§ 7.5 pm
§ The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Kenneth Clarke)
I think it will be for the convenience of the House if I make a statement about the Rover Group.
Yesterday I informed the House that the European Commission had decided the outline terms governing the state aid for the proposed British Aerospace acquisition of the Government's shareholding in Rover Group. I also explained that BAe had asked for more time to consider the implications of other conditions attached to the Commission's decision.
I should make it clear that the points of difficulty for BAe were not related to the basic financial framework of the deal, which was acceptable in principle to BAe and which has not changed since yesterday. The issue was the commercial flexibility available to BAe in complying with the Commission's decision.
I am, however, glad to report that talks with the Commission this morning have clarified the position in terms satisfactory to the BAe board.
As I informed the House yesterday, the Commission has approved the final terms of the acquisition after certain changes in the structure and scale of the March agreement. In making this judgment, the Commission has recognised the important implications for competition and restructuring in the European vehicles market through the return of Rover Group to the private sector. It has also taken note of the prospects for the development of the company, on the basis of Rover Group's management's plans which BAe has endorsed.
Under the revised arrangements it has been agreed that some residual items of trading debt should remain on the balance sheet. The revised terms also take account of the continuing improvement in Rover Group's financial performance since the talks with BAe were launched. I am sure that the House will have welcomed the improvement in the half-year results that Rover Group announced yesterday. These showed a profit before interest of £28.8 million compared with a loss of £10 million for the same period last year.
On this basis, BAe will still pay £150 million for the Government's shareholding in Rover Group. The precise timing of the payment will follow the clarification of certain tax matters arising out of the change of ownership of the company. The Government, BAe and the Commission have also agreed a new cash injection of £547 million comprising £469 million in recognition of historic debt; and £78 million to support part of Rover Group's investment programme in the assisted areas.
In addition, we have agreed material changes to the tax provisions of the March agreement. There has been no change in the provision that only £500 million of Rover's existing trading losses will be available after it has been acquired by British Aerospace, but we have agreed to remove two other tax restrictions that were in the earlier agreement. They will give the British Aerospace group the same freedom that any other company has under tax law to utilise about £200 million of Rover Group's capital losses and up to about £300 million of disclaimed capital allowances. Estimating the value of those tax benefits is a matter for British Aerospace, although clearly they are very significant.
613 I pay tribute to the contribution made by Graham Day, his management team and his work force, whose skills and hard work have permitted the return of 18 Rover Group businesses to private ownership since May 1986. They have raised the performance of Rover Group to the point where it can now look forward with confidence at its final return to the disciplines of the market place, as part of one of Europe's major engineering groups.
I am certain that the Rover Group's return to the private sector will prove to be in the best interests of the company, its employees and dealers—as well as of the many thousands of others in its supplying industries whose livelihoods depend upon the Rover Group's health. The deal also means that, subject only to approval at an extraordinary general meeting of British Aerospace, we shall have returned to the private sector the last of the constituent parts of what was British Leyland.
§ Mr. Bryan Gould (Dagenham)
Is it not clear that Ministers have spent the last 27 hours trying not so much to safeguard the British car industry as to salvage what they can from the mess they have created? Is it not equally clear that they have failed miserably in that attempt? Have Ministers so far conceded control over their own policy that to overcome a problem that the Chancellor of the Duchy himself described only yesterday as not being "especially important or material" they have had to return cap in hand to Brussels to beg for concessions?
Is it not a further humiliation that the response to that request was to send Ministers packing with a flea in their ear? Will the Chancellor of the Duchy confirm the Commission's statement today that it has not changed its position in any way?
How is it that an unelected official can tell the Secretary of State for Trade and Industry that his terms are non-negotiable? How is it that the Commission can dictate to the British Government on the details of Rover's corporate plan when the House of Commons is kept in the dark? Does that new corporate plan mean, at the EEC's behest, the virtual end of British-controlled car manufacture? What was the point at issue that was supposedly trivial but which caused so much concern to British Aerospace and which was so non-negotiable for the Commission?
How is it that British Aerospace has now accepted £250 million less than Ministers initially offered? As I asked yesterday, why was it left to the EEC to negotiate that reduction in the spending of taxpayers' money? What reliance can he placed on a deal in which British Aerospace manifestly has so little confidence, and which manifestly carries with it so little commitment to the British car industry? If it has taken Professor Roland Smith 27 hours to have his arm twisted, how long will it take him to persuade his institutional shareholders to accept the deal? Is it true that institutional shareholders have already been telephoning to express their objections?
May we be given a guarantee that, if the shareholders throw out the deal, there will be no hawking round of Rover to any buyer—whether British or, more likely, foreign—who can be found, and that we will have no more of these embarrassing nonsenses in the name of an unnecessary and unwelcome privatisation?
§ Mr. Clarke
I appreciate that the hon. Member for Dagenham (Mr. Gould) has had to guess to a certain extent about the way in which my right hon. and noble 614 Friend and myself have spent the last 27 hours. Having heard his opening questions, I may say that his guesswork is miles wide of the truth. Over the past 27 hours, we have been clarifying certain of the procedural conditions which the Commission attached to its decision and which were communicated to British Aerospace yesterday morning. The Commission has not changed the nature of its agreement with either the Government or British Aerospace: nobody asked it to do so. As I said yesterday, the British Government were agreed, and we did not return to the Commission asking for any change.
British Aerospace, quite rightly, wished to go over the terms and written conditions it received yesterday and to clarify certain points. In particular, British Aerospace wished to reassure itself that it would retain commercial flexibility in the management of its business. I am glad to say that, as a result of the exchanges between the Commission and British Aerospace, in which the Government played a helpful part, BAe is now satisfied, from the explanations it has received, that it will have the necessary commercial freedom that any responsible management would want in running a business.
That is what caused what I described yesterday—as it has turned out, accurately—as a "last-minute hitch" It did not grow, it has been removed, and with clarification we can now proceed.
Rover Group's management plans have not been changed at any stage in that process. They were not changed by the Commission, and they were not changed by British Aerospace. They have been accepted by British Aerospace. Of course we have not disclosed those plans to the House. We have not disclosed them publicly because there must be commercial confidentiality about the management plans of a business of that kind. To disclose Rover Group's corporate and management plans would be of huge advantage to its foreign and domestic competitors. It would have been quite wrong to reveal them. It was wrong to do so when the group was nationalised, and it would be wrong to do so now that it is to be privatised.
As to changes in the deal, the deal must be looked at as a whole. As I said, its scale and structure have been changed. It is true that the cash injection has been reduced by about £250 million. At the same time, there have been changes made to the tax losses available to British Aerospace. On the other hand, we have removed the ring fencing from the capital losses and the unclaimed capital allowances, so that they can now be used against the business of British Aerospace as a whole. Therefore, the agreement structure has been changed.
Certain factors have mainly influenced that change, apart from the Commission's perfectly legitimate desire to ensure that state aids were not being given to Rover Group on a basis that gave it an unfair competitive advantage over its competitors, which is a policy we support. Inevitably, we entered into discussions with the Commission knowing that it was likely to make changes. It has always done so in the past. It did so in the case of Leyland-DAF last year and in respect of Renault earlier this year. Also—this should be very welcome—Rover Group's own performance and our expectations of the debt at the date of completion were changing as our discussions proceeded, and we have just had its excellent results.
I believe that the agreement is certainly one that we can endorse. It is extremely welcome. The hon. Member for 615 Dagenham spoke about what the shareholders may decide at the extraordinary general meeting. That is the next and last step, but the British Aerospace board will commend the agreement to the company's shareholders, and my guess is that the shareholders will take more notice of the British Aerospace board than they will of the hon. Gentleman and his hon. Friends, who have merely been trying to wreck this whole arrangement from the moment that it started.
§ Mr. Speaker
Order. I remind the House that this is an interruption of a very important debate. I ask for single questions.
§ Mr. Michael Grylls (Surrey, North-West)
Does my right hon. and learned Friend agree that this excellent news is the result of the Government's good stewardship in looking after Rover Group during the past few years, and of the high standard of the group's present management? The House, if it is sensible, ought to welcome the group's move back into the private sector, particularly into a firm such as British Aerospace, with its wide spread of engineering and high-tech skills. The Rover Group has a real chance of prospering and of doing better and better, as we surely all hope it will do.
§ Mr. Clarke
I agree with my hon. Friend. He is right to congratulate the group's management. This is almost a historic occasion. My hon. Friend and I have been Members of the House for the same period. It is an amazing thought that we are on the threshold of seeing Rover Group ceasing to be a politicised company and returning to an ordinary commercial basis, and to having a management planning for its future free from the constraints of the public sector and of vast losses. It is a significant landmark in the recovery of the British economy. It is most symbolic of the way in which the British economy generally is reviving.
§ Mr. Ron Leighton (Newham, North-East)
In view of this amazing episode, will the Chancellor of the Duchy of Lancaster tell us who is running the country and whether the British Government have any say in it? Is he aware that it looks at though Commissioner Sutherland has much more influence over these matters than he does as a Minister of the Crown? Who elected Commissioner Sutherland, and by what democratic method can we remove him? Are we to assume that the next time the Minister stands at the Dispatch Box to give a statement on British Government industrial policy he will have to say, "But of course, as we are just a county council in the Common Market, this all depends on whether I am overruled by my superiors in Brussels"?
§ Mr. Clarke
The policy of the European Community is that state aids, to use the European phrase—in other words, subsidies to industry—should be regulated to ensure that member Governments do not start subsidising against each other to preserve loss-making industries and excess capacity. That is not in the long-term interests of the European Community and its economy. The British Government wholly support that aim.
I believe that it is desirable to have a market within the European Community in which the Governments do not 616 subsidise their respective client companies against one another. Where a degree of state aid is justified, it is right that someone should police it. That is what has happened on this occasion. The British Government not only accept that policy, but we do not have any difficulties with the Commission about it, as the satisfactory resolution of this issue has demonstrated.
If we ever, heaven save us, have a Labour Government again, I am glad to say that the policy of the Community would stop them returning to a system of indiscriminate state subsidies to nationalised industries and propping up the fantastic losses that Rover Group began to incur in the days of bad stewardship in the 1970s.
§ Mr. Cranley Onslow (Woking)
Is my right hon. and learned Friend aware that, despite the Opposition's carping attitude, there will be few people in the country who will not heartily welcome the satisfactory outcome of the negotiations? Few people will not join in wishing all possible success to everyone involved—the management and work force of Rover and British Aerospace—and will not thoroughly condemn the stupid, frivolous, irresponsible and superficial attitude of the Opposition Front Bench.
§ Mr. Clarke
I entirely agree with my right hon. Friend's description of the Opposition as "carping". There have been moments in the confused history of the Opposition's approach to this matter when they brought temporary cheer to those with the interests of Fiat, Volkswagen, Renault and other car companies in mind. I am sure that they have, unintentionally, given considerable encouragement to Rover's rivals. A successful deal is a much better outcome for our company.
§ Mr. Robin Corbett (Birmingham, Erdington)
Can the Minister give watertight assurances to the House that British Aerospace has accepted and will implement Rover's investment programme? What guarantees and assurances did he seek on future employment within Rover and what were given?
§ Mr. Clarke
As I said in my statement, British Aerospace has accepted and endorsed Rover's management plans. In common with every other management, British Aerospace retains the right to be flexible in applying those plans, as it must. That was the point that we were discussing. British Aerospace sought clarification to ensure that it was free to respond to market conditions and that it has the same flexibility that any management requires as things evolve. As of now, British Aerospace accepts and endorses the management plan of Rover Group, and when it acquires the business it will proceed on that basis.
§ Sir Hal Miller (Bromsgrove)
Does my right hon. and learned Friend agree that all this kerfuffle over the dashing, once again, of the Opposition's hopes that the deal would fail should not be allowed to obscure the fact that, with improved quality and improved management, and given the tremendous manufacturing cost advantage and the success of this Government's policies, Britain is once more the place to make cars? That is why the deal will succeed.
§ Mr. Clarke
I agree with my hon. Friend; and I am sure that he agrees with me that the last hopes of the Opposition were dashed by the good results of the past six 617 months. The Opposition would have got the position that they would have preferred only if Rover had plunged back into loss and the deal had been frustrated.
§ Mr. Alex Salmond (Banff and Buchan)
Given the two new tax breaks, can the Minister estimate just how much British Aerospace will be given to take on the Rover Group? Will Rover Group have to pay the Government £150 million, or will the Government deduct that from the money that they will give to British Aerospace?
§ Mr. Clarke
The tax losses and the unclaimed tax allowances are of value to British Aerospace, but, as I have already said, only the company can calculate that and it can do so only when it has made progress in assessing the capital gains that it will use against the capital losses and it has got the necessary clearance from the Inland Revenue for the tax arrangements that it proposes. Once that has been sorted out, the company will pay £150 million in consideration of the Government's shareholding.
§ Mr. Kenneth Warren (Hastings and Rye)
Although I appreciate that Mr. Sutherland was doing the job for which he is empowered, does my right hon. and learned Friend consider that the time has come to decide whether the fact that the commissioners have such power should be brought to the attention of the Council of Ministers?
As we move towards 1992 we must ensure that the restructuring that industry in Europe believes is necessary is carried out more efficiently than it has been in the past several months. Does not my right hon. Friend find it amazing that, given all the union support, no Opposition Members support the proposal?
§ Mr. Clarke
I frequently encounter Commissioner Sutherland at Council of Ministers meetings and, among other things, we discuss state aids. There is no difference between Commissioner Sutherland and myself about those aids. At the moment I have joined with other Ministers to encourage Mr. Sutherland to take a careful look at the Italian proposals for state aids to their steel industry. We support the commissioner in his declared intention to take a firm view of that matter and to ensure that the Italians comply with the rules.
§ Mr. Nigel Spearing (Newham, South)
Despite what the hon. Member for Hastings and Rye (Mr. Warren) has just said, does the Minister agree that Commissioner Sutherland was acting entirely within the rules and entirely within the constraints of the treaty of Rome? Surely his reply to my hon. Friend the Member for Newham, North-East (Mr. Leighton) demonstrates that, in this respect and in many others, a future House of Commons and a future Labour Government would be politically constrained by that treaty. If, as the Minister has claimed, the Government were aware of the constraints, why did they not produce a deal that could have got through the loops instead of being caught on the barbed wire?
§ Mr. Clarke
Unlike the hon. Gentleman, I am a supporter of Britain's membership of the European Community and a supporter of the economic regime within the Community. I have already said that I am a supporter of the policy of state aids which the Commissioner has applied. I should have thought that the whole point of my statement today was to make it clear that my right hon. and noble Friend has conducted negotiations with the result that we have got through the 618 loops and have complied with Community policy to reach a conclusion that is wholly satisfactory to the Commission, to the British Government and to the board of British Aerospace.
§ Mr. Charles Wardle (Bexhill and Battle)
Apart from the commercial flexibility considerations to which my right hon. and learned Friend has alluded, should not any responsible board of directors who have put their name to an offer document and then had the terms of that document revised sit down and work out the profit and cash flow implications of the changes? Is that not the very least that their shareholders and employees would expect of them?
§ Mr. Clarke
British Aerospace has done that throughout its contemplation of and discussions about the purchase of the Rover Group. It was happy with the financial agreement which emerged and which my right hon. and noble Friend had been discussing with it while discussing the agreement with the Commission.
Yesterday, British Aerospace got written terms from the Commission setting out the procedures that the Commission would follow, but British Aerospace wanted more time to consider them and to receive certain clarifications. It has now got those clarifications and it is going ahead. British Aerospace has told us that it will now commend the deal for its commercial and financial common sense to its shareholders at the extraordinary general meeting.
§ Mr. Peter Snape (West Bromwich, East)
Was the European Commission right when it referred in its statement yesterday toThe planned move by Rover from mass car producer to specialist producer"?If it was, is such a move a matter for celebration by the Conservative party? What employment problems are likely to arise from such a move? What are the implications of it for those in the west midlands engaged in the car accessory business who depend upon the Rover Group for their future survival?
§ Mr. Clarke
There is a certain amount of semantics involved in this, but Mr. Graham Day has said publicly on a number of occasions that Rover Group is not a volume car producer—[HON. MEMBERS: "Why?"]—because it represents 3 per cent. of the European car market. Rover's existing management plans have throughout been accepted by British Aerospace and endorsed. That is the basis on which we are starting.
§ Mr. Phillip Oppenheim (Amber Valley)
Surely it should not surprise anyone that the party whose mega-merger industrial policy created the lumbering British Leyland giant in the first place, whose economic policies riddled it with inflation and whose labour policies crippled it with strikes should look so glum today and fall back on its anti-EEC instincts in compensation for the fact that this deal will go through?
§ Mr. Clarke
I shall not seek to rival my hon. Friend's language, but I wholly agree with his sentiments.
§ Dr. John Reid (Motherwell, North)
Will the Minister confirm his astounding statement in reply to the hon. Member for Banff and Buchan (Mr. Salmond) that the Government do not know the valuation to be put on the new tax allowances which will be worked out only later by 619 the company? Is it not astounding for the Minister to tell the House that he does not know how much extra taxpayers' money has been ploughed into the deal? Can he tell us the difference between a £250 million subsidy and a £250 million tax allowance? If he can, I promise that nobody on this side of the House will tell the EEC.
§ Mr. Clarke
We know what is available to Rover Group by way of tax losses which it can use. The trading losses of £500 million remain unchanged and we have capped those. Rover has more trading losses on its books now, and they will be available for use against future Rover Group profits. In the March agreement, the capital losses and unclaimed capital allowances were ring-fenced and could be used only against capital gains in the Rover business. We have removed that ring fence so that they can now be used in British Aerospace as a whole, as lawfully as for any other company. [Interruption.] With respect to the hon. Member for Dagenham (Mr. Gould), who disputes that, it is entirely lawful to do that with capital losses and unclaimed capital allowances. Exactly how much use British Aerospace can make of that will depend on its decisions about capital gains and tax computations. It will need section 768 clearance from the Inland Revenue and then it will know the value and will pay the consideration for the share.
§ Mr. Andrew Smith (Oxford, East)
We all want to see the Rover Group succeed in or out of British Aerospace. Given how crucial to that success the corporate plan and the restructuring to which the Minister referred are, is he not hiding behind his claim of commercial confidentiality? Could he not at least tell us whether it is intended that the numbers employed will increase or decrease? Can he tell us whether part of the Cowley site, as has been widely reported, is scheduled to be sold under the plan? Is it not wholly unacceptable that the workers and communities most affected are being kept in the dark about precisely what this means for jobs and the viability of the industry?
§ Mr. Clarke
This is an old issue and I am sure that this exchange has taken place in the House many times before. The Government do not disclose the corporate plan or the management plans of the Rover Group because they are commercial and are valuable to competitors. I believe that the House has accepted that and, if not, it should. There is no more reason to disclose the management plans to competitors now than there was when it was a nationalised corporation. I understand the hon. Gentleman's concerns about these matters, which are legitimately shared by many of his constituents. I believe that his constituents and the unions that represent them welcome this deal.
§ Mr. Roger King (Birmingham, Northfield)
Is my right hon. and learned Friend aware that tonight he and our right hon. and noble Friend the Secretary of State will be the toast of thousands of working people within the Rover Group factories in Birmingham, Solihull and Coventry who look forward to working with British Aerospace to provide the wealth and fill the jobs, which are increasing month by month and will provide them with a high and successful standard of living? I am sure that they extend their thanks.
§ Mr. Clarke
We do not normally have toasts on the Floor of the House, but I shall propose one in return to the management and work force of the Rover Group who have done so much to get us to where we are today.
§ Mr. Dave Nellist (Coventry, South-East)
Is the Minister aware that his statement—I notice from a copy that it was the third draft—will not bring any joy to British Aerospace workers or to car workers in the midlands? When he spoke of Rover following the other 18 privatised former Leyland businesses, is he aware that not only have Coventry Climax, Self-Changing Gears and Alvis savagely reduced jobs, but that last week the jewel in his crown, Jaguar, froze all recruitment and started cutting jobs through what it euphemistically calls "natural wastage" because of the decline in the American market and currency changes, both of which I warned the Minister about in the House before?
Will the Chancellor answer the question about yesterday's press release from Commissioner Sutherland's office which speaks of the danger of over-capacity in car production in Europe and states:The planned move by Rover from mass car producer to specialist producer will reduce the danger of aid being used to expand capacity"?Does not that mean that the sword of Damocles will hang over the jobs at Longbridge, about which Uriah Heep has just spoken, and those at Cowley, about which my hon. Friend the Member for Oxford, East (Mr. Smith) spoke?
§ Mr. Clarke
The commissioner was anxious to ensure that none of the 12 Governments used subsidies to expand capacity at a time when, in his judgment, there was surplus capacity. The hon. Gentleman talks about employment in various companies. Employment in manufacturing, as in the service industries, depends on success in the market place and on making products which can sell. That is the case for all the companies that he cited, and it will continue to be the case for British Aerospace, Rover Group and other great firms. The Government's approach to these matters has been hugely successful in creating employment, as this morning's unemployment figures have again confirmed. The hon. Gentleman is wrong in believing that the Government can fix the numbers of people employed in particular plants making particular products. That is an absurd approach to industrial policy.
§ Mr. Robin Maxwell-Hyslop (Tiverton)
Is my right hon. and learned Friend aware that, when the all-party Select Committee on Trade and Industry looked at the initial nationalisation of British Leyland, the problems of the Rootes Group, the Chrysler rescue operation and others, it always regarded the corporate plan of the companies as essentially commercially confidential and that it would have destroyed the future that the Committee was trying to preserve had they been revealed? Will he stress that the taxation arrangements that he announced today are not making extra deviations from normal tax law, but bringing the provisions more nearly into parallel with normal tax law?
§ Mr. Clarke
My hon. Friend is a senior and experienced Member and I am grateful to him for endorsing my belief about the confidentiality of corporate plans. I do not believe that any Select Committee would ever wish to expose those to the public eye. They never have and never will. Rover Group has suffered greatly from being drawn into the political arena, but fortunately it has never 621 suffered the blow of seeing its management plans trailed over the Floor of the House of Commons, and I trust that it never will.
My hon. Friend is right that in March we put a ring fence around the capital losses and allowances so that ordinary law did not apply and British Aerospace could not have used them in its business as a whole. We have removed that ring fence so that the ordinary law applies to this new group on the capital tax position, just as it would for any other acquisition.
§ Mr. Speaker
Order. We are in the middle of an important debate. I shall allow questions to continue until a quarter to eight and then we must move on.
§ Mr. Matthew Taylor (Truro)
Has it not taken the Commission to expose the Government's golden give-away terms, not only in this but in every privatisation, and their fly-boy attitude to public investment? Has it not taken the Commission also to expose the Government's lack of willingness to take on board competition policy in reality and to approach both privatisation issues and industry in general with a determination to serve the public's best interests rather than investors?
§ Mr. Clarke
We had all this yesterday. I have explained the basis upon which the discussions went on and how the agreement that we have arrived at was reached. if I follow the hon. Gentleman, I take it that he supports the Commission's terms and the agreement that we have entered into. So do I, so do the Government, so does British Aerospace—so there should be nothing between us.
§ Mr. Quentin Davies (Stamford and Spalding)
Does my right hon. and learned Friend agree that it is astonishingly naive of the hon. Member for Dagenham (Mr. Gould) and some of his hon. Friends not to realise that it would be inconceivable That a major and complex corporate deal of this kind could be put together without a great deal of delicate and cliff-hanging negotiation? Does he agree that their attitude to these matters reflects their most profound inexperience? Does he accept that there will be widespread admiration, not only in the two companies concerned but throughout British industry, for the able way in which he and the Secretary of State have conducted the negotiations on behalf of the Government, and that an expanding and thriving British Aerospace will be a fine monument to their achievements in the future?
§ Mr. Clarke
I agree with my hon. Friend to the extent that I hope that Opposition Members will go over the agreement and how we reached it, so that in the unlikely event of any of them having to deal with the European Commission in matters of this sort they will have a slightly better understanding of how these affairs are conducted than they did in March or yesterday.
§ Mr. Dennis Skinner (Bolsover)
Is the Minister aware that it would strike someone outside this place that what has happened in the course of these 24 hours was that he has been unable to convince people in the Common Market about the straight subsidy? The Common Market almost certainly then told him to cover it up and get in touch with chartered accountants, who would fiddle the tax and provide the same sort of money in that way. Why cannot that be done for taxpayers in Britain so that they 622 can have the ring fence removed from around them and set up tax liabilities against other assets? Is it not significant that this matter is being discussed on the day of the Third Reading of the Finance (No. 2) Bill, when £2 billion is being handed out to top taxpayers—and here the Minister comes along with another big tax fiddle'?
§ Mr. Clarke
I have already explained this. As I said yesterday, we were in complete agreement with the commissioner. The Government did not go back to the Commission and ask to have any of the terms changed. For the Government and the Commission, nothing has changed since yesterday morning. Quite correctly, British Aerospace wanted clarification of a text that it saw only yesterday morning about the procedures and conditions that the Commission was applying. In discussions on that, the Government played an intermediary role. The board is now satisfied, and that is where we are now.
I have tried with some care to explain the tax position. It bears no relation to what the hon. Gentleman said. The company is being governed by the same law and tax rules as apply to any other private company in this country.
§ Mr. James Hill (Southampton, Test)
I congratulate my right hon. and learned Friend on his statement. Is he as surprised as I am that, although he has announced a successful conclusion, the Opposition are giving it exactly the same response as if he had succeeded in finding a failure for them? Surely the Opposition realise that competition policy has existed for years. It has been criticised because other countries have not obeyed the rules, as we do. I hope that, in future, subsidies for all nations that belong to the European Parliament will be scrutinised in the Council of Ministers and subjected to the same media exposure as this case has been.
§ Mr. Clarke
As a Member of the European Parliament and of the House, my hon. Friend has always supported competition policy, and we have consistently taken this view about subsidies in the EEC over the years. We are, as I said yesterday, equally firm in insisting that the Commission applies the same agreed regime to other countries. We are usually amongst the most vehement in requesting the Commission to uphold its duty and make sure that others apply only legitimate state aids to business.
§ Mr. Tam Dalyell (Linlithgow)
The Minister will riot have had time to bring himself up to date yet with the Bathgate position, as he promised to do yesterday, but will he say something about the £78 million, which is tosupport part of Rover Group's investment programme in the assisted areas"?How is the sum of £469 million of historic debt arrived at?
§ Mr. Clarke
The £78 million is regional selective assistance given on the same criteria as we always apply to regional selective assistance for any other company. The assistance goes towards some of the investment plans of the Rover Group under its management plans. It will help to support and maintain jobs in the west midlands that now have assisted-area status.
§ Mr. Clarke
To the best of my knowledge and belief, it has nothing to do with Bathgate. I will write to the hon. 623 Gentleman if there is any mistake about that. It is regional selective assistance for investment in the continuing business of Rover Group.
As for debt, we have agreed to allow the historic trading debts to be removed from the books of the company, except that £100 million-worth of historic debt is now to remain on the books. That has led to a change in the deal since we announced it in March. Apart from that, a vehicle stock provision was made in the books of the company which we previously regarded as debt, but the Commission regards as working capital, so it has been taken out of the original March agreement. There have been other minor changes, but those two were the big ones— £100 million historic debt remaining on the books, and vehicle stock provision, which is no longer to be written off by the Government.
§ Mr. Robert Hayward (Kingswood)
My right hon. and learned Friend has removed a large element of uncertainty hanging over British Aerospace and Rover Group. Can he reconfirm that these negotiations have in no way affected any negotiations between the Government and British Aerospace on the Airbus programme?
§ Mr. Clarke
I can. Our arrangements in the Department of Trade and Industry have helped with that. My right hon. and noble Friend conducts all day-to-day business on the Rover Group and I conduct all day-to-day business on Airbus.
I hate to use the expression "Chinese walls", but there are certain Chinese walls between the discussions, and my right hon. and noble Friend and I regularly discuss the position on both fronts. One thing that has emerged all the way through is that there is no connection between this 624 arrangement for Rover Group and the launch aid that the Government have given to Airbus, on which our position is given and perfectly clear.
§ Mr. Bob Cryer (Bradford, South)
Will the Minister confirm that this rather shabby conspiracy has resulted in £2.9 billion-worth of taxpayers' money going to British Aerospace—plus £1 billion in cash and capital allowances? Does he agree that British Aerospace will receive in return £750 million-worth of physical assets for £150 million? Would not most people regard that as barefaced robbery of the taxpayer? Why cannot the taxpayer be given the benefit of this developing company, whose results the Minister has mentioned? Does the right hon. and learned Gentleman accept that there will be enormous pressure from the workers and the labour movement to get this company back into public ownership, where it belongs?
§ Mr. Clarke
What the hon. Gentleman describes as a conspiracy is an agreement to return Rover Group to the private sector where it belongs and where, in our opinion, it will flourish. It is a wholly suitable end to our exchanges tonight, if this be the end of them, that a Labour Member should sound as thought he is urging his hon. Friends on the Opposition Front Bench to renationalise the company——
§ Mr. Clarke
Looking back over the history of the nationalised British Leyland, which has cost the British taxpayer £2.9 billion, I am astonished to see the unreconstructed end of the Labour party still demanding its renationalisation. What I have announced today promises a very much better future for the company, its work force, its dealers and everyone associated with it.
I beg to ask leave to withdraw the motion.
§ Motion, by leave, withdrawn.