HC Deb 17 March 1986 vol 94 cc45-58

'The Secretary of State shall present to Parliament a draft prospectus for the successor company which shall include independent valuations of the company.'.

Government amendment No. 38.

Mr. Hunt

The House will be aware that the mini-prospectus is becoming a popular art form in the flotation of companies, particularly those moving from the public to the private sector. It is a particularly valuable means of publicising an issue the size of British Gas, in attracting the necessary funds and a wider spread of share ownership. Nevertheless, mini-prospectuses are a relatively recent innovation and were first given general application under the Stock Exchange (Listing) Regulations 1984, which implemented three European Community directives. Like many such useful tools, they carry one possible disadvantage: it could be argued that the process of abridgement or extraction of selected information from the full listing particulars that the preparation of a mini-prospectus involves could give rise to liability for misrepresenation or the omission of material facts, although they have been amply disclosed in the full prospectus.

A provision is included in clause 126 (5) of the Financial Services Bill to give protection against any liability thus arising where the material has been approved by the stock exchange under the 1984 regulations. However, we are dealing with the present situation. I am sure that hon. Members on both sides of the House, whatever their views on the principle of the proposed flotation of British Gas, will agree that we should make full use of the marketing tools available. The new clause provides the necessary protection against liability that might arise simply by virtue of the abridgement that I have desrcibed, despite the fact that full disclosure would already have been made elsewhere. It is a protection that the Government are proposing to extend to all issues under the Financial Services Bill. I therefore urge hon. Members to support the new clause.

5.15 pm
Mr. Orme

We find the Government's approach to flotation unacceptable. I specifically draw attention to new clause 7, which states: The Secretary of State shall present to Parliament a draft prospectus for the successor company which shall include independent valuations of the company. We say that because of what has happened in previous flotations, not least British Telecom. Because of the strength of our feeling and because our new clause is not likely to be reached in the voting pattern, I shall ask my right hon. and hon. Friends to vote against the Government's new clause 9. We shall do so because of the importance that we attach to the flotation of shares.

The terms of the sale of British Gas are a cause for concern, particularly in view of the report of the Public Accounts Committee on the sale of British Telecom. Unfortunately, the PAC's reports are always after the event, for obvious reasons, and therefore too late to influence it. However, it is not too late to influence the sale of British Gas. That is why we raise the matter on the Floor of the House now.

The Government have said, and Ministers said in Committee, that the PAC's conclusions would be taken fully into account when the new clauses were considered. Looking at the Amendment Paper, we find that that is not so. Our new clause gives us the opportunity to discuss and put forward our views on that important matter.

The reports of the PAC are an indictment of the handling of the sale of BT. We use the argument about BT, as we did in Committee, because it is the only parallel that we can use for the size of the sale, in that it is a transfer of a public monopoly into a private monopoly. We are dealing with a large amount of expenditure. The British taxpayer has a right to be informed about the proposed sale.

The City continues to be the main beneficiary of privatisation. For example, in fees, commission and so on, in the small sale of Associated British Ports, the City made £2.6 million. It made £12.5 million on Britoil, and a massive £190 million on British Telecom. In its 17th report on 16 May 1984, the PAC criticised the failure to use the usual Government method of floating new Government stocks and the Government's heavy reliance on the advice of merchant bankers who also had a stake in the sale as underwriters. That shows clearly that there have been conflicts of interest in the conduct of previous flotations. Who can have confidence in the City at present? What is happening in some areas of the City of London is a disgrace. In effect, about £200 million is being handed over in the sale of a public company, to which a large part of the electorate is opposed. Therefore, we must endeavour to protect their interests and at least bring forward the issues.

Many of the PAC's criticisms are a direct result of the undervaluing of shares. For instance, a gain of 18 per cent. was made on the sale of Cable and Wireless, with a loss of £40 million to the taxpayer. For Associated British Ports, the gain was 23 per cent., the equivalent of £10.58 million. Amersham International showed a gain costing the taxpayer £22 million. However, the most astonishing example has been the sale of British Telecom. In December 1984, the Financial Times commented:

the Government have sold BT for some £1.3 billion less than its initial stock value". According to the share index in The London Standard today, British Telecom shares are selling at 218p a share yet, at the time of BT's sale, they were sold at 130p a share. There has already been a massive gain in the pricing of British Telecom shares. The taxpayer is paying for it, but what benefit has he had from the sale? Recently, BT prices, not least standing charges, have increased, and this is affecting pensioners and many other sections of the community.

No doubt the Under-Secretary of State saw the recent "World in Action" programme which looked closely at the sale of BT. Independent financial experts said that by the summer it was increasingly clear that the sale would be a success. The sale was first thought to be a massive risk, but that was no longer the case. The programme told us that one firm of City stockbrokers upset its competitors by saying that and was accused of "talking up" the selling price. The success of the sale was desrcibed as inevitable—similar to giving £10 notes for £5 notes.

British Telecom was a British-owned company, one of the 10 most successful companies in the United Kingdom, and was sold off for one reason— to enable the Government to use the proceeds for tax relief at what they thought was the appropriate time. British taxpayers are still paying for that massive undervaluation. The "World in Action" programme pointed out that if the proceeds had been used differently 30 hospitals could have been built. Instead, the money was used to line the pockets of people in the City.

The third report of the Committee of Public Accounts, which was printed on 11 November 1985, continued the srcutiny of the sale of British Telecom. In the coming months and years, will we see the PAC dealing with the sale of British Gas in the same way? Will people wring their hands and say, "Why did we allow that to happen?" I wish to put it on the record, as, no doubt, do other hon. Members, that we warn the British public before the event of the consequences of the sale. The PAC concluded that the Department of Trade and Industry got the flotation hopelessly wrong. The Committee understood why the Department and the Treasury took that underwriting course but was not convinced that the extent of risk justified the rates agreed for placing commission. The Committee noted the Department's explanation of the reasons for the high premium in the aftermarket but was surprised that the Department had not foreseen the possibility of this situation arising. Inevitably this also raised the question whether … the Government objective of maximising net sale proceeds has been met. Moreover, we note the Department's view that if the special selling measures led to their receiving an extra 4p a share that was equivalent to £120 million. By the same token it can be argued … that the price was over cautious and that a modest further increase … would have brought in a higher return without risk". That would have meant a higher return to the taxpayer. Whatever one's view on privatisation, this can be seen only as a powerful indictment of the way in which the matter was handled.

There has not been a Government response to the PAC report. The Secretary of State for Energy today gave a response to the report of the Select Committee on Energy. On Sunday, the right hon. Gentleman rubbished the report of the Select Committee on the Environment. The right hon. Gentleman has been quick to reply to the reports of the Energy and Environment Select Committees, which are not strictly within his remit, but he has not replied to the PAC's report, with its implications for British Gas.

The PAC report commented also on the sale of shares overseas. Within the first week, every British Telecom share put into the New York market was sold back into Britain, giving New York investors a killing of £108 million. The PAC recommends that a thorough review of the method, desirability and value of overseas sales should be carried out by the Department and the Treasury. What do the Government have to say about the sale overseas of British Gas shares? They have appointed a Japanese merchant bank, Goldman Sachs of the United States and the Swiss Bank Corporation to promote the sale of shares overseas. This morning, the Financial Times was catching up with events—it was a little behind the times—in referring to the 15 per cent. limit on the sale of shares overseas. We should like the Government to spell out how that sale will operate in terms of the information they put before the Standing Committee. We should like also information which the Standing Committee was not given on the operation of the golden share. We are dealing with a crucial industry and we are, therefore, entitled to ask for more information.

The purpose of the new clause is to allow Parliament to assess the method of the sale, to ensure that valuations are independent and to srcutinise the desirability of promoting sales overseas. If the Government are selling off our national assets—it does not matter whether it is Westland, British Leyland or British Gas—they should at least ensure that the sale does not result in tremendous losses for the taxpayer.

The new clause offers the Government an opportunity to show that their hands are clean and that they are not just providing another killing for the City. Their actions with public assets must come under public srcutiny, preferably before mistakes are made. There must be srcutiny by the House. That is why the new clause is important. We are entitled to a Government reply. If that reply is not satisfactory, we shall divide the House.

5.30 pm
Mr. Allan Rogers

The Minister made some interesting slips when introducing the new clause, and I was particularly interested in his reference to the prospectus as an art form. This Government would turn me off anything, and the desrciption of the prospectus as a particularly interesting art form would not encourage me to buy shares in British Gas. Although I shall not buy them, many other people will. As my right hon. Friend the Member for Salford, East (Mr. Orme) said, it will almost be like giving people £10 notes for £5 notes.

It should be remembered that this flotation is not part of the Government's policy of extending share-owning democracy. Given the immense volume of the flotation, it is clear that the number of British Gas employees who will take up shares will be relatively small. It is more than likely that the billions of pounds of shares that will be floated will be bought by the institutions in the City and on the exchanges of New York and Japan. Therefore, it is a smokesrceen for the Government to suggest that they are returning a national industry into the hands of the British people through the purchase of shares. That is absolute nonsense. One could even say that such a suggestion is a lie. To a large extent, as with British Telecom, the ownership of these shares will fall into the hands of the large institutions which will be at least one or two, if not more, steps divorced from the British public. As a result, British Gas will be even further removed from the British people than it is at present.

That is why the Opposition have tabled new clause 7. We want to ensure that the value of the gift that is to be handed over is known to the public at large. As was said in Committee, many parts of British Gas were taken into public ownership without compensation. It is a bit much that assets which were formerly owned by municipalities and local government should now be sold without such bodies receiving any compensation. That is especially so, given that compensation was paid by the Labour Government to the private corporations that ran sectors of the gas industry prior to public ownership. That is why we have argued that there should be a proper evaluation of the assets, so that a comparison can be made with the assets at the time that the industry was taken into public ownership, and so that proper compensation can be paid.

My right hon. Friend the Member for Salford, East referred to the huge sums of money that would be paid to the stockbrokers in the City of London. It will run into millions of pounds for a job that a donkey could do. This national asset will be worth around £17 billion, and up to £1 billion may be paid to City stockbrokers for handling this flotation. In Committee we considered the mechanics of the flotation at some length. Some figures were given about the volume of the flotation and the fact that the amount involved might be two to three times the total sum handled by the City of London on new issues in any one year. In other words, this flotation could take up all the investment capital available for a considerable time.

Last week the Secretary of State for Transport said that there would be a delay in the privatisation of British Airways, and the Minister of State said that this was due to all sorts of reasons that were outside the Government's control. I giggled at that, because the truth is that the market could not stand these two flotations this year. The Government have decided to go ahead with the sale of British Gas and to hold back the sale of British Airways, simply because not enough money is available as investment capital to allow the two flotations to proceed at the same time. That is another Government hypocrisy that has been exposed as we have considered the Bill.

I accept that the Government have a sufficient majority to ensure that this exercise goes ahead. We are anxious that they produce information on which the people can judge what it is all about. We had some successes in Committee and received some publicity, but we shall continue to expose the Government for the charlatan way in which they are promoting this Bill.

Mr. Rost

I welcome the Government's new clause, which will allow a mini-prospectus to be issued. It would be nonsense if that were not allowed. A full prospectus would have to be published in large quantities, and would probably take up to eight or 10 pages in one of the heavy newspapers. Apart from the enormous cost involved, the average investor does not read the small print anyway. He wants to know who is backing the issue, who the brokers are, who the advisers and merchant bankers are, and who the sponsors are. In this case, the Government have some good names sponsoring the flotation.

Even the experienced professional investor will take much of the small print as read, provided that the backers are reputable and that their reputations are at stake. If we are to encourage the new smaller investor and British Gas employees to become involved in this issue—that is the main motivation of the Government's privatisation policy; it is the spreading of capitalism—it is essential that we do not confuse such investors with an enormously bulky prospectus published in the newspapers or elsewhere that will simply put them off. On the other hand, a simplified prospectus might encourage the small investor to go for it.

Although I have sympathy with some of the arguments put by the right hon. Member for Salford, East (Mr. Orme), I feel that he over-stated his case. He referred to PAC criticism of previous flotations. I sympathise with him, and have supported him publicly on previous occasions, but if the right hon. Gentleman is basing his argument on the subsequent rise in the price of British Telecom shares, he should reflect on whether he has overstated his case. In fact, since British Telecom was floated about 15 months ago the share price has risen substantially, but the right hon. Gentleman did not point out that the BT share price has risen by far less than most other leading shares during that period. If investors had bought other shares, such as in Imperial Chemical Industries, they would have more than doubled their money. Indeed, a portfolio of leading shares would have done much better for investors than have British Telecom shares.

The right hon. Gentleman should also have pointed out that the market as a whole has risen substantially during the past 15 months—by more than 40 per cent. I do not have the figures before me, but within that market many leading companies' shares have more than doubled in price. This is a reflection of confidence in the Government's economic policy. The encouragement of new investors and the new mood of optimism is reflected in investor confidence, at home and abroad, in the Government and in the future of our economy. For the right hon. Gentleman to criticise the flotation of British Telecom as having been under-priced because the whole market sector has improved substantially is to be unfair to himself, because he usually presents a fairer argument.

I sympathise slightly with the gist of the right hon. Gentleman's overall criticism of the basis of flotation of the Government's privatisation programme. There is a better way of establishing a fairer price than we have so far achieved. I cannot understand why it is essential that 100 per cent. of the shares that the Government intend to sell must be sold on one day. That is unnecessary. The Government do not sell their gilts in that way, and companies do not sell their shares in that way. They sell sufficient shares to establish a market, and then gradually peddle them once the market level has been established. There seems to be no reason why the Government, who are acting on behalf of the nation as the trustee for British Gas shares, should not establish a market by selling 10 per cent. and withholding 90 per cent. of the shares, and then sell the 90 per cent. gradually during the following months, probably fairly rapidly, at a market level which will have established itself according to the market assessment of the value of British Gas. If the flotation were handled in that way, it would overcome the necessity for the right hon. Gentleman's new clause.

While I understand the gist of the right hon. Gentleman's argument, the proposal that a fair independent valuation should be prepared for British Gas and presented to Parliament is nonsense. The only independent fair valuation is the market valuation. Many investments and companies are valued on a fraction of their asset values. I can name any number of oil companies which are valued at well below their asset values, and I can think of many investments and companies which are valued at many times their asset values because of the premium that is paid for management, prospects or goodwill.

I do not understand what the right hon. Gentleman means by an independent valuation. The only independent valuation that is meaningful is the market valuation—the balance between supply and demand, and buyers and sellers. That is why I suggest that if British Gas and other privatisation issues are to be floated by the Government, only a small proportion of shares should be issued initially to establish an independent share valuation through a balance between buyers and sellers in the market. That way we would not have the problem which has been highlighted and criticised by the Public Accounts Committee, and shareholders—the nation—would be guaranteed a fair price. It is inevitably almost impossible to value in advance a company of this nature.

That is important if we are to encourage wider share ownership and the new small saver to buy shares in British Gas. A genuine investor will not be put off by the proposal for a fair valuation, because he will not go for a quick short-term profit, but will be more interested in long-term investment. Certainly British Gas employees, whom we hope will participate, will consider the long-term interest, because their future and livelihood are involved. Therefore, they will not take a short-term view or be tempted by a quick short-term profit.

The right hon. Gentleman's new clause is impractical and unnecessary if we think carefully about the way in which the flotation of British Gas should be handled to achieve a fair balance between the desire to encourage new small investors and employees, and to seek a fair price for the nation and shareholders.

5.45 pm
Mr. Malcolm Bruce (Gordon)

I wish to deal with the new clauses tabled by the Government and the Labour party. It is conceivable that when the Secretary of State announced the privatisation of British Gas many people outside the House who do not hold the strong ideological views that are represented across the divide may have thought that it seemed not a bad idea. During the past few months the House has witnessed a dynamic change which requires this massive flotation to be considered carefully.

It has been said, and, indeed, it should be true, that this is the biggest single company flotation that we have ever seen. When the Secretary of State announced the flotation, the price of oil was nearly $30, which consequently increased the valuation of British Gas above what it is now, when the price of oil has fallen to $15. If Sheikh Yamani is to be believed— he has not been wrong during the past few months—the price of oil is heading towards $8.

If those circumstances prevail, it is reasonable to assume that one would not expect to offer a major energy company on the market in the autumn. We have legitimate reasons for ensuring that the prospectus and details of the flotation are brought back to the House because the needs of the Conservative party may conflict substantially with the national interest. The House and even the Government's supporters are entitled to ensure that we are not forced to make a flotation at the bottom of the market and in circumstances where the valuation of British Gas, which should be about £8 billion, could be depressed by up to £3 billion simply because of the oil and gas markets.

I have considerable sympathy with the sentiments behind new clause 7 and the provision that the prospectus should be brought back to the House. I have heard the Minister's objections to that, but he should recognise that we are considering a major issue, not something that can be brushed aside by saying, "Trust us. We are the Government. We shall do it in the best way." There is a clear conflict of interests between the Conservative party's political objectives and the national interest.

It is important that this peculiar sort of flotation is spelt out in significant detail. It is wrong to privatise a major utility, as we are doing, especially in a way which neither introduces an element of major competition nor produces proper accountability and regulation. If it is appropriate to bring private money into a major utility, such as British Gas, the right approach would be to look for some sort of franchise operation. It is a privilege to operate a utility, and, to paraphrase what has already been said, it should not be a licence to print money. The right hon. Member for Salford, East (Mr. Orme) said that the British Telecom flotation had been desrcibed as buying £10 notes for £5 notes. Our worry is that the Government, in their desperation, might offer £10 notes for £2 or even £1, because they are anxious to get their hands on the money in the short term and will float the company even when the market is out of tune with the flotation. It is important that those who are invited to subsrcibe to the British Gas Flotation are aware of the circumstances.

Another factor that must be taken into account is that there is likely to be a general election within a year of the flotation. The prospectus must spell out the political objectives of a different Government. I shall not speculate on the nature of that different Government, but let us assume that they are not a Conservative Government. If they are not, there will be moves towards greater regulation of British Gas and greater accountability, which will affect the value of the shares. If the Government floated British Gas at the bottom of the market, some people might make a substantial killing. However, if they held off a little longer or the price recovered, some people might be surprised later to discover that the British Gas operation was not as cheerful as they had thought and was not a licence to print money. In those circumstances, they would have had every right to know in advance the risks that they were taking.

On balance, the greater risk is that the Government will sell us short rather than the other way round. In those circumstances, the Minister should accept that a substantial body of opinion outside the House is not satisfied with the way in which the Committee stage of the Bill was conducted and the fact that no significant changes were made. The Government seem intent on pressing ahead with the flotation, ignoring the completely changed market circumstances since the idea of privatising British Gas was mooted. Therefore, the Government should bring the details of the prospectus back to the House and should require that a full explanation of what is involved is laid before the prospective shareholders. They must not simply say, "Leave it to us." I am afraid that we do not trust them.

Mrs. Clwyd

Conservative Members have tried to convince us that wider share ownership is good for everyone, but research has shown that the number of individual shareholdings in privatised companies drops dramatically soon after privatisation and that strategic control of the stock remains in relatively few hands. In Cable and Wireless, for example, the initial 150,000 shareholders slumped to 26,000 within a year, and 467 large shareholders owned three quarters of the 346 million shares in private hands. There are plenty of similar examples, and it is a fraud to suggest that wider share ownership will be achieved by privatisation.

As my right hon. Friend the Member for Salford, East (Mr. Orme) said forcefully, public assets have been substantially undervalued. If the Government have nothing to hide—if they are not simply trying to line the pockets of their friends—there is no reason why they should not support our new clause. Of course, they might be doing what we all suspect they are doing. As my right hon. Friend said, the terms of sale of British Gas are a cause for great concern. Our new clause tries to do something about them.

My right hon. Friend gave detailed examples of sale receipts, percentage speculative gains and the immediate loss to the taxpayer in previous privatisations. Indeed, the Government have a poor record on such sales. Their practice is to sell assets cheaply so that flotations cannot fail. The Government's problem now is the falling price of oil, which is increasing the public's anxiety about the sale of British Gas. My right hon. Friend talked about the Public Accounts Committee, which expressed its worries about stock going to an immediate substantial premium and creating windfall gains for the investor at public expense. He challenged the Minister to answer the points made by the PAC, and perhaps we shall hear some answers from him today.

The Public Accounts Committee made an important point about the handling of share sales. It mentioned the advice of merchant bankers, on which the Government rely heavily, who also have a stake in the sale as underwriters. The PAC said that the merchant bank advisers who were also underwriting the issue would have an incentive to ensure that the issue was fully taken up.

An interesting side effect of the privatisation programme that we discussed in Committee is that the public spotlight is beginning to focus on the fat fees for the City. I am not surprised that Conservative Members have so vigorously defended privatisation. My right hon. Friend gave examples of the millions of pounds lost to taxpayers by the previous 10 sales of nationalised companies. The report on British Telecom showed that the Government and their advisers undervalued the offer by a factor of five, while the City was rewarded with sale fees of at least £128 million.

The new clause is designed to ensure that that does not happen again. Judged by any standards—even by the standards of Conservative Members—those fees are excessive and appear to bear no relation to whether a sale has failed. We want basic information on why large fees are charged and paid to enable us to determine how the costs are arrived at. The Public Accounts Committee and Parliament should investigate the fees and other expenses paid for privatisation sales, not with a view to establishing what is normal in the City, but with a view to discovering how the costs are arrived at and distributed and whether the taxpayer is getting value for money. Why have the Government ignored the advice of the PAC that the Bank of England be used more often as an adviser during sell-offs?

Unless the Government support our new clause, the Bill will simply line the pockets of their friends. The salaries of the chairmen and top directors of 10 privatised companies increased by an average of 85 per cent. within two years of privatisation. The profits that once belonged to the public are being plundered to pay excessive salary increases to top executives.

If the Government do not support our new clause, they will show what we suspect: that the privatisation programme has more to do with private greed than with public need.

Mr. David Hunt

The right hon. Member for Salford, East (Mr. Orme) and his hon. Friends have extended the debate to cover some general points on the flotation. My hon. Friend the Member for Erewash (Mr. Rost) was right to say that this is a marvellous opportunity for wider share ownership. The Government have made it clear that they intend to ensure that the ownership of British Gas is widely spread throughout the British public, and specific proposals will be made to ensure that those who manage the industry and are employed in it can have a direct stake in the industry for which they work.— [Interruption.] Now that I have woken up the Opposition Front Bench, may I make some more important points?

The Government are determined that the privatisation of British Gas will be good for the consumer, the employee and the nation. Anybody who now objectively studies the legislation, improved further here today, will see that that is the clear objective. No longer will British Gas suffer from unwarranted restrictions on its freedom to act as an efficient, successful and commercial business.

6 pm

The right hon. Member for Salford, East quoted from the Public Accounts Committee report, and the Government treat its comments seriously and will carefully consider the points that it makes. The formal response will, however, be a matter for my right hon. Friend the Secretary of State for Trade and Industry. The right hon. Gentleman said that he and his hon. Friends wanted to involve Parliament in the details of the proposed sale of shares in British Gas. I fully understand their interest in the contents of the prospectus, which will naturally and rightly be the subject of the widest possible interest.

Part II will enable the assets of BGC to vest in a Companes Act company wholly owned by the Crown, with the securities issued to the Secretary of State. Clause 50 specifically contemplates the disposal by the Secretary of State of such securities. Parliamentary approval to the Secretary of State's exercise of his powers of disposal will therefore have been given when the Bill reaches the statute book. Therefore, it is not necessary to involve Parliament in the details of the execution of those powers, and it would not be appropriate to require in the statute the presentation to Parliament of the prospectus in relation to one particular private sector company over another.

Nevertheless—I pay particular regard to what my hon. Friend the Member for Erewash said—my right hon. Friends and I shall pay particular regard to making the prospectus available to Parliament. We shall arrange for copies to be placed in the Libraries of both Houses at an appropriate time. I share my hon. Friend's view that we must see the widest possible extension of share ownership through this privatisation issue.

Hon. Members seek independent valuations of the company in the prospectus, but it is nonsense to value companies on the basis, for example, of the current cost of replacing all its assets. The company's value should be seen as the value of the business to investors, and depends on a number of factors at the time of sale, including the profitability of the company, and of other companies in the same market sector, and the overall state of the market. The new clause proposed by the Opposition is both unnecessary and inappropriate, and I shall urge my hon. Friends to vote against it. We want as wide a spread of ownership as possible, in particular to the employees of British Gas. My right hon. Friends and I are determined to see that the flotation provides an opportunity for all those employed in this great industry to have participation in its future success. Managers and employees will have a unique opportunity, for the first time, of a direct benefit resulting from their future success.

Mr. Bruce

If the Government thought that the market was adverse, are there any circumstances under which they would postpone or abandon the sale for commercial reasons?

Mr. Hunt

That question and the hon. Gentleman's contribution to the debate have demonstrated once again that the Liberal party is all over the place. It does not know whether to support or oppose the issue. I have noticed that there has been a singular absence of any member of the SDP here. Perhaps that is a good thing, because we do not know where the Liberal party or the SDP stand on this point.

Mr. Bruce

Answer the question.

Mr. Hunt

The answer to the question is that it is now evident for all to see that neither the Liberal party nor the SDP wants this issue to be a success. I have news for them—it will be a success. I have no doubt that the future commercial success of Britain will greatly benefit from the ownership of this company being spread among the employees, the managers, the pension funds and individual investors. These proposals will enhance the commercial success of our nation and bring benefit to industry, consumers and the employees.

Mr. Orme

With the leave of the House, Mr. Speaker. The Minister's reply proves that we were right to table our new clause. The House is right to srcutinise the sale of a major national asset. On almost every occasion that the Government have privatised, they have got it wrong over the sale of shares. This is the biggest sale of shares ever. As for wider share ownership, we have seen what has happened with the shares that have been resold and gone into larger units and companies. For example, the total share ownership of British Telecom among employees is less than 2 per cent. Therefore, I ask my right hon. and hon. Friends to vote against the Government's new clause, on the basis that our new clause on public srcutiny by the House of Commons is the correct one.

Question put, That the clause be read a Second time:—

The House divided: Ayes 228, Noes 185.

Division No. 102] [6.10 pm
AYES
Adley, Robert Fry, Peter
Alison, Rt Hon Michael Galley, Roy
Amess, David Gardiner, George (Reigate)
Ancram, Michael Garel-Jones, Tristan
Aspinwall, Jack Gilmour, Rt Hon Sir Ian
Atkins, Rt Hon Sir H. Glyn, Dr Alan
Atkins, Robert (South Ribble) Gorst, John
Baker, Rt Hon K. (Mole Vall'y) Gower, Sir Raymond
Baldry, Tony Grant, Sir Anthony
Beaumont-Dark, Anthony Greenway, Harry
Bellingham, Henry Gregory, Conal
Benyon, William Griffiths, Sir Eldon
Best, Keith Grist, Ian
Biffen, Rt Hon John Ground, Patrick
Biggs-Davison, Sir John Grylls, Michael
Blaker, Rt Hon Sir Peter Gummer, Rt Hon John S
Body, Sir Richard Hamilton, Hon A. (Epsom)
Boscawen, Hon Robert Hamilton, Neil (Tatton)
Bottomley, Peter Hannam, John
Bowden, A. (Brighton K'to'n) Harris, David
Bowden, Gerald (Dulwich) Hayes, J.
Boyson, Dr Rhodes Hayhoe, Rt Hon Barney
Braine, Rt Hon Sir Bernard Heddle, John
Brandon-Bravo, Martin Henderson, Barry
Bright, Graham Higgins, Rt Hon Terence L.
Brittan, Rt Hon Leon Hind, Kenneth
Brown, M. (Brigg & Cl'thpes) Hirst, Michael
Browne, John Holland, Sir Philip (Gedling)
Bruinvels, Peter Holt, Richard
Bryan, Sir Paul Howarth, Gerald (Cannock)
Buchanan-Smith, Rt Hon A. Howell, Rt Hon D. (G'ldford)
Buck, Sir Antony Howell, Ralph (Norfolk, N)
Butler, Rt Hon Sir Adam Hunt, David (Wirral W)
Butterfill, John Irving, Charles
Carlisle, John (Luton N) Johnson Smith, Sir Geoffrey
Carlisle, Kenneth (Lincoln) Kershaw, Sir Anthony
Cash, William Key, Robert
Chapman, Sydney Knox, David
Chope, Christopher Latham, Michael
Clark, Dr Michael (Rochford) Lawler, Geoffrey
Clark, Sir W. (Croydon S) Lawrence, Ivan
Clarke, Rt Hon K. (Rushcliffe) Leigh, Edward (Gainsbor'gh)
Cockeram, Eric Lester, Jim
Colvin, Michael Lewis, Sir Kenneth (Stamf'd)
Conway, Derek Lightbown, David
Coombs, Simon Lilley, Peter
Cope, John Lloyd, Ian (Havant)
Cormack, Patrick Lord, Michael
Corrie, John Luce, Rt Hon Richard
Cranborne, Viscount Lyell, Nicholas
Critchley, Julian McCurley, Mrs Anna
Currie, Mrs Edwina Macfarlane, Neil
Dickens, Geoffrey MacGregor, Rt Hon John
Dicks, Terry MacKay, Andrew (Berkshire)
Dorrell, Stephen Maclean, David John
Douglas-Hamilton, Lord J. McNair-Wilson, P. (New F'st)
Dover, Den Madel, David
du Cann, Rt Hon Sir Edward Malone, Gerald
Durant, Tony Maples, John
Eggar, Tim Marshall, Michael (Arundel)
Evennett, David Mates, Michael
Eyre, Sir Reginald Mather, Carol
Finsberg, Sir Geoffrey Maude, Hon Francis
Fletcher, Alexander Merchant, Piers
Fookes, Miss Janet Meyer, Sir Anthony
Forman, Nigel Miller, Hal (B'grove)
Forth, Eric Mills, Iain (Meriden)
Fowler, Rt Hon Norman Mills, Sir Peter (West Devon)
Miscampbell, Norman Speller, Tony
Mitchell, David (Hants NW) Spencer, Derek
Monro, Sir Hector Spicer, Jim (Dorset W)
Moore, Rt Hon John Spicer, Michael (S Worcs)
Morrison, Hon C. (Devizes) Stanbrook, Ivor
Moynihan, Hon C. Stanley, Rt Hon John
Needham, Richard Stern, Michael
Nelson, Anthony Stevens, Lewis (Nuneaton)
Neubert, Michael Stewart, Allan (Eastwood)
Nicholls, Patrick Stewart, Andrew (Sherwood)
Norris, Steven Stewart, Ian (Hertf'dshire N)
Onslow, Cranley Stokes, John
Ottaway, Richard Stradling Thomas, Sir John
Page, Sir John (Harrow W) Sumberg, David
Page, Richard (Herts SW) Taylor, John (Solihull)
Parris, Matthew Taylor, Teddy (S'end E)
Patten, J. (Oxf W & Abgdn) Temple-Morris, Peter
Pattie, Geoffrey Thomas, Rt Hon Peter
Pawsey, James Thompson, Donald (Calder V)
Peacock, Mrs Elizabeth Thorne, Neil (Ilford S)
Percival, Rt Hon Sir Ian Thornton, Malcolm
Porter, Barry Townend, John (Bridlington)
Powell, William (Corby) Tracey, Richard
Prentice, Rt Hon Reg Twinn, Dr Ian
Price, Sir David van Straubenzee, Sir W.
Pym, Rt Hon Francis Vaughan, Sir Gerard
Raffan, Keith Viggers, Peter
Raison, Rt Hon Timothy Waddington, David
Rathbone, Tim Wakeham, Rt Hon John
Rhodes James, Robert Waldegrave, Hon William
Ridley, Rt Hon Nicholas Walker, Bill (T'side N)
Ridsdale, Sir Julian Walker, Rt Hon P. (W'cester)
Robinson, Mark (N'port W) Waller, Gary
Roe, Mrs Marion Ward, John
Rossi, Sir Hugh Wardle, C. (Bexhill)
Rost, Peter Warren, Kenneth
Rumbold, Mrs Angela Watson, John
Ryder, Richard Watts, John
Sackville, Hon Thomas Wheeler, John
Sainsbury, Hon Timothy Whitney, Raymond
Sayeed, Jonathan Wolfson, Mark
Shaw, Sir Michael (Scarb') Wood, Timothy
Shepherd, Colin (Hereford) Woodcock, Michael
Shepherd, Richard (Aldridge) Young, Sir George (Acton)
Silvester, Fred
Skeet, Sir Trevor Tellers for the Ayes:
Smith, Sir Dudley (Warwick) Mr. Peter Lloyd and
Smith, Tim (Beaconsfield) Mr. Mark Lennox Boyd.
NOES
Adams, Allen (Paisley N) Clarke, Thomas
Anderson, Donald Clay, Robert
Archer, Rt Hon Peter Clelland, David Gordon
Atkinson, N. (Tottenham) Clwyd, Mrs Ann
Bagier, Gordon A. T. Cocks, Rt Hon M. (Bristol S)
Barnett, Guy Cohen, Harry
Barron, Kevin Conlan, Bernard
Beckett, Mrs Margaret Corbett, Robin
Beith, A. J. Corbyn, Jeremy
Bell, Stuart Cox, Thomas (Tooting)
Benn, Rt Hon Tony Craigen, J. M.
Bennett, A. (Dent'n & Red'sh) Crowther, Stan
Bermingham, Gerald Cunningham, Dr John
Bidwell, Sydney Davies, Ronald (Caerphilly)
Blair, Anthony Davis, Terry (B'ham, H'ge H'I)
Bray, Dr Jeremy Deakins, Eric
Brown, Gordon (D'f'mline E) Dixon, Donald
Brown, Hugh D. (Provan) Dormand, Jack
Brown, N. (N'c'tle-u-Tyne E) Douglas, Dick
Brown, R. (N'c'tle-u-Tyne N) Dubs, Alfred
Bruce, Malcolm Dunwoody, Hon Mrs G.
Buchan, Norman Eadie, Alex
Callaghan, Jim (Heyw'd & M) Eastham, Ken
Campbell, Ian Edwards, Bob (W'h'mpt'n SE)
Campbell-Savours, Dale Evans, John (St. Helens N)
Canavan, Dennis Ewing, Harry
Carlile, Alexander (Montg'y) Fatchett, Derek
Carter-Jones, Lewis Fields, T. (L'pool Broad Gn)
Cartwright, John Fisher, Mark
Clark, Dr David (S Shields) Flannery, Martin
Foot, Rt Hon Michael Mitchell, Austin (G't Grimsby)
Forrester, John Morris, Rt Hon A. (W'shawe)
Foster, Derek Morris, Rt Hon J. (Aberavon)
Foulkes, George Nellist, David
Fraser, J. (Norwood) Oakes, Rt Hon Gordon
Freeson, Rt Hon Reginald O'Brien, William
Freud, Clement O'Neill, Martin
Garrett, W. E. Orme, Rt Hon Stanley
George, Bruce Park, George
Gilbert, Rt Hon Dr John Parry, Robert
Godman, Dr Norman Patchett, Terry
Golding, John Pendry, Tom
Gould, Bryan Pike, Peter
Gourlay, Harry Powell, Raymond (Ogmore)
Hamilton, James (M'well N) Prescott, John
Hamilton, W. W. (Fife Central) Radice, Giles
Hancock, Michael Redmond, Martin
Hardy, Peter Richardson, Ms Jo
Harman, Ms Harriet Roberts, Allan (Bootle)
Harrison, Rt Hon Walter Robinson, G. (Coventry NW)
Hart, Rt Hon Dame Judith Rogers, Allan
Hattersley, Rt Hon Roy Rooker, J. W.
Haynes, Frank Ross, Ernest (Dundee W)
Heffer, Eric S. Ross, Stephen (Isle of Wight)
Hogg, N. (C'nauld & Kilsyth) Rowlands, Ted
Holland, Stuart (Vauxhall) Sedgemore, Brian
Howells, Geraint Sheerman, Barry
Hoyle, Douglas Sheldon, Rt Hon R.
Hughes, Dr Mark (Durham) Shore, Rt Hon Peter
Hughes, Robert (Aberdeen N) Short, Mrs R.(W'hampt'n NE)
Hughes, Roy (Newport East) Silkin, Rt Hon J.
Hughes, Sean (Knowsley S) Skinner, Dennis
Janner, Hon Greville Smith, C.(Isl'ton S & F'bury)
Jones, Barry (Alyn & Deeside) Snape, Peter
Kaufman, Rt Hon Gerald Soley, Clive
Kilroy-Silk, Robert Spearing, Nigel
Kinnock, Rt Hon Neil Steel, Rt Hon David
Kirkwood, Archy Stewart, Rt Hon D. (W Isles)
Lambie, David Stott, Roger
Lamond, James Strang, Gavin
Leighton, Ronald Straw, Jack
Lewis, Terence (Worsley) Thomas, Dafydd (Merioneth)
Litherland, Robert Thomas, Dr R. (Carmarthen)
Lloyd, Tony (Stretford) Thompson, J. (Wansbeck)
Lofthouse, Geoffrey Thorne, Stan (Preston)
Loyden, Edward Tinn, James
McCartney, Hugh Torney, Tom
McDonald, Dr Oonagh Wainwright, R.
McKelvey, William Wallace, James
MacKenzie, Rt Hon Gregor Wardell, Gareth (Gower)
Maclennan, Robert Wareing, Robert
McNamara, Kevin Weetch, Ken
McTaggart, Robert Welsh, Michael
McWilliam, John White, James
Madden, Max Williams, Rt Hon A.
Marek, Dr John Wilson, Gordon
Marshall, David (Shettleston) Winnick, David
Martin, Michael Woodall, Alec
Mason, Rt Hon Roy Wrigglesworth, Ian
Maynard, Miss Joan Young, David (Bolton SE)
Meadowcroft, Michael
Michie, William Tellers for the Noes:
Mikardo, Ian Mr. Allen McKay and
Millan, Rt Hon Bruce Mr. Lawrence Cunliffe.
Miller, Dr M. S. (E Kilbride)

Question accordingly agreed to.

Clause read a Second time, and added to the Bill.

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