Short Brothers plc (Hansard, 21 July 1988)

§ The Parliamentary Under-Secretary of State for Northern Ireland (Mr. Peter Viggers)
With permission, Mr. Deputy Speaker, I wish to make a statement about Short Brothers plc.
My right hon. Friend the Secretary of State for Northern Ireland informed the House on 29 June that we are seriously interested in possibilities for privatisation. We are, therefore, actively seeking the return of Short Brothers plc to the private sector from state ownership. I wish to make it clear that the Government are ready to consider suitable proposals that might lead to the acquisition of Short Brothers by private sector interests. I invite organisations which can secure the necessary financial backing to come forward as soon as possible.
The Government would prefer to transfer the company as a whole to the private sector. We would not, however, rule out the sale of the different parts of the business to separate interests.
In considering any proposals, the Government will give full weight to the contribution that a continuing viable business could make to the Northern Ireland economy.
My statement today follows the Government's consistent approach throughout the United Kingdom of seeking to replace state ownership with the benefits and opportunities that flow from effective private sector leadership. Those benefits have been clearly demonstrated in the companies that have already been privatised.
Shorts has many achievements to its name, especially in exports, and it is an important contractor for the Ministry of Defence. The Government believe that the future of a strong viable business at Shorts is best served not by continued dependence on public ownership, but by the disciplines and opportunities of the private sector. Returning the company to private ownership, therefore, offers the best prospects of its future development and levels of employment in the longer term.

§ Mr. Jim Marshall (Leicester, South)
I hope that the Under-Secretary will not misunderstand if I welcome him to the Dispatch Box. We have read a great deal about the Government's intentions towards Government-owned companies in the North of Ireland, but the presence of Ministers in the Chamber to make those intentions clear has been rare. Even the Under-Secretary will have to agree that the Opposition, especially my hon. Friend the Member for Kingston-upon-Hull, North (Mr. McNamara), have had to go to great extremes to encourage the Under-Secretary to make a statement before Parliament rises at the end of next week.
Although the statement has been made today, the Under-Secretary must agree that it is very short on what will happen to Shorts and long on the Government's intentions. We believe that it is regrettable that the future of Harland and Wolff will still be subject to conjecture and uncertainty. The future of Shorts should be determined as quickly as possible. I am sure that the Minister agrees that we are witnessing the continued victory of Thatcherite economic dogmatism over the real economic needs of Northern Ireland. The Minister must also accept that the Government are seeking to escape their responsibility for the industrial and economic well-being of the Province.
1313 When will the Minister begin to understand that Shorts and Harland and Wolff are regarded in the Province as symbols of the Government's continued commitment to the economic and industrial infrastructure in the North of Ireland? The announcement today and the Under-Secretary's previous announcements on Harland and Wolff and Northern Ireland Electricity give the impression to many people, especially those in Northern Ireland, that the Government are trying to shed their responsibility for continued industrial and economic development in the North of Ireland.
I hope that the Minister will accept that the Opposition's view is that Shorts should remain a publicly owned company. If it is to be privatised, I urge the Minister to accept that the company should be privatised as a whole and not broken down into its three main constituent parts. Further, I urge the Minister to accept that guarantees about job losses must be obtained. The Minister must surely accept that, if the company is privatised and there are large-scale job losses, that will seriously undermine not only the economic development of Greater Belfast, but that of Northern Ireland as a whole.
May I, Mr. Deputy Speaker, with your permission, ask a number of specific questions? First, will the Minister state whether the Government intend to introduce any capital restructuring of the company prior to privatisation? If so, will it require the approval or the agreement of the Commission in Brussels, as occurred with the privatisation of the Rover Group?
Secondly, what will happen to the proposed $60 million order from the Pentagon if the company is privatised?
Thirdly, what prospect is there of Government funds for the company, especially for the new 90 to 100-seater Jetfan aircraft experiment?
Fourthly, can the Minister confirm that both Boeing and McDonnell Douglas have been approached to take over Shorts, but have declined?
Fifthly, what consultations have taken place specifically with the management, but, more generally, with the work force?
Sixthly, can the Minister confirm that the losses for this financial year are likely to be about £130 million?
Seventhly, if divisions are sold separately, will the Minister give a cast-iron guarantee that the important missiles division will not be sold to foreign competitors?
Short Brothers is a company of which all of us can be proud. I am sure that the Minister agrees that it is operating on the very frontiers of new and high technology—in many aspects exciting technology—and that it would be a disaster for the company to be run down and the highly trained and skilled work force to be lost, not just to Belfast but to the United Kingdom.

§ Mr. Viggers
I shall deal first with the hon. Gentleman's last point. We fully recognise the importance of Shorts and its skilled work force in Northern Ireland, and we pay due regard to their interests.
The hon. Gentleman said that the statement was short on what will happen. That is true, because what we have announced today is our intention to move the company to the private sector. The future of the enterprise will very much depend upon the intentions of those who approach us and negotiate with a view to undertaking parts, or the whole, of that operation.
1314 The hon. Gentleman's question gives me the opportunity to say that the Government recognise the direct interest of Shorts' suppliers, customers and work force. We wish to make it clear that the Government will continue to provide support for Shorts while we move towards its privatisation. I especially wish to confirm the Government's continuing commitment to the statement, first made in a parliamentary answer on 23 December 1981, that the Government will stand behind the company.
The hon. Gentleman asked about the Government's commitment to Northern Ireland and their intention to improve employment there. I am very proud of the fact that unemployment in Northern Ireland has reduced substantially in the past two years and is now some 19,000 fewer than in September 1986. That is all credit to the industry—substantially the private sector industry—of Northern Ireland, which has been successful in taking advantage of United Kingdom policies.
The hon. Gentleman asked a number of specific questions. The first was whether capital restructuring will require EEC permission or authority. That will, of course, depend on the approaches that we receive from the private sector, which I have invited today. At this stage it is a hypothetical question.
The hon. Gentleman asked about the future of the prospective $60 million Pentagon order for the American National Guard. If the enterprise in Belfast—be it within the public sector, as Shorts is now, or within the private sector—can supply the American Government with orders, that prospect is extremely good. However, I cannot give a cast-iron guarantee that the order will be successful. At the moment, Shorts has been negotiating for some time with the American Government and those discussions are at an advanced stage. Whether the order can be fulfilled depends on the work force rather than the ownership of the company.
The hon. Gentleman asked about the FJX. That will also depend on the manner of approach to Shorts and the enterprise of those who wish to undertake it. The Government have not approached Boeing or McDonnell Douglas about taking over Shorts. We would welcome approaches from all quarters. In reply to the hon. Gentleman's specific question, we have not made approaches to the two companies to which he referred.
The hon. Gentleman asked about discussions with management. Those have taken place, but our first priority was to give the House a statement of our intention that the company should be moved to the private sector. lie also asked for a statement of the current loss this year. The overall loss of Shorts in 1985–86 was £37 million. The overall loss in 1986–87 was £20 million. The figures for the current year have not yet been audited and it is not possible for me to make a statement on them.
The hon. Gentleman asked whether the missiles division would be undertaken by foreign control and management. That will depend entirely on the approaches that we receive for the company. The number of jobs and the prospects of the enterprise in Belfast depend on its ability to produce and sell products that customers want to buy. We wish it well.

Several Hon. Members
rose—

§ Mr. Deputy Speaker (Mr. Harold Walker)
Order. I remind the House that we are now eating into the time of some very important debates. I hope that questions will be brief.

§ Mr. James Kilfedder (North Down)
It is appalling that Shorts, which has an international reputation for excellence and is on the frontier of high technology, is to be split up by the Government and sold off in parts. It amounts to the fact that commercial vultures will come along. When they have picked the bones clean, they will go elsewhere. Privatisation may be all right for England where the economy is strong, but that cannot be said of Northern Ireland where this action and decision will upset a very fragile economy.
Is the Minister aware that the excellent work force of dedicated and skilled men will deeply and bitterly resent the Government's decision? That applies not only to the work force, but to the people of Northern Ireland. Will the Government think again about this matter in view of the high unemployment in Northern Ireland—and I adopt and echo the comments of the hon. Member for Leicester, South (Mr. Marshall)—and ensure that they will not sell the company in part? Will they reconsider? If they have to sell it, they must sell it in one piece and ensure that it is maintained as a viable unit.

§ Mr. Viggers
The hon. Gentleman cannot have heard my statement in which I said: The Government would prefer to transfer the company as a whole to the private sector. We would not, however, rule out the sale of the different parts of the business to separate interests. We have certainly not ruled out the transfer of the company as a whole.
With regard to the future of Shorts in private sector ownership, 17 major businesses have been privatised in the United Kingdom including the British Airports Authority, Rolls-Royce, Royal Ordnance, British Airways, British Telecom, British Gas, British Aerospace, Jaguar, and Cable and Wireless and 655,000 jobs have been moved to the private sector. Those who work within the new private sector areas are very pleased that that is the case. For instance, the profits of the National Freight Corporation have risen from £4.3 million in 1981 to £370 million in 1986. The hon. Gentleman is unnecessarily gloomy. There is no reason why the enterprise should not have a profitable and successful future in private enterprise.

§ Mr. Roy Beggs (Antrim, East)
This statement can only add to the distress of those who are unsure and uncertain whether they will have a job should the proposal proceed. There are very special circumstances in Northern Ireland where there are more people unemployed than currently work in the manufacturing sector. Is the Minister aware that the proposals to privatise Shorts, Harland and Wolff and Northern Ireland Electricity collectively are perceived as phased British economic withdrawal from Northern Ireland? That perception is there and is causing concern. Overseas investors will be watching what happens very carefully and this proposal may cause them to consider further whether to invest in Northern Ireland if the Government are seen to pull out from our major employers.
I am not reassured by the statement that the Government would prefer to see the company purchased and retained as one single entity. There is a let-out there. As we are not all fools and we are aware that the attractive 1316 sectors of Shorts—the profit-making sectors—will probably be snapped up by investors, will the Minister undertake, in the event of the company being broken up, to continue to fund those sectors that are not yet profitable to retain employment and give encouragement? What can the Minister say today to reassure those who question whether there is now British economic withdrawal from Northern Ireland?

§ Mr. Viggers
I say again to the House that the Government's preference, as stated in my statement, is to transfer the company as a whole to the private sector. That, I reassure the hon. Gentleman, is what I said and it is what I mean. However, we would not rule out the sale of different parts of the business to separate interests, but our preference is that the business should be transferred to the private sector as a whole.
With regard to the hon. Gentleman's substantial point, any talk of economic withdrawal from Northern Ireland is nonsense. The Government and our predecessors have provided substantial economic support to the Province. This year public expenditure in Northern Ireland will total £5 billion, of which some £1.6 billion is the amount of the United Kingdom subvention to Northern Ireland. That enables the Northern Ireland Office and my Department in particular—the Department of Economic Development—to fund a very wide range of programmes through the Industrial Development Board and the Local Enterprise Development Unit which are highly successful and have led to a wide range of investment and employment opportunities. That is why we are so proud that unemployment has fallen in Northern Ireland.
It is necessary for us to take account of the manner in which money is spent to ensure that we obtain good value for money. In that way we can have some confidence that the level of unemployment will continue to fall leading to more confidence and prosperity in Northern Ireland.

§ Sir Michael McNair-Wilson (Newbury)
Will the sale of the company be conditional upon the purchaser maintaining Shorts at Queens Island for a five-year period as a minimum? If the company was sold to a foreign aircraft company which decided to rationalise its product line, it is conceivable that it might want to move its production facilities to its own factories which might be outside Northern Ireland. That undoubtedly would be a serious blow to the employment prospects in the Province. On that same point, are the Ministry of Defence contracts, particularly those for the Short Tucano, absolutely secure, no matter who buys the company?

§ Mr. Viggers
On the first point, I assure my hon. Friend that employment in Northern Ireland is the main basis upon which financial support is given to industry. It would certainly be the Government's continued intention to support enterprise, industry and employment in Northern Ireland. In my statement I said that the Government would give full weight to the contribution that a continuing viable business could have to the Northern Ireland economy—and that of course is in Northern Ireland.
I am pleased that the Tucano project is now making good progress with further deliveries to the Royal Air Force. That contract is held by Shorlac and I see no reason why it should be disturbed by any proposals that we have to switch the operation to the private sector. In common 1317 with the general point that I made, I think that the private sector would have enhanced opportunities to seek further export orders for the Tucano aircraft.

§ Mr. Seamus Mallon (Newry and Armagh)
Now that the decision has been made to sacrifice jobs on the altar of Tory ideology, will the Minister give a commitment to the House that if Shorts is to be sold off in separate sections to separate interests, some parts will be based in rural Northern Ireland so that the imbalance in employment can be rectified and so that all the people of the North of Ireland can benefit by this decision, however dubious?

§ Mr. Viggers
I am not sure how many times I must repeat that the Government would prefer to transfer the company as a whole to the private sector. As to spreading its operations around Northern Ireland, the hon. Gentleman will well know that there are almost 100 jobs at Shorts in west Belfast. It is not for Government, if the company is in the public sector—certainly not if it is in the private sector—to be dirigiste about where the operation should be. I do not think that it would be appropriate for the Government to make conditions about the transfer to the private sector. To that extent, I completely contradict the—Government's—[Interruption.]—the hon. Gentleman's assertion that we have sacrificed jobs.

§ Mr. Robin Maxwell-Hyslop (Tiverton)
Is not the reality, as opposed to the theoretical structure, that the Northern Ireland Vote is paying for the high cost of the Ministry of Defence's change in specification of the Tucano, which ought properly to fall on the Ministry of Defence's Vote rather than on the Northern Ireland Vote? As long as both are part of Her Majesty's Government, that problem does not present itself in a form that has to be resolved. If the company is privatised, it will. As my hon. Friend is speaking for Her Majesty's Government, not only the Northern Ireland Office, can he tell us whether the cost of the changes in specification will, after privatisation, be paid for by the Ministry of Defence or his Department and, if by neither, by whom they will be paid?

§ Mr. Viggers
The terms on which the Tucano contract was entered into by Shorts and the Ministry of Defence were effectively a fixed-price contract, which meant that Shorts would pay the cost of modifications and alterations to meet the contract. Who will meet such obligations will be a matter for consultation between the successor to the Tucano operation and the Government.

§ Mr. Richard Livsey (Brecon and Radnor)
Does the Minister agree that Shorts is important to employment in Northern Ireland? Its dependence on defence contracts and high technology and its recent poor financial performance, which must have a bearing on its position, show that the company should not be privatised. What assurance will the Minister give that employment will be maintained at its present level at Shorts? Will he confirm that the company is likely to make a loss this year? He has already said that it made a loss of £20 million in 1986–87.

§ Mr. Viggers
The company made losses in the past two years ended 31 March 1987. The figures for this year have not been audited, so I cannot make a statement on the amount of overall loss or profit. As to the primary point made by the hon. Gentleman, I deny that public or private ownership has anything to do with the level of employment. Success in winning customers, providing 1318 products that people want to buy and at prices that they want to pay win profits and jobs for companies. I have every hope and expectation that in private ownership Shorts will be able to do that.

§ Mr. Michael Colvin (Romsey and Waterside)
The Opposition cannot criticise the Government for lack of commitment to Northern Ireland; it is clear to see everywhere that one looks, and I have just been to look. Will my hon. Friend acknowledge that Shorts is a company of great capability, which may not yet have achieved its full potential? Will not privatisation add the vital element of market forces, which is the spur to higher productivity? Surely that is the best way of preserving jobs. Will my hon. Friend confirm that British bids for the company will be given preference, and will he say when it is likely to be Harland and Wolf's turn?

§ Mr. Viggers
We have announced that it is our wish that Harland and Wolff should move to the private sector; we are having discussions about that, as my hon. Friend will well know. I could not phrase my hon. Friend's expectation of the opportunities offered by private enterprise better than he did. The number of jobs in any company depends on its ability to produce and sell products that customers want to buy. We have every expectation that the Shorts enterprise will want to do that.

Several Hon. Members
rose—

§ Mr. Deputy Speaker
Order. I shall call those hon. Members who have been standing.

§ Mr. Bob Cryer (Bradford, South)
How many millions of pounds of taxpayers' mow/ have been put into Shorts? Given that the Government are proposing to sell Shorts at a knock-down price, will not this announcement join the long list of crimes committed in Northern Ireland? It is daylight robbery of the taxpayers. As the Government are so keen on ballots for trade unionists, will the Minister organise a ballot among Shorts workers to see whether they want privatisation of the concern to which they have given their lives over many years, or does democracy stop short for workers? Is it not scandalous that the Government are making this proposition in an area that, as the Minister knows—the Secretary of State is sitting next to him—is so sensitive that the plan will bring concern, shock and amazement to people who are already much bemused by the circumstances that prevail in the Province?

§ Mr. Viggers
It is indeed true that much public money has been put into Shorts. Shorts has been able to borrow money, which is guaranteed by the Government. I hear what the hon. Gentleman says and I recognise that Shorts' workers will be apprehensive and concerned about a move from the public to the private sector. I say to them that there is no future for a company that is supported by Government. The future lies in the private sector, where there is enterprise and the opportunity of growth. That is where the company's longer-term employment prospects lie. I am sure that, on reflection, most people will take that view.

§ Mr. Tony Benn (Chesterfield)
Is the Minister aware—quite apart from the general arguments about privatisation, which confers political power over the economy on shareholders who have no interest whatever in the social conditions of the Province—that tens of 1319 millions of pounds have been put into Shorts and Harland and Wolff? As a Minister, I had direct responsibility for the funding of Shorts' aircraft and the Musgrave dock. The money that was put in sustained and created jobs that otherwise would not have been there.
When the Minister talks about subsidy, he might mention the £13 million a week—£722 million a year—that the Government spend on the emergency in Northern Ireland. Is it not a fact that that money would be better put into economic development than into the continuation of the war? Given the role that Harland and Wolff and Shorts have played in sustaining employment in Northern Ireland, it must be obvious to anyone who listened to the statement that it, like many others made by the hon. Gentleman's Office, is a barely concealed announcement that the Government are planning an economic withdrawal from Northern Ireland.

§ Mr. Viggers
I have said already that, in considering any proposals, the Government will give full weight to the contribution that a continuing viable business would make to the Northern Ireland economy. Indeed, we shall give that full regard.
The right hon. Gentleman asked whether it would not be more helpful to transfer the money spent on security in Northern Ireland to the economy. I can scarcely disagree with him. However, any moderately intelligent 10-year-old would know that that option is not available to the Government, nor was it to the previous Government. We have three problems—security, political problems and the economy. Our job, especially that of my Department, is to ensure that the economy plays its part in improving prosperity and employment prospects in Northern Ireland, thereby making a happier Province that will contribute to solving the other two problems.

§ Mr. George Foulkes (Carrick, Cumnock and Doon Valley)
Does the Minister accept that today's announcement will reduce the Government's influence on politically sensitive contracts? Does he accept that, even in the present position, whereby all Shorts directors are appointed by the Government, the company refuses to make any public comment on incontrovertible evidence that, by falsifying end-user certificates, Shorts' Blowpipes are getting into the hands of terrorists? Will he say what the Government are doing to discover information about that problem and make a statement about it? Does he accept that such instances will be much more likely if the company is privately controlled, especially if there is to be foreign investment in and control over Shorts?

§ Mr. Viggers
The hon. Gentleman is tempting me to go wide of the subject of the statement. He made allegations about the company, which I refute, but I do not think that what he says is an argument against what I have announced.

§ Mr. Dennis Skinner (Bolsover)
Is not this selling off by the Tory Government almost getting into the political gutter? It is almost as though, when she meets the Cabinet, the Prime Minister goes around the table and asks, "What have you got to sell off today?" She turns to the Secretary of State for Northern Ireland and asks, "Is it not time that you sold something off, despite all the social consequences?" Will the Minister guarantee that Mr. Ravi Tikkoo, 1320 with Mafia-like tendencies, is not to be given a chance to buy into Shorts? He is the man who ordered gunmen on to his ship to drive off members of the National Union of Seamen. The Government are just about getting to the level that no one could have imagined nine years ago—selling off Northern Ireland, with all the problems that it has. They should be ashamed of themselves.

§ Mr. Viggers
Some 655,000 workers, who worked in the public sector in 1979, now work within the private sector. They recognise the benefits of private enterprise, as I trust that the people of Northern Ireland will. If we seek to insulate Northern Ireland from the economic forces that apply in the rest of the United Kingdom, which have brought massive benefits to the remainder of people in the United Kingdom, we shall do the people of Northern Ireland not a service but a disservice.

§ Mr. Tam Dalyell (Linlithgow)
May I press the Minister on defence sales? On four occasions this afternoon he has said—doubtless sincerely—that the preferred option was to sell Shorts as a whole. Could there not easily, without raising Aunt Sallys, be a situation in which some big international firms want to pick off those parts of Shorts that are extremely advanced, and leave the rest? There will be plundering of what is technically advanced. That is not fanciful. What will the Government do? Will they say, "We really prefer that it should be kept as an entity"?
In the context of the Saudi arms deal, people may have reservations about what exactly happened with arms in the middle east, but that is not the point. We are discussing a major contract. Shorts is a major company. How is it to react to a Saudi arms deal, for example? What is the fallback position?

§ Mr. Viggers
We shall consider all approaches on their merits and take account of all interests, including, of course, the national interest.

§ Sir Michael McNair-Wilson
On a point of order, Mr. Deputy Speaker. I do not think that the hon. Member for Leicester, South (Mr. Marshall) intended to mislead the House, but if he chooses to look at next week's oral questions to the Secretary of State for Northern Ireland, he will find a question in my name about the privatisation of Shorts. Frankly, his suggestion that he has dragged the statement out of a reluctant Government is bunk.

§ Mr. Deputy Speaker
Order. Let us get on.