will have to pay the higher price?

Why should the House, or the work force at Barnbow, have any more confidence in the undertakings from Vickers that the right hon. Gentleman has just relayed than they had in the right hon. Gentleman's undertaking to sell off Royal Ordnance as a whole and not to sell it off in bits?

Mr. Younger

I am most grateful to the right hon. Gentleman for his welcome of at least parts of the statement. He is very much more realistic than his right hon. Friend the Member for Llanelli (Mr. Davies).

The right hon. Member for Leeds, East (Mr. Healey) made the point that, as the only domestic customer for the purchase of tanks, the Ministry of Defence is in a unique position. It is my concern over the long-term future of tank manufacture in this country that leads me to the inevitable conclusion that this is by far the best solution. The right hon. Gentleman points to it being a monopoly. He might like to reflect carefully upon what the position would be if we allowed just the two—indeed, the only two—tank manufacturers in the country to battle it out for orders that are not nearly sufficient to keep the two going. There are barely enough orders to keep one of them going. The result would be that one of them would go to the wall. Therefore, it is much better for the long-term future of tank manufacture that this deal should be done.

I am grateful to the right hon. Gentleman for his welcome for the seventh regiment of Challenger tanks. I very much hope that Vickers will be able to recover the money that it has invested. I have no idea whether it thinks that it will be able to do it on one order alone, but I very much hope that it will recover the money. The quicker it recovers it, the more prosperous the company, which all depend upon, will be.

I should have thought that the right hon. Gentleman would be able to have pretty good confidence in a company that is prepared not only to pay about £11 million for the assets of this factory but also to invest probably a larger sum in the building of an entirely new factory in its place on the same site and to employ most of the same work force. I should have thought that he would be very pleased indeed about that.

Mr. Jim Lester (Broxtowe)

I welcome the end to the uncertainty by the announcement of the Challenger order, but is my right hon. Friend .aware that there will be widespread concern in Nottingham, and in the Nottingham ROF, about the fact that the natural partnership in tank production between Leeds and Nottingham will be broken. What assurance is he able to give the House that co-operation over future tank production will be maintained? One of the major points that was made at the time of privatisation by those hon. Members with Nottingham constituencies who dealt with the Bill was that the philosophy of privatisation is wider share ownership among employees. How can my right hon. Friend guarantee wider share ownership among the employees, either in Leeds or in the rest of the ROFs, on the basis of a single sale, on whatever criteria?

Mr. Younger

I appreciate the points that my hon. Friend has made, and I am grateful to him for welcoming the end of the uncertainty, which will undoubtedly be a great relief to many. However, my hon. Friend will know very well—indeed, better than most—that Nottingham is to be involved in the order announced today — the seventh regiment of Challenger tanks. In future, it will no doubt be very well placed competitively to obtain further orders, or to take part in further orders, either as a subcontractor of Vickers, if that is the most appropriate way, or in some other way with foreign firms. My hon. Friend knows better than most that a very large part of Nottingham's output is export orders. In no way will that be altered by this statement, because it remains part of Royal Ordnance.

As for wider share ownership, I should very much have liked to see a flotation, if that had been possible, in July and an opportunity for all concerned to own shares. However, I hope that the Leeds employees will find that Vickers is a good employer, and I hope that it will discuss with the unions and all concerned at Leeds how matters are to be taken forward.

Mr. Merlyn Rees (Morley and Leeds, South)

The Secretary of State will be aware from what he has been told by his Minister of State, who met a number of hon. Members at a meeting to which we took shop stewards from Barnbow, that there has been much discussion about Barnbow's future in recent months, let alone recent years. One of the overall questions that all of us will have to face up to is that, whether the factories are owned by Vickers or by anybody else, the future is bleak for Barnbow and that alternative types of production there ought to be considered, because it will not be able to support the size of work force that it has supported in the past.

Fortunately, I received a letter this morning from one of the men who works at Barnbow. I did not know that the statement was to be made today. He asked me to write to the Secretary of State with some very prescient questions. He said: The Government decided to privatise the Royal Ordnance Factories to make them more competitive with outside industry, but now we find RO Leeds offered to our main competitor, the reason given 'there is not room for two tank factories in the country.' His question is this: If there isn't room for two tank factories in the country how on earth can there be room for two in the same company? It is a real question. Are the redundancies to be in Leeds or are they to be in Newcastle? There will have to be redundancies somewhere. He then went on to say that he had listened to a chap from Vickers on Radio Leeds the other night who said: Vickers were all for expansion not closures. My correspondent said that his follow-up question would have been that Leeds knows all about Vickers: look what it did to Crabtrees, Manns Dawson, Payne and Elliot, Campbell and Hunters. He said that it was no use telling the people of Leeds that Vickers was going to expand; the books are clear. The factory is to be cut back even more than it would have been had it remained in the ROF.

Mr. Younger

I am grateful to the right hon. Gentleman for some of his remarks but, with great respect to him, I do not think that to disparage what is an extremely good company is likely to be helpful either to the right hon. Gentleman or to his constituents. Vickers is now proposing to move into his area and spend a large amount of its money, not Government money, upon building a brand new factory. There are 630 constituencies in this country. They would all be very glad to have a brand new factory. The right hon. Gentleman has got that wrong. He is absolutely right, of course, about the need for diversification. To rely upon tanks alone in the long term would be difficult, but on reflection might he not think that this is at least one step in the right direction of diversification? The products that are made by Vickers at Newcastle are not the same as those which are made at Leeds. At least it will broaden the product base a little, and I certainly look to Vickers to take that further.

Mr. Spencer Batiste (Elmet)

Will my right hon. Friend accept that those of us who represent Barnbow employees in Leeds are concerned to secure both the short-term future of that company and its long-term prospects? His announcement today that the order for the seventh regiment is to be placed at Leeds and that it is guaranteed to be completed at Leeds is very welcome, as it secures the first of these objectives. I am sure that all hon. Members with Leeds constituencies will greatly thank him for that.

My right hon. Friend's announcement of major investment by Vickers in Leeds is a completely new factor, which transforms the position. Asset-stripping by Vickers would be completely unacceptable to both sides of the House. However, any further major long-term investment by a successful company like Vickers, on top of the already major investment that it has made only a couple of miles down the road at the Howson Algraphy plant in my constituency, would be very welcome. Is my right hon. Friend sure that he has secured adequate guarantees of that investment during his negotiations, and is he sure that the contract, when it is finally signed, will have that clearly embodied in it?

Mr. Younger

I am very grateful to my hon. Friend. He is completely right when he says that there are both short-term and long-term interests in this factory and its employees which are important to us all. I am glad that at least the short-term problem has been greatly helped by today's announcement. As my hon. Friend has pointed out, asset-stripping would, indeed, be unacceptable to us all. However, this is the very reverse of asset-stripping. It is, I suppose, asset-building, in that the company is coming into the area and building an entirely new factory.

As for guarantees, as part of the agreement, Vickers has given an undertaking to move ahead in the way that I have described. I am quite certain that as an honourable company of very good standing that has every intention of making this business flourish, it will carry out what it has said it has undertaken to do.

Mr. Michael Meadowcroft (Leeds, West)

In the interests of consistency with earlier questions that I asked the Secretary of State, may I welcome very much the order for the Challenger tanks at Barnbow? That is by far the most important immediate question for the employees at Leeds. But the key question is the duration of the order and the time span that there will be before considering further orders. Surely, with Vickers' record in the City, as the right hon. Member for Morley and Leeds, South (Mr. Rees) said, the employees at Barnbow will not have much confidence for the future unless there is some sign of what will follow the order. Will the Secretary of State tell us how long the contract will last, because otherwise the belief that Vickers has bought the competition will not give the employees much faith for the long-term future?

Mr. Younger

I appreciate what the hon. Gentleman says and I thank him for his welcome for the order for the seventh regiment. Of course, he is right to say that we must consider the longer term. No decision has been taken on any further regiments' orders for Challenger tanks. I have formulated no plans to place any such further orders. It would be wrong of me to give a guarantee that that can be done, because no such decision has been taken. Naturally, that will be considered for the future. When we consider the future of the Royal Ordnance factories we must not rely solely on future orders of tanks by the British Ministry of Defence, because they are not likely to be forthcoming in large enough quantities. This order should keep the factories going until about the end of the decade. From then on it will be a question of how well the new company manages to obtain new orders in different areas.

Mr. Richard Ottaway (Nottingham, North)

Will my right hon. Friend say why, when many of us thought that a flotation was in the best interests of the ordnance factory, a private sale is now the preferred option?

Mr. Younger

Yes. I had hoped that it would be possible to have a flotation, as planned, in July. As I said to the House when I announced the decision, we could not do it in July because, in our view and that of our advisers, it was clear that the company was not in the right condition for flotation. It would have been irresponsible to float the company when it was not ready to be a robust performer in the open market. My intention remains to privatise Royal Ordnance. I hope to privatise it as a whole and I shall, of course, keep the House informed.

Mr. Derek Fatchett (Leeds, Central)

Where will the British Army go for tanks in the future if it is not satisfied with price and quality from Vickers? What guarantees has Vickers given for the new factory? I noticed that, when responding to questions, the Secretary of State moved from saying "facility" to saying "factory". It may be useful to define whether we mean a facility or new factory.

Mr. Younger

I am not sure what the difference is. It depends whether one is speaking English or American. I mean a factory. The Americans refer to it as a facility. In future, when the British Army seeks bids for tank orders, I hope that it obtains competitive bids from tank producers abroad—

Mr. William O'Brien (Normanton)

Such as Germany?

Mr. Younger

Yes, and I hope that there will be a much better possibility of collaborative projects for the next order of main battle tanks. I hope that Vickers, in its new form, can take part in that.

Mrs. Anna McCurley (Renfrew, West and Inverclyde)

My right hon. Friend's statement will bring some relief to my constituents at ROF Bishopton. Will the Secretary of State move swiftly to enact his expressed preference to end uncertainty? Will he respond to the rumour published in the newspapers today that the sale will not be open, but that Royal Ordnance Factories plc will be sold off to Trafalgar House?

Mr. Younger

I am pleased if my statement has helped to end difficulty and uncertainty, or at least to reduce it, at Bishopton, in which my hon. Friend the Member for Renfrew, West and Inverclyde (Mrs. McCurley) takes such an interest. I repeated today that my intention is still, if I can do so, to privatise Royal Ordnance as a whole, if that proves to be practical. I hope that this can be done as quickly as possible to eliminate uncertainty. I assure my hon. Friend, in response to her other question, that we are open to several bids to buy Royal Ordnance as a whole. I do not envisage it being a sale to one bidder; I hope to get several bids, which will be properly evaluated, and I shall keep the House informed.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

It is clear that the Secretary of State's policy is in total shreds because, having given undertakings that he would put the whole of Royal Ordnance into a flotation or on to the market as one unit, he is now selling off one little bit. Will he please tell me, since morale in the ROFs is about as low as it can go, why any employee should believe that the right hon. Gentleman's undertaking today is any more use than the undertaking given by his predecessor, which he has now totally abrogated?

Mr. Younger

The hon. Member for Crewe and Nantwich (Mrs. Dunwoody) is wrong. Although it is my hope successfully to privatise Royal Ordnance in one unit, I cannot give a guarantee that that will be so. Nor have I, or my predecessors, ever given such a guarantee. I hope that the hon. Lady will understand that. On morale, I readily agree that the uncertainty for all the employees of Royal Ordnance has been unsettling during this period. I wish to end that uncertainty as quickly as I can. I can say today at least that any low morale among the tank manufacturers is ended. They now have a clear and firm future as a result of my announcement today.

Mr. Den Dover (Chorley)

Is my right hon. Friend aware that my constituents at ROF Euxton will feel massively betrayed if they have no opportunity to buy shares when he floats the rest of the Royal Ordnance organisation without the tank manufacturers? The employees went along with the privatisation provided that they had that opportunity.

Mr. Younger

I note what my hon. Friend says. If it proves possible to come to an arrangement which involves employees' share ownership, no one would be more pleased than I. My hon. Friend will probably agree that his constituents and most employees of Royal Ordnance factories will be primarily concerned that the business should be given a firm future. I must balance that fact when I consider the possible ways of privatising the factories, which I hope will be as a whole.

Mr. Geoffrey Lofthouse (Pontefract and Castleford)

Will the Secretary of State return to the questions put to him by my hon. Friend the Member for Leeds, Central (Mr. Fatchett) and the hon. Member for Elmet (Mr. Batiste)? Is the investment on the new factory legally binding in the agreement or is it just a promise or an understanding as outlined by the Secretary of State? If it is not legally binding, is it not possible that Vickers could rat on the deal?

Mr. Younger

I understand that, on hearing this for the first time, the hon. Gentleman wishes to have some assurance. That is part of the agreement that has been openly entered into.

Mr. Lofthouse

Is it legally binding?

Mr. Younger

Yes. It is part of the agreement that has been openly entered into by Vickers with the Ministry of Defence. If it is of any reassurance to the hon. Gentleman, Vickers intends to start work very quickly. Vickers told me that it expects to start work at the beginning of August. There can be no doubt that Vickers has every intention of going ahead as fast as it can.

Mr. David Clelland (Tyne Bridge)

I shall resist the temptation to take issue with my right hon. Friend the Member for Leeds, East (Mr. Healey) about the relative merits of the work forces in Leeds and Newcastle. I assure him that, although my constituents work for a private company, they are nevertheless a highly skilled work force —[HON. MEMBERS: "Hear, hear."] I can do without the embarrassment of being supported by Conservative Members. The Secretary of State is aware that the northern region has the highest unemployment in Britain, and Tyne Bridge, where the Vickers factory is located, has one of the highest unemployment levels in the region. Therefore, it must have been in the Secretary of State's mind, when taking the decision, that it may have implications for the Newcastle factory. Will he assure the House that he has discussed the matter with the company and that there are no detrimental employment effects on the Newcastle factory?

Mr. Younger

I am grateful to the hon. Gentleman, although I am not sure that his language was the most felicitous. He said that his constituents, although working for private enterprise, were highly skilled. I should have thought that they were highly skilled because they worked for private enterprise. It is a matter of the expression that one uses. The hon. Gentleman knows that Vickers; is a good company and is extremely proud of its relatively new factory at Newcastle. It is not likely that Vickers would do anything adversely to affect that factory.

Mr. O'Brien

What was the recommendation of the board of directors of the Leeds ROF when it met on 15 July, considered a valuation of £25 million of its plant and rejected the £11 million offer of Vickers because it was less than half of the plant's value? Will the right hon. Gentleman confirm that the profit from the tank order will exceed £10 million and that orders on the order book are also worth more than £10 million, so Vickers has a great deal of money? Will he also confirm that the 1,400 people who are employed at Leeds will be retained by Vickers, or will there be substantial job reductions? What were the management board's recommendations concerning the Vickers offer and what will the profits from tank sales and orders on the book be? Will they not be substantially more than is required to buy the factory and build a new one?

Mr. Younger

I appreciate the points on which the hon. Gentleman wants answers, and I shall do my best to supply them. The board of Royal Ordnance plc, which is in control, has agreed to this arrangement. That is the essential factor. The price that is paid will be related to an audited asset value for the plant. We must bear in mind that it is all very well to draw up the asset value of a plant, but its actual value is what somebody is prepared to pay for it. If the hon. Gentleman would like to take a little longer to consider the market and the situation of the factory, I think that he will agree with every adviser who has been asked to give an opinion that this is a remarkably good deal. Such a sum, and an undertaking to build a new factory on the same site, is a remarkable deal. I hope, although as a customer I am anxious to get the lowest possible price, that the company and the work force are so efficient that profits will be considerable. I hope that there will be enough to pay the company back so that it can be profitable and prosperous.

Mr. Peter Pike (Burnley)

Is the Secretary of State aware that there are grave fears among employees in ROFs throughout the country except Leeds, where they will be worried about whether there will be redundancies there or at Newcastle? Does he agree that the fears that were expressed in Committee about two years ago have proved to be well founded time and again and that the Government have done tremendous harm during the past two years to the viability of ROFs? Would it not be best to drop the scheme altogether? Does he agree that the preferred option of selling the ROFs as a unit is not on?

Mr. Younger

I appreciate and understand that there have been considerable uncertainties and fears for those who work in ROFs. That is inseparable from the difficult business of trying to move it into the private sector. I do not agree with the hon. Gentleman's assessment of what has happened to the efficiency of Royal Ordnance. It is very much more efficient, even now, than a few years ago. That offers a much better prospect for the future because it means that there are much better prospects of getting orders from overseas. I hope that, on reflection, the hon. Gentleman will agree that my intention to get Royal Ordnance into the private sector, if possible as a whole, is very much in the interests of his constituents.

Mr. Jack Straw (Blackburn)

Is the Secretary of State aware of the appalling damage to the morale of all of the work force of ROFs that has been done by him and his predecessors during the past six years, in which orders have been lost and thousands of employees have lost their jobs? That should be compared with the record of the Labour Government. As parliamentary answers show, employment in ROFs rose under Labour.

Would Vickers have agreed the deal if the undertaking to build the additional plant at Leeds had been legally binding? What is the future for the Blackburn factory? If the right hon. Gentleman intends to sell off the rest of the ROFs as a single entity why, so many months after the event, has he still not published the opening balance sheet for ROF plc, dated 2 January 1985, or the trading results for 1985, when both would have been available if a prospectus had been issued?

Mr. Younger

I know of the hon. Gentleman's great interest, especially in the Blackburn factory, which is in his constituency. What he said about morale is quite right. The only way in which to put it right is to get the company settled in its new organisation. If it is possible, I want it to be put into the private sector as a whole as it stands. I hope that that will be possible, but I cannot guarantee it.

We have had several expressions of interest from firms and organisations which would like to place a bid for Royal Ordnance as a whole. They will be evaluated. I assure the hon. Gentleman that that will be done as quickly as possible. All the necessary information, including balance sheets, for example, will have to be produced.

Mr. Paddy Ashdown (Yeovil)

Will the right hon. Gentleman now answer the question asked by the hon. Member for Normanton (Mr. O'Brien), which he carefully failed to answer? Is it not the case that the board recommended against the sale and, despite some discreet but heavy arm-twisting, is still generally against it? Will he remember that many of us in the Select Committee predicted that this would happen, so diminishing rather than increasing competition? Is it not a part of the deal that the ROF has agreed not to set up any alternative tank-building facility anywhere in Britain?

Mr. Younger

That has not been put to the Royal Ordnance board, but I can confirm that it has agreed to the deal.

Mr. Ashdown

Did it recommend the deal?

Mr. Younger

It has agreed to the deal.

Mr. Ashdown

Did it recommend it?

Mr. Younger

I do not know what the difference is. I have made it perfectly clear that this was a negotiation between the Ministry of Defence and Vickers. The board has been kept informed throughout and has agreed that it can accept the deal.

Mr. Ashdown

What did the board recommend?

Mr. Younger

I am trying to answer the question. There have been several suggestions, deals or proposals, but they have been turned down by the Ministry of Defence or the Royal Ordnance board; but they are not relevant to this case. This recommendation has been put to the Royal Ordnance board as a result of negotiation between the Ministry of Defence and Vickers. The board has accepted it. That is the important point.