HC Deb 21 December 1988 vol 144 cc427-8
1. Dr. Reid

To ask the Secretary of State for Scotland what safeguards he intends to introduce to protect Scottish Bus Group companies against predatory takeover.

The Parliamentary Under-Secretary of State for Scotland (Lord James Douglas-Hamilton)

The best way of promoting local control is to have strong, viable companies in which there is a significant stake by the employees or established locally based companies.

Dr. Reid

Is the Minister not ashamed of that vacuous answer? Does he not realise that the real dangers of predatory takeovers are monopolisation and, perhaps, bus firms being run by cowboy outfits? What steps does the Minister propose to ensure that there are some safeguards for the travelling public and for the workers in the industry? In the absence of any safeguards, what kind of competition policy is it that allows even the possibility of a vital public service being transformed into a private monopoly, perhaps controlled by people who are resident thousands of miles away from the customers whom they serve?

Lord James Douglas-Hamilton

It will be open to any company to put in a bid. I make it clear that, while no guarantees as to future ownership can be given, we want as much as possible to encourage management-employee buy-outs. The price offered will not be the only factor in assessing bids. Competition and the extent of employee participation will also be important. Preference will be given to management-employee buy-out schemes, but the scale of the preference has yet to be determined.

Mrs. Ray Michie

Does the Minister have any plans to consider putting in the remit of the Scottish Transport Users Consultative Committee a provision to include buses, in view of the imminent privatisation proposals?

Lord James Douglas-Hamilton

It is a Department of Trade and Industry Committee, but I shall certainly pass on the hon. Lady's comment concerning the remit.

Mr. Roger King

Does my hon. Friend agree that it is only right and proper commercially that businesses with a common interest should work together in providing the services that the community needs, either in partnership or in a form of ownership of the companies?

Lord James Douglas-Hamilton

Most certainly. I believe that our thinking has developed considerably since the National Bus Company privatisation. At that time there were a large number of management buyouts, but I believe there were only two management-employee buyouts. We are anxious to encourage management-employee buyouts. A recent poll of people working in the industry in Scotland shows that more than 70 per cent. are in favour of them.

Mr. Wilson

The Minister has again paid lip-service to the encouragement of management-employee buyouts, without announcing any initiatives which would give them a reasonble prospect of success. Will the Minister show his sincerity by guaranteeing that those involved in buy-out initiatives will have the opportunity to acquire those companies before bids are invited from the open market? Does he acknowledge that that is what has happened in Grampian? Will he admit that, without the legislation being thus weighted towards employee buyouts, they will be involved in an unequal struggle with the giants of the bus industry?

Lord James Douglas-Hamilton

I am glad that the hon. Gentleman referred to Grampian. My right hon. and learned Friend has made it clear in a letter to Grampian that that approval has been given. He will be glad to hear that Strathclyde has come out in favour of management-employee buyouts. Councillor Malcolm Waugh said: I am quite confident we will go ahead. While there is no guarantee, we are anxious to encourage management-employee buyouts. We shall give financial assistance that amounts to an indemnity of 75 per cent. of fees, up to a maximum of £60.,000, which means maximum assistance of £48,750. Hon. Members have heard, too that we shall be arranging video presentations and seminars.

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