§ Mr. John Smith (Monklands, East)
(by private notice): To ask the Chancellor of the Exchequer if, following the acquisition by BP of the majority shareholding in Britoil, he will make a statement on how he proposes to use the special share to preserve the independence of the company.
§ The Chancellor of the Exchequer (Mr. Nigel Lawson)
The Atlantic Richfield Company, Arco, has now formally agreed to sell its 24 per cent. holding in Britoil to BP. Taken with its existing holding of 29.8 per cent., this would give BP nearly 54 per cent.of Britoil's ordinary shares. How many more shares it acquires depends on the response to its increased offer.
In the circumstances which have now arisen, the Government will be discussing the situation with BP and with Britoil. These discussions will, of course, be without prejudice to the decision by my right hon. and noble Friend, the Secretary of State for Trade and Industry, in the light of advice to him from the Director General of Fair Trading, on whether the acquisition should be referred to the Monopolies and Mergers Commission.
The House will understand that in advance of these discussions it would not be sensible for me to give details of the outcome which I have in mind. But I can reaffirm that the powers of the special share will be used for so long as it is in the national interest to do so. We shall, of course, take fully into account what is best for Scotland and for the development of the North sea.
§ Mr. Smith
Is it not clear to everyone that BP now has effective control of Britoil, and that unless the Government use the special share Britoil will cease to be an independent company?
Does the Chancellor recollect, when he was Secretary of State for Energy, saying:The very existence of these powers"—the special share—will act as the most formidable deterrent to anyone who tries to take over control of the board, of the company or of the majority of its shares, and who the Government consider to be unacceptable." [Official Report, 31 March 1982; Vol. 21, c. 334.]Will the Chancellor describe how BP was affected by that "formidable deterrent", as, in pursuit of Britoil, it has acted as if the Chancellor's specially devised protection simply did not exist?
Will the right hon. Gentleman give a straight answer to the question: is BP acceptable or unacceptable to the Government? Does he recollect another assurance that was given to the House by the then Minister of State, now Lord Gray of Contin, who said:The articles will contain effective safeguards for Britoil's independence and the safeguards will be triggered if there is an attempt to take over voting control of the company or to control the Britoil board or its composition." —[Official Report, 1 April 1982; Vol. 21, c. 450.]In the light of those assurances given by and on behalf of the Chancellor, what will he now do to honour them? Surely his only course is to say now, emphatically, that he will use his special share to maintain Britoil as a wholly independent company, as independent in every way as it was before the BP bid was lodged. If the right hon. Gentleman does not do that, but produces some cobbled-together deal garlanded with more assurances, he will have engaged in a dishonourable retreat from specific 702 guarantees given to the House. If that happens, will it not prove that, once again, privatisation leads to the bolstering of monopoly?
Does the right hon. Gentleman appreciate that this company is the largest publicly quoted company in Scotland and that the obliteration of its independence would be a severe blow to the west of Scotland and to the dispersal of corporate headquarters throughout the country? Is it not time that the Chancellor cleared the whole matter up and made it crystal clear that the special share will be used to achieve the national objectives which he advertised some years ago?
§ Mr. Lawson
I have made the position crystal clear. I am glad that the right hon. and learned Gentleman has quoted from what I said nearly six years ago on Report on the Oil and Gas (Enterprise) Bill, and I am especially glad that he quoted column 334. I point out that. Britoil has enjoyed complete independence for some five years since it was privatised.
I shall again read—the House should pay attention—the quotation from Hansard, accurately read by the right hon. and learned Gentleman, when I said:The very existence of these powers will act as the most formidable deterrent to anyone who tries to take over control of the board, of the company or of the majority of its shares, and who the Government consider to be unacceptable.I shall read two further quotations, since the right hon. and learned Gentleman is interested. I said:We wanted to create effective safeguards which would enable the Government to prevent any unacceptable change in the future control of the company".I said:We have given, as has BNOC and its advisers, considerable thought to the articles to ensure that they are an effective means of protecting Britoil's independence against unacceptable changes in control." —[Official Report, 31 March 1982; Vol. 21, c. 333–4.]It was quite clear from the beginning that the possibility of an acceptable change in control existed.
The right hon. and learned Gentleman asked me whether control by BP would be acceptable. That depends on the outcome of the discussions which we shall have. That is precisely what they are about.
It is strange to have the right hon. and learned Gentleman treating BP as though it were some kind of pariah. I should like to read what he said in the House on 29 October 1987, barely three months ago, about the share offer and BP. The right hon. and learned Gentleman said:Is it not the case that the first victim will be BP, Britain's largest company? … Is it not clear that BP will suffer … I regard it as a matter of grave seriousness for BP and this country.The interests of BP have been cast aside". —[Official Report, 29 October 1983; Vol. 121, c. 541.]The right hon. and learned Gentleman's schizophrenia is such as to make his remarks today totally valueless.
§ Sir Michael Shaw (Scarborough)
Is not the outcome, so far, of this affair entirely satisfactory? The foreign bidder has been deterred and Britoil remains British. Is that not the object of the exercise?
§ Mr. Bruce Millan (Glasgow, Govan)
Why can we not have straight answers to our questions? Is BP unacceptable, or not? It is certainly wholly unacceptable to the staff and management of Britoil. Why does not the Chancellor say that, as part of his objectives in any discussions—about which we are suspicious—that he may have with BP, at the very least he wants Britoil to remain an independently managed company and the head office and corporate functions to remain in Scotland, in Glasgow?
§ Mr. Lawson
I am very conscious, as I mentioned in my earlier answer, of the Scottish dimension. It is important to consider the best interests of Scotland in all this.
The right hon. Gentleman may not find BP an acceptable company, but the right hon. and learned Member for Monklands, East (Mr. Smith) showed the greatest solicitude for BP's welfare some three months ago, so he clearly regards it as an acceptable company. Whether the change of control to BP will be acceptable will depend on the outcome of the discussions which will be taking place, as I informed the House.
§ Mr. Tim Smith (Beaconsfield)
Will my right hon. Friend confirm that the original objective of the special share was to deter a foreign takeover rather than to protect the independence of Britoil in perpetuity? As that is now not contemplated, surely there is no need to use the special share?
§ Mr. Lawson
I have listened carefully to what my hon. Friend has said. I know—I recall well—that at the time of the debates that we had in 1982 the concern of the Opposition was that there might be a foreign takeover of Britoil. That was their concern, and nothing else. However, I do not think that it is right now to give up the special share. It is necessary to maintain the special share to ensure a satisfactory outcome and to ensure that whatever is agreed is adhered to.
§ Mr. Malcom Bruce (Gordon)
Will the Chancellor acknowledge that BP's takeover of Britoil is its revenge on the Government for the Government going ahead with the sale of shares last November, and that BP is now in direct confrontation with the Government's interests on this matter? Will he not accept that the existence of Britoil as an independent company is vitally necessary, not just for Scotland, but for the healthy development of exploration activity in the North sea, and that in those circumstances, the loss of Britoil's corporate headquarters from Scotland, and the loss of Britoil as an independent company, would set that course back? Does he not acknowledge that BP is transferring people from Aberdeen to London? How does that square with it keeping its corporate headquarters in Scotland?
§ Mr. Lawson
If the hon. Gentleman is bidding for the leadership of the new party, he will have to do a little bit better than that.
I specifically mentioned the best interests of the development of the North sea, and especially Britoil's assets in the North sea, in my reply. As for the hon. Gentleman's suggestion that there is any difference between BP and myself over the question whether the BP share issue should go ahead, which the hon. Gentleman has alleged and which was alleged earlier by the right hon. and learned Member for Monklands, East (Mr. Smith), that, of course, is totally untrue.
704 I should like to read briefly from what the chairman of BP, Sir Peter Walters, said at the annual BP press lunch a fortnight ago. He said:The outcome was in my view the right one; the sale should have gone ahead. I was very pleased though that there was this temporary lifeboat represented by the Bank of England offer to buy back the partly paid which has now expired and which, as you see, almost no one took advantage of. There was no disagreement between myself and the Chancellor as to whether the sale should go ahead or not.
§ Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)
Does my right hon. Friend accept that many of us believed that it was right for there to be a big foreign interest in the North sea but that no one in this House contemplated the chance of virtually the whole of our oil industry in the North sea being controlled by foreign interests? Is he aware that many of us think that the wisest decision that the Government made was to keep a golden share and keep some control in our hands? Is he also aware that Nomura Securities of Japan is bigger than all our banks put together and that it could take over Prudential Assurance and have that as only petty cash? Is it not right that we must make it clear what we wish to control and what we are willing to sell out to other people?
§ Mr. Lawson
I note very carefully what my hon. Friend, who is an expert in all these matters, has said. Of course, it is not a matter for me, but I would have thought that if there were—I realise that this is purely hypothetical—to be a bid by Nomura Securities for the Prudential, there must be a strong chance that that would be referred to the Monopolies and Mergers Commission.
§ Mr. Tony Benn (Chesterfield)
Does the Chancellor recall that, as Liberal First Lord of the Admiralty, Winston Churchill took control of the Anglo-Persian oil company which became BP, in 1914, because oil was so important to the British Navy and to Britain; that the establishment of BNOC gave us further control; that Britoil also gave us control and that when Burmah Oil company went bust, BP acquired its shares to strengthen British control and influence? Does he also realise that, both as Secretary of State for Energy and as Chancellor, he will be the man who threw away our control of the oil resources and the revenues accruing from them?
§ Mr. Lawson
I have answered that question many times before at greater length than I propose to do now, although it is always good to see one of my predecessors as Secretary of State for Energy in his place when we discuss these matters. The plain fact is that times have changed. It is no longer necessary for the British Government to own shares in BP and, indeed, BP believes, that it is far better off without the British Government. Furthermore, I must remind the right hon. Member for Chesterfield (Mr. Benn) that he presided over the first sale of BP shares.
§ Mr. Ian Gow (Eastbourne)
Since it was the primary purpose of the special share to prevent the unacceptable takeover of Britoil, will my right hon. Friend confirm that the indignation—however synthetic—of the Opposition would be much more justified if there had been an unacceptable acquisition?
§ Mr. Lawson
I suspect that my hon. Friend, as usual, is correct. Certainly, although the special share was put in, as I said at the time, to prevent any unacceptable change of control, I remember very clearly the debates that we had 705 at that time. All the Opposition were talking about was the risk of the foreign takeover of Britoil. That was all that they were concerned about.
§ Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)
The right hon. Gentleman is remembering the numerous debates that we had on those issues. Does he remember the numerous times that he said that the whole point and purpose of privatisation and the creation of Britoil was to create a bright, independent British oil company in the North Sea? What price now that independence? Is it not the case that BP's interests now appear bigger than the national interest and bigger than the Government's wishes?
§ Mr. Lawson
I remain anxious to have the best possible development of the United Kingdom continental shell and I know that that concern is shared by the hon. Gentleman. However, I do not believe that it necessarily follows that that has to be secured by Britoil remaining unconnected with BP. We shall have to see what can result from the discussions that we shall have with BP.
§ Mr. Jonathan Aitken (Thanet, South)
Does my right hon. Friend envisage that the Government's forthcoming discussions with BP will be in the nature of a vigorous wrestling match, or tea and sympathy? I urge my right hon. Friend to adopt the friendly approach, which I believe is suggested by his tone this afternoon. Unless the Government are suddenly adopting the blinkers of Scottish nationalism, surely it is inconceivable that BP's ownership would be contrary to the national interest.
§ Mr. Lawson
I believe that discussions will take the form of hard negotiations conducted in an amicable atmosphere.
§ Mr. George Galloway (Glasgow, Hillhead)
The Chancellor of the Exchequer has brought weasel words to the House this afternoon. The golden share was to be a shield to protect the independence of the independent oil-producing and oil-exploring sector, but it has proved to be no more formidable than a piece of silver paper.
Much has been made by the Chancellor of the unacceptability issue. The board and the staff of Britoil —highly skilled staff at the top of their profession—to a man and woman find the BP takeover proposals completely unacceptable. One of the things that has been said concerns the Britishness of BP. How British is BP? Will BP be BP with a billion shares owned by the Kuwaiti Government through the Kuwaiti Investment Office? Unless the Government stiffen their back and offer some resistance to the proposals, this will represent another well-heeled kick in the face of Scotland and the oil-producing sector.
§ Mr. Lawson
BP is most certainly British and will remain so. The acceptability issue is extremely important. As the hon. Gentleman reminds the House, and as I did earlier, we specifically took the power to prevent any unacceptable change of control. [HON. MEMBERS: "Independence."] The whole thing must be read in context. I said that on no fewer than three occasions in that one column of Hansard alone. That is what is at issue now. The discussions are designed to ensure that if there Js to be —I said if—any change of control, it will take place in an acceptable manner. It is the responsibility of the Government, acting in the national interest, to decide what is acceptable.