§ Mr. Austin MitchellI beg to move amendment No. 2, in page 1, line 19, at end insert
`and shall remain thus owned in perpetuity'.
§ Mr. Deputy SpeakerWith this it will be convenient to take the following amendments: No. 29, in clause 3, page 2, line 45, leave out from 'State' to end of line 49.
No. 30, in page 2, line 49, at end insert
'(1A) The proportion of the securities of the successor company which are allotted and subsequently issued in accordance with subsection (1)(b) above shall not exceed 20 per cent.'.No. 12, in clause 6, page 4, line 13, after 'limit', insert'of not less than one quarter'.No. 13, in page 4, line 20, leave out 'first'.
No. 14, in page 4, line 24, leave out from beginning to end of line 48.
§ Mr. MitchellI have moved the amendment in the hope that the steady fall in the Government's majority, which was achieved by the brilliant arguments from this side of the House, will continue. The amendment deals with the basic principle whether British Steel should be privatised and will be better under private ownership or, as we believe, should continue under national control as a public corporation.
It is a basic argument whether British Steel should serve national, social and economic purposes for the nation, as it can do and does under public control, or whether it should serve primarily the interests of investors; whether its measure of success should be geared to its rate of profit. In our view, BSC should stay under public control and continue to serve those purposes which it has been serving so successfully over the years.
We argue that BSC's present success, which the Government tell us about and which British Steel itself 862 points out in its advertisements on commercial television to prepare the way for privatisation, is due entirely to the fact that the company has been built up under public ownership. Only public ownership has allowed the amount of investment and expenditure that is required to keep steel going through the difficult periods that a cyclical industry always faces and allowed the British steel industry to develop into the successful industry that it is today. That is entirely the result of public ownership.
It is irresponsible to throw away those benefits and advantages as the Government propose to do in order to make a quick profit and seize on a window of opportunity for the sale. Fortunately, that action would be made impossible by our amendment, which allows the Government to achieve what they believe to be the benefits of privatisation. Those are the benefits of running the company commercially, of placing marketing imperatives on the company, and of freeing it from the shackles of Treasury control and interference by Ministers, who know so little about industry, and care less.
The amendment allows the company to be governed as a Companies Act company. The shareholder will be the Government of the day. In other words, we want, and we shall maintain, ultimate public control of the organisation. We draw the line there. The amendment requires the Government to keep the shares in perpetuity. Subsequent amendments, particularly amendment No. 29, stop the provisions in later clauses that allow the Government to sell off shares in the company.
It is sensible to draw the line there. What else can the Government gain by flogging shares that they have created in the company? They do not need the money. The Chancellor of the Exchequer has been insistent that he has money rolling out of his ears to give away to the wealthy, with £2 billion going to the top 5 per cent. of the population. As the Chancellor has that much money and the economy is doing so well, why do the Government need the much smaller amount that will be forthcoming from the sale of British Steel?
Not only do the Government not need the money, but there is the question of the cost of selling this corporation, as opposed to borrowing the money in gilts, which is the alternative. Privatisation is a form of public debt that is acquired by selling off assets belonging to the state. It is cheaper to sell gilts, taking into account the reduction of the value of the assets and the taxpayers' investment written off, and taking into account also the cost of privatization—the advertising, the underwriting, and the advice given to the Government by self-interested parties in the City about how privatisation can be made more palatable and acceptable to them.
When all that is taken into account, the gains from privatising British Steel and selling the shares, as distinct from the Government borrowing in the normal way, are minimal. The answer is, "Do not sell." Our amendment allows the Government to get the advantages of the more commercial approach with British Steel, which they say they need, without the ultimate act of selling the shares to the public. It is a simple amendment along those lines.
The amendment brings us to the basis of the argument about privatisation. The Government are obsessed with ideology. Privatisation is not a matter of fact or any tenable arguments or propositions about commercial advantages. It is simply doctrine. The Government have the obsession of Lady Macbeth. They want to wash their hands of any involvement in industry and any control over 863 industry. Yet how can they do that with steel? The industry is basic to the economy. It is the basic raw material of manufacturing, and basic to the manufacturing strength and health of this country.
It is in the interests of manufacturing that steel should be provided as cheaply and efficiently as possible and of as high a quality as possible. That needs massive investment. Indeed, massive investment has been needed to get the steel industry to its present state. That scale of investment is likely to be forthcoming only from the state. It is an industry that is capital hungry, in a way that very few other industries are. It can be fed better by the state because the state does not have to ask for the same rate of return, thus forcing up the prices of the finished products and making our industry less competitive on world markets, in a way that is certain to happen with privatisation.
The Government are so obsessed with privatisation that they are putting themselves in the position of spivs or ticket touts, seizing on a brief window of opportunity, as if they were selling a perishable product, to get rid of it as quickly as possible. That is exactly what they are doing.
The opportunity has gone, though the effects linger on in steel production. The fall in the value of sterling in 1986, which the Chancellor neither wanted nor accepted, and resisted all the way, was forced on him by the rising oil price. It made British Steel, and much of British manufacturing, competitive. It opened our export opportunities in a way that the Government should have passed on to industry much earlier than they did, if they had had the economic sense to do so.
Steel has benefited from the growth of manufacturing that was provided by that fall in the value of sterling, but it has done so at a time when the Chancellor has killed the goose that has laid its golden eggs. He has riddled it with bullets, gone through it with a machete knife, buried it and put a stake through its heart, and put garlic on the grave. Essentially, he has massacred that goose by letting the pound go up in a way that has been destructive to manufacturing industry.
This argument between the Prime Minister and the rest of the Cabinet seems to have dominated the public prints. Nobody seems to notice that they are arguing from the wrong hypothesis. Both accept some increase in the value of sterling. The only argument is whether it should be fast and out of all proportion, or slower and more moderate. Yet there has been an increase of 23 per cent. in the real exchange rate of the pound sterling against the deutschmark since the last quarter of 1986. Our steel industry, in order to be competitive in the face of such an increase in the value of sterling, could not, even if British steel workers began to work for free, eliminate the cost increase forced on it by economic policies of high interest rates keeping sterling artificially over-valued.
The Government are laying burdens and charges on the industry by power price increases, too. The 9 per cent. increase in electricity charges will be crippling for steel and many other industries. Having brought steel to the verge of privatisation, the Government can now impose charges on it to fatten up electricity for privatisation in its turn. So another window of opportunity has been closed and another burden on the steel industry added. It is another difficulty that will make the corporation a much less marketable proposition.
864 By July, probably 90 per cent. of quotas on steel production will have been taken off by the EEC. There will be almost unrestricted competition in the EEC then, and it can be guaranteed that other EEC countries will support their industries more generously than we shall, even if direct state aids are forbidden. Governments can manipulate to get around such restrictions, as the Italians have shown. So, even if there are no state aids, industries in other countries will be more generously supported than will ours, through transport subsidies, redundancy payments and other indirect means of state support with which our Government are much meaner than comparable Governments in the EEC. So another window of opportunity has been closed.
There is a fourth closed window, in the sense that other industries are now going through the modernisation process and shedding labour in the way that British Steel pioneered. They will catch up. The Germans may be facing difficulties now, but they—Thyssen, for instance—are rapidly slimming down to a highly competitive state, the more so as the deutschmark has become under-valued against the pound, and there is world over-capacity in steel.
British Steel will be sailed off into dangerous, stormy waters by the Government as quickly as possible in order to grab the briefly opened window of opportunity provided by the improvement of 1986–87, which was caused largely by the fall of sterling. The symptoms of these problems are all around us. They can be seen in the Metal Bulletin of 14 April, which says that United Kingdom demand for steel is up only 4 per cent., but customers' lead times are lengthening. The only alleviation of the situation is offered by imports, which are now much cheaper because of the high value of sterling. In 1987 imports were at an all time high, excluding 1980, the year of the steel strike. Metal Bulletin for 31 March says that Teesside's order to supply slabs to Tuscaloosa has now been lost to USX, formerly United States Steel—an early symptom of what is happening because the dollar is falling and the pound rising.
In this position it will be a wise Government who recognise the risks of turning this capital-hungry cyclical industry loose on the world market and absolving themselves of all involvement in the consequences. Steel may face consequences and difficulties that will make it again need support from the State to see it through the difficulties that it has had in the past.
The real question to be asked about privatisation—it is the reason why we want to stop the sale of the securities—is who will British Steel be sold to? What are the imperatives of the investors who will take it over? I do not imagine that they will be small investors. This will be a somewhat risky investment in a cyclical capital-hungry industry—too risky to sell to Sid and his friends. All the signs from the Bank of England are that Sid is satiated and will be once bitten twice shy after last October. The buyers will be big internationally diversified investors who want another element in their portfolio. They have no interest, necessarily, in the continuation of steel production in this country. They want a return that will perhaps allow them to write off their assets over a 20-year period. All they want is another egg in their basket, which British Steel can provide.
865 7.45
This is part of the Government's process of making this land fit for investors to live in. They have closed down £25 billion worth of investment in manufacturing industry to make the rest of investment in manufacturing industry more profitable. They have allowed investors to diversify overseas, with money pouring out of this country. They have put on the stock market better invested internationalised industries as an attractive alternative to overseas or other industrial investment in this country. The land is becoming fit for investors, but investors do not have the same commitment to the maintenance of a powerful and effective steel industry, to providing steel as cheaply as possible to manufacturers, and to investing to keep up with the foreign competitors, as the State and community have. Nor do they have the same resources as the State to provide the wherewithal for investment. They do not have the commitment which is central to public ownership and which can be sustained only by public ownership.
The very terms in which the company is being privatised in this shabby little Bill, with its shabby little company, are incentives for investors to write off their investment over a period and for British Steel to run the company to pay dividends regularly to investors rather than to invest in new capacity, new plant and new processes as we would want.
The process of privatisation is essentially a commercial fiddle to write down the assets and make them attractive to investors. Lord Jenkin of Roding said that the Government will sell British Steel at a price that will be attractive to the investor. In other words, they will manipulate the asset value of British Steel until they get it to a price at which investors will bite and be guaranteed the return they want. Such a fiddle would be prevented by our amendment.
The Government will not only write off the £17.6 billion—at current prices—that the taxpayer has put into British Steel, and for which he will receive no return, but even the remaining £3.9 billion of public dividend capital, which is all that is left after earlier write-offs. will be written down to make it attractive to investors. The best estimate that we have of the price that investors will pay for British Steel conies from the Financial Times of 29 February and is £2 billion. At that price the corporation will be an attractive investment for internationally diversified investors who want another egg in their basket.
Clause 2 allows the Government to write down the public dividend capital of £4 billion to a level at which it can be sold—let us say £2 billion. So there will be a substantial write-off at the start to make British Steel attractive to investors. But there is another element in the confidence trick—clause 7. Our best estimate of the assets of British Steel is £5.4 billion. That figure is a combination of the fixed assets at current cost, which are £3.2 billion, plus £926 million of plant, which is fully written off and depreciated, but still in use in British Steel, which is still extracting profit from that money, plus the other assets of £1.2 billion, giving a total of £5.4 billion worth of assets.
The statutory reserve in clause 7 will be set at the difference between the written-down value of public dividend capital—say, £2 billion—and the nominal value of the shares. If the nominal value can be determined at will, the Government can create for themselves free capital which can be distributed and used to absorb losses and then form the basis for write-downs in the asset values of the British Steel Corporation. If the fixed assets are written 866 down, as they will be, below their economic value, the returns that they produce count as income available for distribution. So the basis of privatisation is a confidence trick to fiddle down both assets and public dividend capital to a price that investors will pay. The Government are robbing themselves and the taxpayer and knocking down the value of their assets to get them on the market as quickly as possible—just to get rid of them.
The Government have no higher sense of commitment to or responsibility for the steel industry, which is so important to the economy. As British Steel's assets are already under-valued, this sets the industry out on a dangerous path. The Government say that it is possible, even desirable, to write down assets to provide dividends for investors, and that it is desirable to reduce the price I to make it attractive for investors. On what path does that start the steel industry? It starts it back on the path on which it was previously under private ownership. The record of private ownership of steel was to pay dividends out of capital, to keep up the flow of dividends, at the expense of cutting down on investment or, in many cases, making no investment at all.
There was a fascinating article in Accountancy in 1959 which showed how, when the industry was privately owned, in most years up to the war it paid dividend out of capital. It resumed that process in the 1950s and continued it in the 1960s. It was effectively an industry that was eating itself. It produced a cycle in steel that was a national tragedy. Irresponsible private ownership meant no investment and distribution of dividends out of capital, so reducing the industry to a position where it had to be taken over by the state to build it up by force feeding it in a sense, because only the state is powerful enough to do that.
The state transformed the industry so that in the 1970s and the early 1980s it was a well invested, highly developed industry, producing an extremely competitive product on five integrated coastal sites. Then along come the Government to throw it back to the private sector to resume the irresponsible cycle that will reduce the industry to the state that it was in the early 1960s. This the Government call wisdom, economics and statesmanship. It is pure, simple irresponsibility which is unworthy of any Government, even this one.
§ Mr. CrowtherNo doubt my hon. Friend will recall the Benson report, which drew attention to the fact that the industry was being starved of capital, which led directly to its being taken into public ownership. No doubt my hon. Friend agrees that if that had not happened there would not be a steel industry today.
§ Mr. MitchellMy hon. Friend is right. Because of his long association with and deep knowledge of the steel industry, I am grateful for the point that he made.
The interests of investors will not be the interests of the nation, the workers or manufacturing. Investors will be interested only in their returns. It is worthwhile asking how the return will be secured from British Steel. The answer is that it will be secured by the kind of fiddle which the Government themselves sanction by the very basis of the Bill.
If we take £2 billion as the price for British Steel, the return that an investor will require will be about 20 per cent. We have to add to the rate of return 10 per cent., say, as a risk premium because of the nature of the industry. On our calculation, that will mean an annual dividend of 867 about 20 per cent. to make it an attractive investment. That is a high return. If we take into account Sir Robert Scholey's statement that he wants investment of about £300 million—he did not say for how long—it will be difficult for British Steel to make an annual return to investors on that scale and carry through the national investment.
How could British Steel do that? It could do it by fiddling the figures in part, as it has done by using capital which has been written off. It has already started on that path to pretty up the accounts for privatisation. The Government encouraged that process after they had painted the picture far blacker than it was up to 1985 in order to enhance the case for loss of jobs and closures.
Even on the return which it is making in 1987–88 British Steel will not be able to provide an annual return of £400 million. Therefore, it will be driven down the path that my hon. Friend the Member for Motherwell, South (Dr. Bray) described. The report from Youngs, the management consultants from Motherwell district council, shows clearly how the profits of British Steel could be increased by closures. The figures in the report are clear and dramatic. The closure of Ravenscraig would produce, every year, an extra profit of £100 million because there would be no need to finance investment and employment. In other words, British Steel could get from closures the rate of return that investors will want.
It is not a question of profitability, but just of getting more profit as a return for the investor. That will be feasible by closing plants that might be profitable. The closure of Ravenscraig alone might not bring the dividends up to the requisite figure. The Government have already started British Steel down that path by sanctioning in clause 7 the write-off of assets. That will lead inevitably to further closures to extract more dividend for investors.
§ Mr. Peter Hardy (Wentworth)There is another path as well as the one to which my hon. Friend has referred. British Steel could engage in asset stripping and sell off cheaply United Engineering Steels, which is so important in Rotherham and in my constituency.
§ Mr. MitchellMy hon. Friend is correct.
Different dangers attend privatisation. There is the wasting way, the anorexia nervosa treatment, which provides a steady return for investors at the cost of failing to invest to build up the capacity of the industry so that it may remain competitive. That started with the process which we are now on of letting imports fill the peaks and not expanding the industry to provide for them. That path was pioneered by the British motor cycle industry and has also been trodden by the British car industry. It has had disastrous consequences for both of them.
There are lots of possibilities. What we need is public control so that the industry serves the purposes of the nation, the national strength and British manufacturing. That can be secured only by public ownership in the form provided for in the amendment. The argument is simple. The danger is an irresponsible handover by a Government who are determined to get the cash as quickly as possible and to grab at the money in the window of opportunity so as to produce an incentive for investors who will take over British Steel to screw the maximum rate of return out of 868 their investment in ways which are disadvantageous for the national purposes of the country and the economic health of manufacturing.
It would be irresponsible to throw away the benefits of public ownership and public investment just when they are beginning to make a return. Why should that money not return to the taxpayer? If the industry is to be as efficient and competitive as the Government tell us, why should the taxpayer not continue to derive the benefit and retain for himself and the community the power to sustain the industry through the difficulties which might lie ahead and which the cyclical industry of the past has shown probably do lie ahead?
§ Mr. Michael BrownI am absolutely flabbergasted by what the hon. Member for Great Grimsby (Mr. Mitchell) has said. He served with me on the Standing Committee. I refreshed my memory from the proceedings in Committee to see what the hon. Gentleman said. He said that the Labour party's amendments to the Bill
propose that British Steel should demonstrate a track record before privatisation.He went on to say, and I remember him saying it:We are not standing in the Government's way and saying, 'Thou shalt not privatise'. We are saying that we should privatise taking into account all the sense and virtues that the Government tell us are to be found in the Conservative party"—
§ Mr. Austin MitchellWill the hon. Gentleman give way?
§ Mr. BrownNo, I will not give way until I have completed the quotation—
the feelings of financial market, financial rectitude and financial responsibility—by establishing a track record before this important national asset is launched on an uncertain sea.Later, he said:Our concern, which we reiterated throughout the Second Reading debate, is that British Steel should not be privatised. We do not want it to be privatised. We are flatly opposed to privatisation.[Official Report, Standing Committee D, 10 March 1988; c. 59–60.]
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I do not think that the Labour party knows its policy about the British steel industry. Once upon a time we knew what it was. I have no doubt that hon. Members who were here in the mid-1960s—such as the right hon. Member for Blaenau Gwent (Mr. Foot)—when the nationalisation of the steel industry was going through the House saw the House packed with hon. Members. Today there is no passion in the Opposition's arguments, and the fact that only about half a dozen Opposition Members are present shows that there is little concern whether the British steel industry is privatised.
§ Mr. Austin MitchellIt is fascinating for me to hear my speeches reread with some deterioration in the style, the grammar and the charm of the delivery. It is "Play Away" politics for the hon. Gentleman to engage in that kind of exercise. He well knows that the purpose of a Standing Committee is to probe the thinking of Ministers. In Committee, we were probing to find out if there was any thinking. Ministers emerged very badly from that examination. It is the intention of the Standing Committee to approach matters from different angles. The 869 amendments to which I was speaking approached the problem from different points of view. It is silly and irresponsible to quote one and to hold it against the other.
The hon. Gentleman asked about the Labour party's position on privatisation. Our policy is to stop it. This industry needs to stay in public ownership. Public ownership has served the industry well and we feel that it will prosper only under such ownership. That is a clear statement of the position.
§ Mr. BrownWe have made some progress, because we know what the Labour party would not do if it were in government. It would not denationalise or privatise. If one day—perish the thought—the Labour party were to form the Government, what would they do with the steel industry? We have not heard from the Opposition whether they would renationalise it.
§ Mr. MitchellWill the hon. Gentleman give way?
§ Mr. BrownNo, because I intend to be brief.
We know what the Labour party opposes, but we do not know what it would do to the steel industry if it were to come back to power. I remember pressing the hon. Member for Dagenham (Mr. Gould) time and again in Committee about what he would do, and his ideas changed from day to day. When he and the hon. Member for Great Grimsby had not had time to consider their policy, they expressed totally different views.
Shortly before the 1987 election, the Prime Minister announced three broad goals that the Government would set out to achieve in their term of office: first, a reduction in the burden of public indebtedness; secondly, a significant reduction in personal and corporate tax rates; and, thirdly, the improved provision of social services. A key role in the reduction of debt was to be played by the reform and sale of state-owned businesses.
Those words were used not by our Prime Minister but by the Finance Minister in the New Zealand Labour Government. He used them yesterday evening in the presence of the hon. Member for Dagenham. Labour Governments in other countries who have the responsibility for looking after state assets recognise that they cannot for ever be held in the the public sector. The Labour Government of New Zealand have found a way of giving a future to their steel industry. It was significant that the hon. Member for Dagenham took the trouble to go and listen to that speech, probably because he does not have his policy worked out and is probably trying to get some ideas to see how it is done.
The amendment should be rejected. Labour Governments of the 1960s and 1970s implemented policies that brought the steel industry near to bankruptcy. The Conservative Government of the 1980s have brought the industry back to profitability. It is now time to secure that profitablility by ensuring that the industry is privatised as quickly as possible.
§ Mr. Elliot Morley (Glanford and Scunthorpe)We should remember what we are talking about when we discuss these amendments. The Bill will turn the British Steel Corporation into a plc wholly owned by the Government. That could go ahead with the ownership remaining with the Government, and that is what we are arguing for in the amendments. There are very good 870 arguments for that, and many of them have been outlined by my hon. Friend the Member for Great Grimsby (Mr. Mitchell).
It is worth remembering that British Steel's present prosperity is a direct result of the investment that was made during public ownership. Scunthorpe would have gone the way of Corby if it had not been for the Anchor project and the massive investment in the early 1970s under public ownership. We must face the question whether that same kind of massive investment and modernisation programme will continue in private ownership, or whether the temptation will be to take the profits while they are good and while the exchange rate is to the benefit of BSC. There may be a temptation to take the money while BSC is going through a boom and then, when the industry goes down again, to forget about it.
People who have worked in the steel industry all their lives and have been through the changes when it was privately owned and state-owned have told me that, when the industry was nationalised, investment was in the form of new machinery. They said that when it was denationalised, all it got was a new coat of paint and money was not invested as it should have been. We all want to see a prosperous and competitive steel industry. We do not want to see such a national asset being sold at a loss to Britain and to the taxpayers. That is exactly what we will get under the terms of the Bill.
We have not addressed the problem of the billions of pounds of public money that have gone into the steel industry since the beginning of the 1980s. In reply to a question, the Minister said that since 1979, over £5 billion of taxpayers' money has gone into the industry to help it to restructure and modernise. Are we completely to forget about that money? Now that we have seen the fruits of that investment, are we simply to throw it away while there is an opportunity to receive some dividends, some return in terms of the profits that the steel industry is making? Those profits should go to the Exchequer to repay the taxpayers for all the money that has gone to the industry.
Steel is a strategic industry, important to the well-being of our nation. Britain is a manufacturing nation but we may well be swamped by imports and lose that status. It is important that steel is given the kind of security that a state-owned company enjoys.
I am prepared to accept that there were weaknesses in the Morrison form of nationalisation. I am not saying that we cannot look at different approaches to public ownership that will give the people who work in the industries a real say and a stake in them. I am not saying that a free-standing company should have a great deal of direct interference in its day-to-day running. Such a company should operate on a commercial basis.
Even under the Bill, the company would remain in public ownership and the money that has gone into it could be retrieved through the profits that the industry is now making. There is no logic in selling off British Steel to the private sector and thinking that there will be increased competition, because that will simply produce a monopoly. The sale of other former public companies, such as British Telecom and British Gas, to the private sector has not improved the service to consumers. In the case of British Telecom, the quality of service has deteriorated. There is no guarantee that the benefits to the consumer will be enhanced by selling the British Steel Corporation to the private sector.
§ Mr. Tim Janman (Thurrock)I am interested in the hon. Gentleman's comments about competition. Does he accept that 40 per cent. of steel products sold in the United Kingdom are imported and that there is plenty of competition in Europe that British Steel must face, which will act as an incentive to give good quality service to customers?
§ Mr. MorleyI am not sure that the answer to our economic problems is to increase imports. I would rather see competition among United Kingdom plants, rather than rely upon imports.
We shall go into a unified market in 1992. Our industries already suffer the disadvantage of high energy costs compared with our European rivals. The BSC is by no means one of the largest steel-producing companies in Europe, so it runs the risk of unfair competition which will undermine its position and, as a result, this country's position as a steel-producing nation.
Public ownership protects the steel industry from its cycles. When the going has been good, the private sector has taken money out of the industry, but, when the going has been difficult, it has cleared off and left the state to pick up the pieces. After rebuilding our steel industry and making it one of the best in the world, the Government are prepared to throw it to the wolves, to wash their hands of it and to destroy what has been built up with public money and support.
§ Mr. FallonThe trouble with Opposition Members is that they try to have things both ways. The hon. Member for Glanford and Scunthorpe (Mr. Morley) and, in the earlier debate, the right hon. Member for Blaenau Gwent (Mr. Foot) claimed that the successful steel operations in their constituencies were due to the massive investment programme of the last Labour Government. If that is true, the failure of the steel operations in Corby and Consett must also be due to that programme. Opposition Members cannot have it both ways.
I have always thought that Mr. Speaker was a generous man, but he has been more than generous in his selection of the amendments, because it is clear that amendment No. 2 comes close to being a wrecking amendment. The Labour party says that, even if the British Steel Corporation is allocated in share capital, the shares should not be sold: they should be retained for ever in public ownership. That is quite clearly a nonsensical approach for three reasons.
First, as the hon. Member for Great Grimsby (Mr. Mitchell) admitted, future and continuing large-scale investment will be required in the industry. He suggested that that could be financed from gilts, but, if that is the case, steel would always be competing against other equally massive investment in key public services, such as education and health, which are also financed from gilts and public borrowing. Steel would therefore always be competing, perhaps at a disadvantage, with other claims on investment from the public sector.
Secondly, if the shares are retained in public ownership, the British Steel Corporation will be far less responsive to its customers' and shareholders' needs. In new clause 1, Opposition Members specifically advocate taking account of customers' and shareholders' wishes. Those wishes may well be considered, but, if the shares are retained in public ownership, they will always be less important than the wishes of Ministers, particularly of the Treasury Ministers.
§ Dr. ReidIs the hon. Gentleman suggesting that, as British Telecom is now in the private sector, it is more responsive and pays more attention and gives better service to its customers?
§ Mr. FallonYes, certainly. British Telecom and Oftel do nothing but write to Members of Parliament about all the improvements that they are making and planning. If the improvements are of the scale that they describe, one wonders what the service was like under public ownership. There is therefore no real strength in that argument.
Thirdly, if the BSC is retained in the public sector, it will be placed at a strong competitive disadvantage to other companies in the European and world market place which are privately owned or which Governments intend to be privately owned. As my hon. Friend the Member for Brigg and Cleethorpes (Mr. Brown) has reminded us, such privatisation is envisaged by both Conservative and Socialist Governments.
The amendment seeks to preserve the status quo. If the shares are publicly owned, there is not much point in privatising the BSC. The amendment advocates no change in British Steel and it shows, above all, no confidence in either the management or the work force to make a success of the industry in the market.
§ Mr. FootAs I have listened to the debate, I have been more and more amazed at the prospect that a Minister from the Welsh Office is to reply to it. The Minister of State, Welsh Office is the only Minister to have listened to the debate, so I presume that he will answer for the Government. That is a pretty amazing state of affairs. I have the greatest affection for the hon. Gentleman, as everyone in Wales knows, but we do not regard him as a great spokesman about steel. Is he going to come to the Dispatch Box and say that it was wrong to nationalise the steel industry in Wales?
What will happen to the Llanwern works? There would have been no such works without public ownership. When the works was set up and hundreds of millions of pounds invested in it, it was called the Spencer works. Aneurin Bevan suggested that it was better to call it the Spencer works because Sir Henry Spencer had backed it throughout. He advocated public ownership and knew that only public money could sustain the industry on the proper scale. He would have been gratified by the scale of the success of the Llanwern works over recent years, but he would have been horrified that a Welsh Office spokesman should have dared to come to the Dispatch Box to seek to justify throwing this great industry, built up by huge public funds and effort, back into private hands, when it had been built up solely by public investment and public foresight. If it had not been for that, there would have been no works at Llanwern.
My hon. Friends the Members for Great Grimsby (Mr. Mitchell) and for Glanford and Scunthorpe (Mr. Morley) have put the case magnificently that the steel industry is a long-term industry. It must have a chance of long-term planning. That was the situation in Llanwern. It had some difficulties for two or three years, but Henry Spencer said that we must back it over a period. That is what the steel industry needs.
I recall vividly when the Government took the wretched decision to appoint Ian MacGregor to run the steel industry. The fact that he had ruined the coal industry was 873 bad enough. I remember my first private conversation with him and I believe that it is perfectly all right to make the facts public now. He said to me, "You must recognise that we are not bound by the undertakings of the British Steel Corporation." I said, "But the whole point about the British Steel Corporation is that it must be bound by its previous obligations to the work force and the community at large." Eventually, for a while, we forced him to carry out the obligations that his predecessors had undertaken; that was extremely important for the industry.
Ian MacGregor wanted to wriggle out of the obligations, and under his leadership many commitments to my constituents and others were broken—shamefully so in some cases—and thereby the corporation thought that it did not have to carry out its obligations to the communities. Ian MacGregor was absolutely opposed to the plan of building up other industries and for the steel industry to play a major part in that development. The Labour Government had given that undertaking, but he wanted to wriggle out of it.
It is absolutely appalling that the Minister of State, Welsh Office should come to the Dispatch Box to throw the industry back into private ownership without knowing what the outcome will be. As my hon. Friend the Member for Great Grimsby said, no one can foresee the world situation for steel over the next five or 10 years. It is shameful and shocking that the Government should decide now to put at risk an industry which has been through such pain and agony.
I say this in the interests of the whole steel industry, in which the whole nation has a special interest. As I said earlier, I speak in the interests of each steel plant. We want firm commitments about investment over the next five or 10 years. We should have a Minister at the Dispatch Box who is capable of giving firm commitments. If the industry is to be privatised, such firm commitments cannot be given from the Disptach Box. That is why we are opposed to the privatisation. If the Minister wants to do a service to Wales, he should tear up his prepared speech and say "No, we will not do this." He has experience of steel matters. He had better get an underling from another Department to do the dirty work.
§ The Minister of State, Welsh Office (Mr. Wyn Roberts)The hon. Member for Great Grimsby (Mr. Mitchell) was sufficiently honest to admit at the beginning of this debate that he was using the amendment to debate the basic principle. Therefore, we heard the age-old argument of public ownership versus privatisation. We covered this ground thoroughly on Second Reading, and we touched on it in Committee.
During the Second Reading my right hon. and learned Friend the Chancellor of the Duchy of Lancaster set out the Government's position clearly when he said:
The Government believe that good commercial enterprises should be in the private sector because they thrive better there. They are free of Treasury control, free of ministerial control and further away from political lobbying which raises problems now or in future."— [Official Report, 23 February 1988; Vol. 128, c. 170.]I am aware of the connection of the right hon. Member for Blaenau Gwent (Mr. Foot) with steel. He may not know about mine. I was present at the opening of the Llanwern works in the early 1960s, and I remember Sir Henry Spencer. They used so much blue paint at Llanwern that it was called Spencer Blue. Perhaps the right hon. Gentleman does not remember as clearly as I do that the 874 talk at the time was that the opening of the Llanwern works would mean the end of steel making at Ebbw Vale. It did not mean that for many years thereafter. Was it not left to a Labour Government, towards the end of their term in office, to close down steel making at Ebbw Vale and in Cardiff? That was very much in prospect towards the end of that Labour Government's term of office.
§ Mr. FootThe Minister should get his facts straight. The Minister responsible for the proposal to close the heavy end of steel making at Ebbw Vale was his right hon. Friend the present Secretary of State for Wales. The Minister had better be careful about what he says.
§ Mr. RobertsI am fairly sure of my facts. It was only a matter of time and of allowing the general election to pass before the decisions were implemented. The Labour Government had been forced into the position where they recognised that the rundown at Ebbw Vale and in Cardiff had to take place.
I want to consider the Government's justification for privatisation. As my hon. Friend the Member for Darlington (Mr. Fallon) said, we believe that the steel industry will perform better in the private sector. The Government are not alone in that belief. The BSC wants that. If hon. Members care to look at the report and accounts published in July last year, they will discover in the penultimate paragraph that the chairman states:
The board believes that a return to the private sector would bring clear commercial advantages to the corporation.
§ Mr. RobertsNo, I want to finish this point. I shall give way later.
The chairman of BSC said that in the context of all the challenges that BSC must face in the near future. BSC is facing the challenges for the future with some confidence, and the Government share that confidence. Having listened to Opposition Members today and in Committee, it seems that they base their views entirely on their worst fears and believe that the steel industry will be better protected if it is in public ownership.
The record of British Steel in public ownership is not as the Opposition would make out. I have a copy of an excellent document written by Elizabeth Cotterell, called "The Giant with the Feet of Clay: the British Steel Industry 1945–1981." This very good document describes some of the delays and damage caused during the period of public ownership.
We have not discussed the amendment in detail. However, it is clear that it is our intention that we should sell at least the majority of shares that we hold in the successor company following vesting. If a minority shareholding is retained, it will not be because the Government consider it necessary to retain a formal interest in the successor campany; nor, in those circumstances, would the Government seek to exercise any influence over the company's policy. Once again I reiterate our firm belief that we believe that the industry will react better to the requirements of he market place when it is in the private sector.
8.30 pm
The amendments are designed to preserve a specific Government shareholding in the successor company. That is completely at odds with our policy and it would certainly 875 be wrong to enshrine such restraints in statute. These issues were thoroughly discussed in Committee, and the broader questions were debated on Second Reading. We accept that the steel industry is important, but it does not follow that the Government must retain control over it to protect the national interest. British Steel's history shows that Government intervention is often not beneficial either to the commercial success of the company or, in the longer term, to the national interest.
I recall debates in the House in 1973—and reference was made to this in Committee—when a great argument raged across the Floor of the House on how much steel should be produced. The then Government were talking of 38 million tons, whereas the Opposition were talking of 42 million tons or thereabouts. We all know what volume of steel production was reached within a few years after that time. In other words, all of us, on both sides of the House, were wrong. So much for our deep political knowledge and judgment of the steel industry.
This is an enabling Bill, and privatisation will take place subject to market conditions. We have always made that clear. The taxpayer will have his reward through the return to the Treasury from the sale of shares. I emphasise to the hon. Member for Glanford and Scunthorpe (Mr. Morley) that the return from the proceeds of the sale is likely to be far greater than any return from dividends over the years.
§ Mr. Austin MitchellThe Minister is a poet or a bard, and he made a reply appropriate to a poet or a bard. It was not an economist's reply, nor was it a politician's reply. It was essentially doggerel. There was no mobilisation of any argument. Apart from the Minister's repetition of a few cliches, I heard no justification for taking the British Steel Corporation, which the Minister has told the House is so successful, transforming it into a shell company, and flogging it off. What gains will materialise from such an action? Can those gains be quantified? What prospects lie ahead if that is done?
We claim—and the history of steel shows this to be true—that there is an inherent tendency in private ownership to take the maximum return on investment and to draw the maximum dividends, but not to make the new investment in capacity and plant that is necessary for the industry to remain competitive. The tendency is not to build new plants, but to pay dividends out of capital or out of a failure to invest. That is the whole history of the steel industry. What will make that different now that the Government are again putting the steel industry into the hands of the self-same investing community that produced that record of neglect in the past? What will turn British Steel into a dynamic industry when it is privatised this time? There has been no indication at all from the Government.
One change is that the investors will be internationally diversified. British Steel will represent only a small proportion of their investment and will be something that they can write off. They will have no interest in the continued well-being of British Steel, provided it pays dividends. Once those investors have enjoyed a return on their capital they will be able to write it off after 20 years and put their money into another steel industry somewhere else. British Steel will be just one of the eggs in their basket. The danger is that they do not have any concern for the national interest of the kind which the Government have, 876 and which the elected representatives of the people can have in influencing the Government through the House. That is the argument for public control, and it is one that has not been answered.
The only justification that the Government can provide for privatisation is that the Opposition are against it. That is the equivalent of a thug who has been arrested for attacking an old lady demanding of the policeman, "What is your philosophy about crime? What are you going to do to stop crime?", while not recognising that his own actions were wrong. The Minister's only arguments have come in the form of a few statements from British Steel executives. Of course they are in favour of privatisation, because they will get rid of Treasury control, with all its restrictions, and of interference by Ministers who they believe know nothing about the industry. They will also be able to pay themselves more money. In that situation, I would be in favour of privatisation. However, we in this Chamber must take account of the nation's interests and ensure the survival of a healthy manufacturing economy. We must also concern ourselves with the production of steel as cheaply and as abundantly as possible, to act as a basis for that industry.
§ Mr. Wyn RobertsThe hon. Gentleman does an injustice to the management of BSC when he ascribes to it those reasons for being in favour of privatisation. I am sure that he would wish to take account of the entire contents of the chairman's review, in which his statement in favour of privatisation occurs. He would then see that the BSC board is in favour of privatisation because it believes that the steel industry will do better.
§ Mr. MitchellThe Government have been telling the House how well British Steel has been doing under public ownership, and that the whole basis of its success has been the investment made, the reorganisation undertaken, and the shedding of labour that has been carried through under state ownership. When the hon. Member for Darlington (Mr. Fallon) said that private ownership means success, and that public ownership means failure, his assertion is in direct defiance of all the facts. There is in the 16 May issue of Metal Bulletin a table of results for EEC steelmakers. The only major success is that of British Steel, which is publicly owned, with a profit of 286 million ecu for 1987. The privately-owned German steel maker, Klockner, made a loss of 39 million ecu. Thyssen lost 107 million ecu. Hoechst made a profit of only 24 million ecu, and both Irish Steel and Danish Steel made losses. Private steel makers are losing money, but British Steel is successful, and has been made successful by public ownership. The Government want to throw that away, and that is irresponsible of them to do so in the fashion that they propose.
The Government are irresponsible. They are a Government who have presided over years of oil wealth and have thrown that away. They have thrown away the nation's opportunity and are now selling off the nation's assets at knockdown prices—grabbing a quick window of opportunity to get the best price that they can, irrespective of the consequences for the industry and the problems that will confront the national economy later. It is Government by irresponsibility, and we shall vote against it.
§ Question put, That the amendment be made:—
§ The House divided: Ayes 186, Noes 246.
879| Division No. 308] | [8.37 pm |
| AYES | |
| Abbott, Ms Diane | Harman, Ms Harriet |
| Adams, Allen (Paisley N) | Healey, Rt Hon Denis |
| Allen, Graham | Heffer, Eric S. |
| Anderson, Donald | Henderson, Doug |
| Archer, Rt Hon Peter | Hogg, N. (C'nauld & Kilsyth) |
| Armstrong, Hilary | Holland, Stuart |
| Ashton, Joe | Home Robertson, John |
| Banks, Tony (Newham NW) | Hood, Jimmy |
| Barnes, Harry (Derbyshire NE) | Howarth, George (Knowsley N) |
| Barron, Kevin | Hoyle, Doug |
| Battle, John | Hughes, John (Coventry NE) |
| Beckett, Margaret | Hughes, Robert (Aberdeen N) |
| Bell, Stuart | Hughes, Roy (Newport E) |
| Bennett, A. F. (D'nfn & R'dish) | Illsley, Eric |
| Bidwell, Sydney | Ingram, Adam |
| Blair, Tony | Janner, Greville |
| Boyes, Roland | John, Brynmor |
| Bradley, Keith | Jones, Barry (Alyn & Deeside) |
| Bray, Dr Jeremy | Jones, Martyn (Clwyd S W) |
| Brown, Gordon (D'mline E) | Kaufman, Rt Hon Gerald |
| Brown, Nicholas (Newcastle E) | Lambie, David |
| Buchan, Norman | Lamond, James |
| Buckley, George J. | Leadbitter, Ted |
| Caborn, Richard | Leighton, Ron |
| Callaghan, Jim | Lestor, Joan (Eccles) |
| Campbell, Ron (Blyth Valley) | Lewis, Terry |
| Campbell-Savours, D. N. | Litherland, Robert |
| Clark, Dr David (S Shields) | Lloyd, Tony (Stretford) |
| Clarke, Tom (Monklands W) | Loyden, Eddie |
| Clay, Bob | McAllion, John |
| Clelland, David | McAvoy, Thomas |
| Clwyd, Mrs Ann | McCartney, Ian |
| Cohen, Harry | McFall, John |
| Cook, Frank (Stockton N) | McKay, Allen (Barnsley West) |
| Corbett, Robin | McKelvey, William |
| Cousins, Jim | McLeish, Henry |
| Cox, Tom | McNamara, Kevin |
| Crowther, Stan | McTaggart, Bob |
| Cummings, John | Mahon, Mrs Alice |
| Cunliffe, Lawrence | Marek, Dr John |
| Dalyell, Tam | Marshall, David (Shettleston) |
| Darling, Alistair | Marshall, Jim (Leicester S) |
| Davies, Ron (Caerphiily) | Martin, Michael J. (Springburn) |
| Davis, Terry (B'ham Hodge H'l) | Martlew, Eric |
| Dewar, Donald | Maxton, John |
| Dixon, Don | Meale, Alan |
| Dobson, Frank | Michael, Alun |
| Doran, Frank | Michie, Bill (Sheffield Heeley) |
| Douglas, Dick | Millan, Rt Hon Bruce |
| Dunnachie, Jimmy | Mitchell, Austin (G't Grimsby) |
| Dunwoody, Hon Mrs Gwyneth | Moonie, Dr Lewis |
| Eadie, Alexander | Morgan, Rhodri |
| Eastham, Ken | Morley, Elliott |
| Ewing, Harry (Falkirk E) | Morris, Rt Hon J. (Aberavon) |
| Fatchett, Derek | Mowlam, Marjorie |
| Faulds, Andrew | Mullin, Chris |
| Field, Frank (Birkenhead) | Murphy, Paul |
| Fields, Terry (L'pool B G'n) | Nellist, Dave |
| Flannery, Martin | O'Brien, William |
| Flynn, Paul | O'Neill, Martin |
| Foot, Rt Hon Michael | Parry, Robert |
| Foster, Derek | Patchett, Terry |
| Foulkes, George | Pendry, Tom |
| Fraser, John | Pike, Peter L. |
| Fyfe, Maria | Powell, Ray (Ogmore) |
| Galbraith, Sam | Prescott, John |
| Galloway, George | Primarolo, Dawn |
| Garrett, John (Norwich South) | Radice, Giles |
| Garrett, Ted (Wallsend) | Randall, Stuart |
| Gilbert, Rt Hon Dr John | Redmond, Martin |
| Godman, Dr Norman A. | Reid, Dr John |
| Gordon, Mildred | Richardson, Jo |
| Graham, Thomas | Roberts, Allan (Bootle) |
| Grant, Bernie (Tottenham) | Robertson, George |
| Griffiths, Nigel (Edinburgh S) | Robinson, Geoffrey |
| Grocott, Bruce | Rooker, Jeff |
| Hardy, Peter | Ruddock, Joan |
| Salmond, Alex | Vaz, Keith |
| Sedgemore, Brian | Wall, Pat |
| Sheerman, Barry | Walley, Joan |
| Sheldon, Rt Hon Robert | Warded, Gareth (Gower) |
| Short, Clare | Welsh, Andrew (Angus E) |
| Skinner, Dennis | Welsh, Michael (Doncaster N) |
| Smith, Andrew (Oxford E) | Williams, Rt Hon Alan |
| Smith, C. (Isl'ton & F'bury) | Williams, Alan W. (Carm'then) |
| Soley, Clive | Wilson, Brian |
| Spearing, Nigel | Winnick, David |
| Steinberg, Gerry | Wise, Mrs Audrey |
| Stott, Roger | Worthington, Tony |
| Strang, Gavin | Wray, Jimmy |
| Straw, Jack | Young, David (Bolton SE) |
| Taylor, Mrs Ann (Dewsbury) | |
| Thomas, Dr Dafydd Elis | Tellers for the Ayes: |
| Thompson, Jack (Wansbeck) | Mrs. Llin Golding and |
| Turner, Dennis | Mr. Frank Haynes. |
| NOES | |
| Alison, Rt Hon Michael | Coombs, Anthony (Wyre F'rest) |
| Allason, Rupert | Coombs, Simon (Swindon) |
| Alton, David | Cope, John |
| Amess, David | Cormack, Patrick |
| Amos, Alan | Couchman, James |
| Arbuthnot, James | Cran, James |
| Arnold, Jacques (Gravesham) | Davies, Q. (Stamf'd & Spald'g) |
| Arnold, Tom (Hazel Grove) | Davis, David (Boothferry) |
| Ashby, David | Day, Stephen |
| Atkins, Robert | Devlin, Tim |
| Atkinson, David | Dickens, Geoffrey |
| Baker, Nicholas (Dorset N) | Dicks, Terry |
| Baldry, Tony | Douglas-Hamilton, Lord James |
| Banks, Robert (Harrogate) | Dover, Den |
| Batiste, Spencer | Dunn, Bob |
| Beaumont-Dark, Anthony | Dykes, Hugh |
| Beith, A. J. | Evans, David (Welwyn Hatf'd) |
| Bellingham, Henry | Evennett, David |
| Bendall, Vivian | Fallon, Michael |
| Bennett, Nicholas (Pembroke) | Farr, Sir John |
| Bevan, David Gilroy | Favell, Tony |
| Biffen, Rt Hon John | Fenner, Dame Peggy |
| Blackburn, Dr John Q. | Field, Barry (Isle of Wight) |
| Body, Sir Richard | Finsberg, Sir Geoffrey |
| Bonsor, Sir Nicholas | Fookes, Miss Janet |
| Boswell, Tim | Forman, Nigel |
| Bottomley, Peter | Forsyth, Michael (Stirling) |
| Bottomley, Mrs Virginia | Forth, Eric |
| Bowden, A (Brighton K'pto'n) | Fox, Sir Marcus |
| Bowden, Gerald (Dulwich) | Franks, Cecil |
| Boyson, Rt Hon Dr Sir Rhodes | Freeman, Roger |
| Braine, Rt Hon Sir Bernard | French, Douglas |
| Brandon-Bravo, Martin | Fry, Peter |
| Brazier, Julian | Gale, Roger |
| Brittan, Rt Hon Leon | Gardiner, George |
| Brooke, Rt Hon Peter | Garel-Jones, Tristan |
| Brown, Michael (Brigg & Cl't's) | Goodlad, Alastair |
| Browne, John (Winchester) | Goodson-Wickes, Dr Charles |
| Bruce, Ian (Dorset South) | Gorman, Mrs Teresa |
| Bruce, Malcolm (Gordon) | Gow, Ian |
| Buchanan-Smith, Rt Hon Alick | Gower, Sir Raymond |
| Buck, Sir Antony | Greenway, Harry (Ealing N) |
| Burns, Simon | Greenway, John (Ryedale) |
| Burt, Alistair | Gregory, Conal |
| Butcher, John | Griffiths, Peter (Portsmouth N) |
| Butterfill, John | Grist, Ian |
| Carlile, Alex (Mont'g) | Ground, Patrick |
| Carlisle, Kenneth (Lincoln) | Grylls, Michael |
| Carrington, Matthew | Gummer, Rt Hon John Selwyn |
| Carttiss, Michael | Hamilton, Hon Archie (Epsom) |
| Cash, William | Hamilton, Neil (Tatton) |
| Chalker, Rt Hon Mrs Lynda | Hampson, Dr Keith |
| Chapman, Sydney | Hannam, John |
| Chope, Christopher | Hargreaves, A. (B'ham H'll Gr') |
| Churchill, Mr | Harris, David |
| Clark, Dr Michael (Rochford) | Hawkins, Christopher |
| Clark, Sir W. (Croydon S) | Hayhoe, Rt Hon Sir Barney |
| Clarke, Rt Hon K. (Rushclifie) | Hayward, Robert |
| Colvin, Michael | Heathcoat-Amory, David |
| Conway, Derek | Heddle, John |
| Heseltine, Rt Hon Michael | Nicholson, Emma (Devon West) |
| Hicks, Mrs Maureen (Wolv' NE) | Paice, James |
| Hicks, Robert (Cornwall SE) | Patnick, Irvine |
| Hill, James | Peacock, Mrs Elizabeth |
| Holt, Richard | Porter, Barry (Wirral S) |
| Hordern, Sir Peter | Porter, David (Waveney) |
| Howarth, G. (Cannock & B'wd) | Raffan, Keith |
| Howell, Ralph (North Norfolk) | Rhodes James, Robert |
| Hughes, Robert G. (Harrow W) | Riddick, Graham |
| Hunt, David (Wirral W) | Roberts, Wyn (Conwy) |
| Hunt, John (Ravensbourne) | Roe, Mrs Marion |
| Hunter, Andrew | Rowe, Andrew |
| Irvine, Michael | Rumbold, Mrs Angela |
| Irving, Charles | Ryder, Richard |
| Jack, Michael | Shaw, David (Dover) |
| Jackson, Robert | Shaw, Sir Giles (Pudsey) |
| Janman, Tim | Shepherd, Colin (Hereford) |
| Jessel, Toby | Skeet, Sir Trevor |
| Johnson Smith, Sir Geoffrey | Speller, Tony |
| Jones, Gwilym (Cardiff N) | Spicer, Michael (S Worcs) |
| Jones, Robert B (Herts W) | Stanbrook, Ivor |
| Jopling, Rt Hon Michael | Steen, Anthony |
| Kellett-Bowman, Dame Elaine | Stern, Michael |
| Kilfedder, James | Stevens, Lewis |
| Kirkhope, Timothy | Stewart, Andy (Sherwood) |
| Kirkwood, Archy | Stewart, Ian (Hertfordshire N) |
| Knapman, Roger | Stradling Thomas, Sir John |
| Knight, Greg (Derby North) | Sumberg, David |
| Knowles, Michael | Summerson, Hugo |
| Knox, David | Tapsell, Sir Peter |
| Lamont, Rt Hon Norman | Taylor, John M (Solihull) |
| Lang, Ian | Taylor, Teddy (S'end E) |
| Lawrence, Ivan | Temple-Morris, Peter |
| Lennox-Boyd, Hon Mark | Thompson, D. (Calder Valley) |
| Lightbown, David | Thompson, Patrick (Norwich N) |
| Lilley, Peter | Thorne, Neil |
| Lloyd, Sir Ian (Havant) | Thornton, Malcolm |
| Lloyd, Peter (Fareham) | Thurnham, Peter |
| Lord, Michael | Townend, John (Bridlington) |
| McCrindle, Robert | Tracey, Richard |
| Maclean, David | Tredinnick, David |
| McLoughlin, Patrick | Trippier, David |
| McNair-Wilson, M. (Newbury) | Trotter, Neville |
| McNair-Wilson, P. (New Forest) | Twinn, Dr Ian |
| Madel, David | Vaughan, Sir Gerard |
| Major, Rt Hon John | Waldegrave, Hon William |
| Malins, Humfrey | Walden, George |
| Mans, Keith | Walker, Bill (T'side North) |
| Maples, John | Wallace, James |
| Marshall, Michael (Arundel) | Wardle, Charles (Bexhill) |
| Martin, David (Portsmouth S) | Warren, Kenneth |
| Mawhinney, Dr Brian | Watts, John |
| Maxwell-Hyslop, Robin | Wheeler, John |
| Meyer, Sir Anthony | Whitney, Ray |
| Michie, Mrs Ray (Arg'l & Bute) | Widdecombe, Ann |
| Mills, Iain | Wiggin, Jerry |
| Moate, Roger | Winterton, Mrs Ann |
| Monro, Sir Hector | Wolfson, Mark |
| Morrison, Hon Sir Charles | Wood, Timothy |
| Morrison, Hon P (Chester) | Young, Sir George (Acton) |
| Moss, Malcolm | |
| Mudd, David | Tellers for the Noes: |
| Neubert, Michael | Mr. Stephen Dorrell and |
| Nicholls, Patrick | Mr. Alan Howarth |
| Nicholson, David (Taunton) |
§ Question accordingly negatived.
§ Mr. Austin MitchellI beg to move amendment No. 5, in page 1, line 19, at end insert
'and must be a company in which there shall be designated a special share which shall have the effect in terms of voting at an ordinary meeting of representing 50.01 per cent. of the shares and which shall be held by the Secretary of State for the following purposes—
- (a) ensuring that all directors of the successor company are British citizens;
- (b) restricting the proportion of shares held by non-British citizens or institutions to 15 per cent. of the paid-up capital of the company;
880 - (c) protecting the successor company from being taken over by another person or body; and
- (d) the restriction of any individual shareholder or their nominee to no more than 5 per cent. of the paid-up share capital of the company;
and the Secretary of State shall report to Parliament on the use of the golden share designated under this subsection.'.This amendment relates to retaining Government influence over the privatised British Steel Corporation. Even if the Government are so irresponsible as to want to divest themselves of ownership through a state corporation, they should still retain some influence over the new company and set out certain priorities in the form of a golden share. That is clearly a faute de mieux, in the sense that we prefer the corporation to be publicly owned and amenable to national interests through public ownership—that is the best way of doing that—and, in default, there should be a golden share.
From the Minister's own agnostic position on Second Reading, it is clear that he did not think of including a golden share in the proposals. It is clear also that, through our arguments in Committee, we have brought the Government round. In Committee, there was little Government movement. Perhaps it was because the Ministers did not know much about steel or the Bill. But, during our discussions, we managed to secure one concession—and there will be a golden share in British Steel plc. We rate that as a success, but it is no more than a recognition by the Government of their responsibility to privatised industry. We are glad about that concession, but we want the Minister to put some flesh on it and tell us exactly what the Government envisage in the golden share. We envisage the range of powers that is specified in our amendment. The first is
that all directors … are British citizens.It restrictsthe proportion of shares held by non-British citizens or institutions to 15 per cent.".In other words, we do not want to get into a British Petroleum problem.The amendment protects
the successor company from being taken over by another person or body.Clearly, it could be in danger of that. If there is no investment and industrial strength is not maintained, it restrictsany individual shareholder or their nominee to no more than 5 per cent. of the paid-up share capital of the company.More important, it requires the Secretary of State to
report to Parliament on the use of the golden share designated under this subsection.That is the golden share as we would like it. We wait to hear how the Minister would define it. There can and should be no doubt about the principle of the golden share. The 23 July 1985 minutes of Her Majesty's Treasury Official Committee on Nationalised Industry Policy, which is an unclassified document on special rights shares, show that that body agreed:
In some privatisations, there will be no need for reserve powers. But in certain cases, the Government needs to retain specific limited powers over the future ownership or control or conduct of a privatised company. Powers have been taken for example to prevent foreign control where this is judged to be undesirable, to block take-overs during a limited period while the company fully establishes itself in the private sector, and to veto any material disposition of assets. The exact powers required will need to be determined by the circumstances of each case, but they should always be limited to the minimum necessary.881 In British Steel, the minimum necessary is substantial, because it is a crucial industry. We want the industry to be run as closely in accord with the national interest as a privatised industry—a plc—can be. That is why we have opted for the form of words in our amendment.
If the Minister does not think that British Steel is important, strategic or crucial enough to the economy to justify that full range of powers, it is incumbent on him to tell us why he rejects them and how the dangers that they safeguard against can be avoided if they are not specified in the golden share.
Clearly there is scope for discussion about the golden share. The golden share should be written into the legislation. That seems to be an essential safeguard. I assume that the Government's approach will be to write it into the articles of the company. That is not as effective as putting it into the Bill. If a case goes to court and a judge rules that the equal rights of shareholders are overruled or obviated by the existence of a golden share, the nature of the operation could be endangered. That is always a possibility. To safeguard against that, legislation will have priority and will be fully and comprehensively binding in a way in which the company's articles will not. That is why we prefer to have this in the legislation.
Let us examine what is in the golden share. The contents of golden shares have varied from privatised company to privatised company. There is no pattern. I should have thought that it was incumbent on the Government to set out some basic pattern of requirements to be imposed on privatised companies. The Government have certainly had enough practical experience to set out certain basic rules in the form of a golden share and what it should be about. I ask hon. Members to look at experience. For instance, the golden share of the British Airports Authority provides that there will be no individual shareholding of more than 15 per cent. It entrenches the ownership of major airports with the British Airports Authority. In British Aerospace, there is no foreign stake over 15 per cent. The directors are British, and there is one Government director. British Airways has no special share, but no individual stake over 15 per cent. and no foreign holding over 25 per cent. are allowed. In British Telecom, there is no stake above 15 per cent. The chief executive must be British and the Government have the right to appoint directors. There is a patchwork quilt of provisions.
Steel is so crucial that we should have the maximum possible provision and safeguards in the golden share. There are real dangers. It is important to assert the national interest, in whatever form it can be asserted, through a golden share held by the Government. I was pleased to hear the Minister announce that there is a possibility that the Government will maintain a shareholding. Clearly we welcome that. We prefer them to maintain as big a shareholding as possible and for as long as possible—certainly until Labour returns to power, when we shall know what action to take with the shareholding.
The golden share is a different provision—[Interruption.] The Under-Secretary of State is checking what was said in the previous debate. In Committee, he envisaged a 25 per cent. Government shareholding in BSC. I hope that he will not whittle away at the figure and cause that shareholding to vanish like a mirage. That shareholding was important in building up our vote on amendment No. 2. I notice that the Government's 882 majority fell abruptly. Either their supporters do not have faith in the privatisation proposals or we are gathering new strength, perhaps as a consequence of the Minister's commitment in the last debate.
Since the 1920s, we have not had a totally unregulated market in steel, without any Government involvement or state responsibility for the market's overall shape. Over the years, Government aspirations about public versus private ownership have changed like a zigzag. The Conservative party came into office hostile to public ownership, but the Government increased it massively by encouraging the British Steel Corporation in the early 1980s to drive all the competition out of business. Dunford and Hatfield was the classic example. Private steel producers which had prospered and made profits under Labour—we had a different attitude towards the private sector—were driven out of business by BSC under this Government. In effect, a Government committed to privatisation were closing down the private sector. The Government then took another zigzag with the Phoenix hive-offs, in which British Steel retains a stake.
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Now, in another zigzag, the Government are to turn this dominant public limited company loose on the market without control or supervision, let or hindrance. There will not even be effective controls by the Monopolies and Mergers Commission. The procedures have been speeded up and will probably be weakened. How effective will those procedures be as a control on any monopolistic tendencies implicit in British Steel's performance? I asked the Under-Secretary of State for Corporate Affairs when he intended to publish the M MC's report on various nationalised industries, including BSC. Having given me a holding answer, because the question so disturbed him and the Government's actions were so obscure that he was not able to find the answer immediately, the hon. Gentleman said:
The report was delivered to the Secretary of State in 1986.No date was given, but it was almost certainly the beginning of 1986. The hon. Gentleman did not even give the month. He said:The delay in publication has been caused by the need to consider very carefully a request by the British Steel Corporation that the Secretary of State should exercise his powers under section 17 of the Competition Act 1980 to make a number of excisions to the published report in order to avoid prejudicing the interests of the corporation."—[Official Report, 3 May 1988; Vol. 132, c. 373]What are the Government hiding? What was cut out of the report and why can it not be published? Is the report so damaging about the privatisation prospects of the British Steel Corporation that it will deter investors?If that is effective supervision of a nationalised company by the Monopolies and Mergers Commission, it is clear that the privatised company will be turned loose with no effective control over it. That is why we want the Government to have a golden share. The fact that the Government have bungled the golden share over Britoil does not invalidate the golden share. It might invalidate its use by the Government, but it does not invalidate the principle of retaining a vestige of influence and setting the company in the right direction. The fact that the EEC has doubts about it does not invalidate the golden share. My guess is that the Government now wish that they had a golden share in BP. That is the line argued by The Independent, which, on 5 May 1988, said: 883
In simple truth, the Government has run into difficulty with BP because it was never envisaged that such a situation could arise.That was a reference to the Kuwaiti investment, which is bigger than our Government's stake in BP. Kuwait, a member of the Organisation of Petroleum Exporting Countries, has more influence and control over BP than our Government. If the Government had provided themselves with the instrument which we provide for them in the amendment, that situation with BP could not have arisen.Before the marines begin to abseil down the front of the British Steel building, unveiling the slogan "Three and threepence," as they did on BP, let us take a sensible precaution. Any Government with wisdom would maintain the vestige of public influence, national control, and point it in the direction of public involvement and interest in what will be a powerful private competitor.
§ Mr. CrowtherWe are all probably aware that the Government have issued a press statement today, setting out what they will write into the articles of association. I think it would have been more courteous if they had let hon. Members know at the same time as they informed the press.
§ Mr. Kenneth ClarkeI did not intervene during the speech of the hon. Member for Glasgow, Cathcart (Mr. Maxton) when he made the same point. The press statement actually repeats the text of an answer to a parliamentary question. We followed the convention of not issuing it to the press until Parliament had been told. Our intention was that the debate on the amendment should be better informed, which could be achieved by giving advance notice of the terms of the special share that we were proposing. Whatever else we can be accused of—the hon. Member may be about to accuse us of all kinds of things—discourtesy to the House is not one of them.
§ Mr. CrowtherIs the Chancellor of the Duchy saying that the answer is in Hansard today?
§ Mr. ClarkeNo, it is not. We followed the usual convention. Parliamentary questions are always answered at 3.30 pm, and press releases can be given after that. Parliamentary questions are available, as the hon. Member knows, and, if one goes to the right place in the House, one can obtain a copy of today's answers.
§ Mr. CrowtherI do not think that that is satisfactory. Most hon. Members will not have had the opportunity of seeing the written answer until later.
A representative of the press told me what is in the answer. As I understand it, in the first place it is intended that the Government retain a golden share in British Steel. Perhaps the Chancellor of the Duchy will tell me if I am wrong, but they are intending to limit share ownership by any individual to 15 per cent. However, whether there is a limitation on foreign ownership—
§ Mr. Kenneth Clarkeindicated dissent.
§ Mr. CrowtherI see that the Chancellor of the Duchy shakes his head. That is what fills me with dismay. I thought that there was to be no limitation. However, I understood that the Government may have been agreeable to writing that limitation in. If they are not prepared to 884 write it into the articles of association, that makes the matter worse. However, even if they had done that, I would not have found that adequate. That limitation on foreign ownership needs to be written into the legislation, which is what the amendment is all about. If we are going to protect the national interest, it is essential that this amendment is carried. The amendment deals with both those matters.
The golden share principle is fine, so long as the golden share is held by a Government who are really concerned about the national interest. I confess that I am not confident that the Government have any concern for the national interest. That is also why we need to write it into the Bill. In order to avoid uncertainty about the future ownership of the industry, a limitation on foreign ownership with no time limit needs to be written into the Bill. I believe that even the golden share principle may be limited to five years. That will be a five-year limit on the modest provisions which are now proposed.
We know, of course, that the Government are intending to push the British Steel Corporation into the private sector as soon as possible. The great danger is that this privatised company will enter into a cut-throat price war in Europe when the production quotas are lifted at the end of next month. It is now fairly clear that about 90 per cent. of all steel products in the Community will be outside the quotas. At the same time, the West Germans are still alleging—wrongly in my view—that the British steel industry is receiving Government subsidies. If the Chancellor of the Duchy of Lancaster knows something about that that I do not know, I shall be pleased to hear it, because as far as I know there are now no Government subsidies for the steel industry—
§ Mr. Kenneth ClarkeThe hon. Gentleman has invited me to intervene and I am glad to say that I agree with him on this point. I understand that some German companies are complaining about the capital write-offs that took place in the past which they claim were unfair subsidies of the British steel industry against their steel industry. Those so-called capital write-offs were cleared by the British Government with the Commission and accepted by the Commission some years ago. We agree with the European Commission that the German complaints are completely unjustified. British Steel's present position has been fairly won in the market place and reflects great credit on all those in the corporation.
§ Mr. CrowtherI am happy to have that assurance. However, what worries me is that the Germans may well regard their allegations—false though they may be—as a good excuse for increasing the German Government's existing subsidies which assist their industry. I admit that those subsidies are indirect, but they are nevertheless substantial.
Because of the continuing excess capacity outside Britain, which will continue for some time despite the impending closure of the Krupp works at Rheinhausen, an attempted takeover of the British Steel Corporation from another country—probably Germany—is becoming more and more probable. I am worried by that because, from the German point of view, it would make sense. Also, American steel producers which, according to a recent report, are now operating at 90 per cent. of capacity, may be looking for a way of buying into the European 885 Community in much the same way as some Swiss companies are trying it on in the chocolate industry. That is another serious danger.
I am not concerned only about the British Steel Corporation itself. Like my hon. Friend the Member for Wentworth (Mr. Hardy) 1 am worried because the BSC stilll owns 50 per cent. of the shares in United Engineering Steels in our area. That company used to be mostly the British Steel special steels group. It is the biggest engineering steel producer in Europe. It is a successful company which, last year, made over 2 million liquid tonnes of steel, mostly in Rotherham. It made a pre-tax profit of over £36 million on sales of £577 million. It is the kind of operation that might well be attractive to predators who will think that they may get a foothold in that company by buying BSC shares. Again, that causes great concern. My constituents, and those of my hon. Friend the Member for Wentworth, who worked for United Engineering Steels are entitled to some assurance about the future ownership of the company in which they work.
I emphasise that it is not some sort of narrow chauvinistic nationalism that makes people like me worry about such matters. It is the simple conviction that Britain, British industry and the people who work in British industry still count for something in this world. They are entitled to a fair crack of the whip and to believe that the British Government are on their side, although we have seen little evidence of that recently. That may be an old-fashioned view, but it was the view of the Conservative party until it started to abandon all its traditional principles under the leadership of the present Prime Minister, who apparently thinks that a combination of empty rhetoric and wild gestures is an adequate substitute for the real policies which would allow British manufacturers to compete on equal terms with the rest of the world, instead of having to fight with their hands tied behind their backs.
At present, the British economy is more dominated by foreign-owned companies than that of any other country in western Europe. That is not something that we can be proud of as a nation. I am certainly not against foreign companies investing in new factories in Britain and creating new jobs, but I am very much against foreign companies buying British firms in order to manipulate them for their own purposes. If that were to happen to the British Steel Corporation, it would be an absolute disaster.
The Government proposals for handing over the Rover Group to British Aerospace contain no restriction whatever to prevent British Aerospace, on the expiration of five years, from selling the Rover business to anyone anywhere in the world who might be interested in buying it.
I believe that it is not a flight of fancy to suggest that in the foreseeable future vehicle manufacture, as distinct from vehicle assembly, could be coming to an end in this country. I do not want to see the steel industry, the most basic of all our industries, placed in the same hazardous position. The only way to make sure that that does not happen is to approve this amendment. If Government Members wish to demonstrate their patriotism tonight, they will vote for it.
§ Mr. HardyI am delighted to follow my parliamentary neighbour, my hon. Friend the Member for Rotherham 886 (Mr. Crowther), because he has quite properly drawn attention to the very real need for concern about the position in south Yorkshire of the larger part of United Engineering Steels. The Government have not been very helpful in dispelling the anxieties felt by the people working there, who have contributed to establishing world records, creating profits and providing Britain with a strategically important industry.
I was extremely sorry that in the last debate I was unable to intervene as I had hoped to during the speech by the Minister of State, Welsh Office, because it would have reduced the length of his speech. However, I can make the point now and remain entirely in order. It refers to the shareholding.
The Welsh Minister said—and I am sure that the Minister, in winding up this debate, may say—that the board of the British Steel Corporation is eager to see privatisation. He gave the impression, indeed, that it is more eager than the Government, because the Minister was prepared to wait until the climate was right, while Sir Robert Scholey and his friends appear to have wanted it yesterday whether the climate was appropriate or not. The reason may be that they feel that the precedents established in other privatisations mean that they will do very well out of it.
I wanted to tell the Minister, since I am an amateur historian—I stress the word "amateur"—that my observation of privatisations over the last few years shows that the Government have been applying the rules that were applied in the Nelsonian navy in terms of the distribution of prize money to the distribution of free shares in private industry. The arrangements for the privatisation of British Telecom, British Petroleum or any of the others seems to be closely in accord with the distribution of prize money earned by the flagships, the frigates and so on in the 18th and early 19th centuries, if not before.
The distribution of shares to people in higher positions is clearly a matter of great public interest. I am grateful that my attention has been drawn to the publication of the articles of association and the details of the share arrangements. I have only received a copy in the last two or three minutes. My constituents will be most moved by the fact that they are being offered £70-worth of free shares, plus a further £2-worth of shares for each year of service. Sir Robert Scholey must have been in the industry for about 40 years, which suggests that he will be given £150-worth of shares. Some of my constituents who have worked there only 10 years will receive £90-worth. That is not an impressive way of involving people in their privatised concern.
Will the basis of distribution of free shares in this document apply throughout the industry from the chairman to the apprentice? I am a little worried that the document states that BSC pensioners applying for shares will be allowed certain facilities. Will United Engineering Steels' pensioners—those who have retired since UES was established and who may have had 30 or more years' service with the corporation before that Phoenix manifestation—have that facility extended to them?
The Government have ignored the national interest. A few months ago, together with other south Yorkshire Members, I met the Engineering Employers Federation. We were astonished to learn that British industry could now provide armour plating from only two sources. The Ministry of Defence had become extremely worried about 887 this diminution of our strategic capacity and it invited Thyssen of Germany to tender for the engineering steel required for our defence purposes. We established that under no circumstances would the Germans allow any other country, not even an ally or another member of the European Common Market, to tender for military requirements. That suggests how low our Government's concern has been for our strategic interests.
That is not the only reason why I support the amendment. I am glad to see the Under-Secretary of State present and he will know what I am about to say. The amendment refers to takeovers. I have no great faith that all captains of British industry are fit and proper people to run the industry upon which the country depends and on which many of our constituents depend for their livelihood.
Two years ago I hesitated before I joined the demand for a reference to the Monopolies and Mergers Commission when a company called Guinness took over a firm, Bells, which owned Canning Town glass works in my constituency—one of the most effective glassworks in Europe. Before I decided to join that demand, I wrote to Guinness to establish its intentions in respect of my constituency. I wrote two letters to the then chief executive and I was given firm assurances about its intentions. Guinness did not wait five years, which is why I am worried about a five-year golden share and why we need the protection which the amendment would afford.
The workers put their backs into the new company, demonstrated their success and more than passed the targets which the company set. The company gave such strong assurances that the ratepayers in my area gave it grants for additional work to improve the facilities at the plant. Towards the end of last year, the company announced that it was moving the administrative jobs, but it assured me that production would be untouched. Then in January came the decision to close the plant. Almost 500 jobs in Dearne valley, perhaps the area of highest unemployment, were destroyed.
When I complained, the chairman of Guinness announced that the company had never given me an assurance. Fortunately, I could present his letters which I also showed to the Under-Secretary of State. He knew that the company had behaved extremely badly when my hon. Friend the Member for Don Valley (Mr. Redmond) and I went to see him. That is one section of the captains of British industry on which we cannot depend for our national interest.
The Minister pointed out that it is not the Government's policy to intervene in these matters, and we know that all too well. We have very good cause to know it in areas like mine. It will not be in areas like mine where a large proportion of shares in BSC or those resulting from any other privatisation will be distributed. This will be grasped more readily in the areas that have been doing very well. Concern was expressed about the green belt in the south last night; that is the sort of area I am referring to.
I believe that the amendment is entirely justified. It protects the interests of communities that have contributed to the successful condition of British Steel. It gazes realistically at the position of British commerce and business today. Perhaps those who now direct large sectors 888 of that industry might be more appropriately placed, if not at the tables of 10 Downing street then in the Old Bailey. I am not prepared to see the interests of my constituents sacrificed to the whim of those who will trade with only the shortest term consideration and my hon. Friends are to be congratulated on tabling the amendment.
When we tabled an amendment to the Gas Bill—now the Gas Act 1986—we proposed merely that the chairman or chief executive should be a British citizen. I was called a chauvinist when I moved that amendment in Standing Committee. The Minister mocked and attacked the suggestion, until I pointed out that we had taken the amendment literally from the Act that established British Telecommunications. I am glad that we are not being so modest tonight as we were in that Committee. I am delighted that we are suggesting that the directors of the successor company to BSC should be British citizens. If we had not proposed such an amendment, and if the Government do not accept it, the point made by my hon. Friend the Member for Rotherham becomes valid.
I have great anxieties about who will own the British steel industry in less than five years. Certainly I believe that there is a danger from the Germans, who know how effective our steel industry is, or that the Japanese may well look at the industry. Knowing what a soft touch we are, perhaps the next time that Nestle and Suchard decide that they want to buy a British business, they may decide to demonstrate their interest in diversity and buy steel as well as chocolate in Yorkshire. That decision would be as logical as many made by British industry.
The amendment is valid. It should commend itself to every hon. Member who is interested in maintaining a strategic industrial capacity. Certainly I believe that it would be welcomed by those people who have made sure that British Steel is a successful industry, worth more than £2,000 million, which is the rather optimistic price that the Government will seek, according to my hon. Friend the Member for Great Grimsby (Mr. Mitchell).
By the time that the Government have carried out a few more dawn raids in Brussels, the price might have to come down—who knows?—but certainly it will be sold at far less than its value. The people who will be betrayed are those who contributed to its value in the first place.
§ Ms. Marjorie Mowlam (Redcar)In supporting amendment No. 5, we are trying to provide some protection for British Steel as a major United Kingdom industry, so that it functions in the interests of its past and present employees, its customers, and the United Kingdom economy as a whole. That is not for exports, but for the many firms that feed into British Steel. That is very important, both nationally and regionally. Many secondary and tertiary industries on Teesside are dependent on British Steel, and any change in the strength and market of British Steel would have dire effects on those industries.
By the amendment we are trying to make sure that the golden share is enshrined in a formal, constitutional way within the statute. As we have seen from the press releases that we have just obtained, it will exist for only five years. Why five years? Did the Minister pick that figure by luck, or by design? I hope that the Chancellor of the Duchy of Lancaster will explain and justify that period when he responds to the debate.
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The protection afforded by the golden share is important, and would be even more important if we had a decent Government. The 50.01 per cent. share gives us the chance of providing certain protections that are essential for the future of British Steel. First, it would provide parliamentary accountability, which is essential to the development of a major United Kingdom industry such as this. Secondly, it would maintain some formal links between Government Departments—especially the DTI—and the sponsorship of this major industry. Thirdly, it would provide additional shareholder protection. The golden share would help to inhibit price fluctuations caused by speculation. Fourthly, it would offer protection for non-shareholders. As with previous privatisations, the assets could be sold at substantial discounts. The golden share would prevent such assets being sold to overseas buyers and it would also prevent asset-stripping. These are all important reasons for protecting the industry as it moves forward into privatisation.
Other important elements must not be ignored. One is the importance of keeping British Steel as an integrated whole. Without such integration there will be problems with new products, marketing and developing new processes. Research and development—particularly on Teesside—and new capacity and facilities will not come about without protecting the nature of the integrated company and without the five plants remaining together. Integration is important also because it would mean that resource allocation and management decisions would be kept in the United Kingdom.
I hope that this protection will mean that other goods for the industry will be procured in the United Kingdom, and that research and development and the patents and licences that result from them would flow into the United Kingdom rather than out of it. The future development of the industry is important to my constituents in Redcar and to other hon. Members' constituents who depend on British Steel and on the secondary and tertiary industries which in turn depend on the company remaining integrated, not broken up.
Information technology is a good example of what happens when an industry moves to branch plants. It is bad for direct and indirect employment, for future competitiveness and for other United Kingdom manufacturers. I am sure the Minister knows of the report on software in information technology, which showed the sorts of dangers that would ensue for British Steel—the problems of technological dependency, partial supply and non-supply. We are worried that such problems would afflict the industry without the integration of its several plants spread around the country.
The golden share protects the integrity of the corporation. Without it the investment and confidence that are needed for the future of the industry will not exist. If the amendment is not accepted, I and my hon. Friends are worried that financial predators such as we saw in the Guinness and Westland affairs—or in dawn raids by Nestle or Suchard—will feature in the future of British Steel, which would be a crime. For eight years we have suffered on Teesside, and without this amendment our future there looks bleak.
§ Mr. MorleyThe amendment is a major step forward in what the Bill is attempting to do. It would give the Government the best of both worlds. We could argue that 890 on the one hand they have a free standing company which operates without commercial restraint, and on the other they have the golden share and the option to make sure that whoever controls the company and is involved in it has some responsibility. Responsibilities are involved, such as the responsibility to my community. If the steel industry was removed from my constituency, it would take the very heart out of the constituency.
The Government have been consistent on these issues, as we have seen with Suchard and Rowntree, where they have shown not the slightest concern, but many hon. Members on the Government Benches have shown concern. I hope that they will show concern tonight by supporting the amendment and giving security not only to the steel industry but to the many communities which rely upon steel.
§ Mr. Kenneth ClarkeI wish, first, to answer a couple of points with which I shall not deal at length in my reply to the debate. I took note of the point made by the hon. Member for Wentworth (Mr. Hardy) about employee shares. We shall return to that later in a debate on a suitable amendment. I accept that he is interested in what has been announced today in answer to a parliamentary question on employee shares. At this stage I can assure him that the availability of shares to employees will be on an equal footing with management throughout the rest of the company. Management will have no special rights.
I also know of the hon. Gentleman's great concern about the circumstances in which Guinness took over the company which owned Canning Town glass works because my hon. Friend the Parliamentary Under-Secretary of State has discussed the case with me. Obviously this is not the time to discuss that further. I do not think that it is right to generalise, as the hon. Gentleman did, about all takeovers.
The hon. Member for Redcar (Ms. Mowlam) also raised a point, which I shall not deal with at length, about the need to keep British Steel as an integrated whole. I wish that she had been here earlier for the debate on new clause 1 which arose out of a desire of certain of her hon. Friends to see the company broken up when it is privatised. I should like to pray her in aid in saying that, whatever else happens to British Steel, at the moment it is in the national interest that it is privatised as one unit and not broken up.
The debate was really about special shares. First, I must congratulate the hon. Member for Great Grimsby (M r. Mitchell), as usual, on carrying the heat and burden of the day on the Bill. I regret that the hon. Member for Glasgow, Cathcart (Mr. Maxton) has not returned. He teased me earlier by saying that I would vanish to have a large meal and a cigar. I have had the cigar, but I have not had the meal. I assume that the hon. Gentleman is having a good meal, wherever he is.
Apart from his leg pull, the hon. Gentleman accused me, as did the hon. Member for Rotherham (Mr. Crowther), of discourtesy to the House by giving details of the special share in a press notice this afternoon. I think we followed the usual convention in this place: that no announcement is made to the press until an announcement has been made to the House. There was a parliamentary question today, answered at 3.30 pm. I believe that hon. Members can always browse through the day's answers in the Library when they come in at half-past three. The parliamentary answer was followed by a press notice. I am 891 glad that it came to the notice of both hon. Gentlemen, which means that they know the nature of the special share which we propose.
We begin at least with agreement. The Government have accepted—as I said on Second Reading that we were considering, and as my hon. Friend said in Committee—the case for a special share. As the hon. Member for Rotherham has discovered, we propose to put in the articles of the company a provision which will restrict individual shareholdings in the company to a maximum of 15 per cent. of the equity and to retain that special or golden share for a period of five years.
In several of the privatisations that the Government have taken through, we have included varying provisions for special or golden shares. As the hon. Gentleman said, no pattern has emerged because we have held that each industrial situation and each company should be judged on its merits. Our policy is as far as possible to put privatised companies into the position of any private sector company.
To varying degrees, in different terms and with different companies, we have had a look at the situation and have decided that, usually for a limited period, some sort of restraint is required on the ability of outside companies to make bids for the acquisition of other companies. In terms of British Steel, we have come up with the formulation that I have described. I shall shortly explain why we have done that. Our suggestion does not match the Opposition amendment that we are discussing. I suppose that it differs in one very significant respect because what we propose will not discriminate between British holders of equity and overseas owners of equity. We see no case for doing so in the case of British Steel because we see no defence or strategic interest in British Steel. It is a Bismarckian view to regard steel as one of the key defence industries. Many private sector steel companies have no restrictions on foreign ownership.
§ Mr. CrowtherI am astonished that the Minister can say that the steel industry, of all industries, has no strategic importance. Can he tell us any type of weapon that does not have steel in it?
§ Mr. ClarkeIn terms of modern warfare, electronics is probably more important than steel and more difficult to get in the required quality, whereas the world is somewhat awash with steel of varying qualities. I am not a defence expert and the hon. Gentleman may be ahead of me in that respect, but I think that he is thinking in terms of the Franco-Prussian war rather than in terms of today's warfare.
I have recently detected to a growing extent that the Opposition are going through one of their fits of slightly anti-foreign fervour when they speak about industrial policy. The Conservative party is the patriotic party of Britain and we demonstrate that quite frequently. The Labour party goes into occasional fits of chauvinism where suddenly everyone across the Channel is some sort of dread threat to British industry. In this case, I do not think that we should go as far as the Opposition want us to go and place restrictions on foreign ownership or say that no director should be a non-British citizen. It is quite absurd to say that there should not be an American, let alone a 892 European, director. It is absurd to say that one should have to produce a passport before one can become a director and that shareholdings should be restricted.
This is a somewhat unsuitable time for the Labour party to go through one of these anti-foreigner fits, because we are presently contemplating the implications for British industry of 1992 and the European single market. We wish to see, perhaps, much stronger Europewide companies that can compete with the Japanese and the Americans, and this is not the time to impose fancy restrictions about foreign shareholdings. Presumably such restrictions would apply to citizens of the Irish Republic and Germany and to French companies.
The hon. Member for Motherwell, South (Dr. Bray) has not agreed with a great deal of what I have said about the Bill. He quite rightly touched on the possibilities of Europewide integration in the steel industry. He contemplated his hobby horse of a Ravenscraig-Shotton-Dalzell company perhaps linking up with Europeans. British Steel has made it clear that it is not opposed to overseas participation in the equity of the company. I think that the hon. Member for Motherwell, South and I agree that as a private company British Steel may well contemplate some overseas acquisitions and buy into the European steel industry in order to strengthen its position in the European market.
Whatever else we are looking at in the special share, we should not be looking at a tight little national, British holding and we should not be averse to all overseas holdings or overseas equity investment on the scale that the Opposition amendment would seek to rule out. If we are contemplating a British company taking shareholdings in Europe, we cannot possibly start laying down legislative or other restrictions on European shareholdings in Britain. It is a mistake to discriminate against foreigners whether it applies to the nationality of the directors or to overseas holdings or anything else. As I said, there is some agreement between us because upon consideration we have accepted the case for having a special share in British Steel.
We have time-limited the share because we contemplate that British Steel will eventually be a private sector company like any other and should be open to all the commercial pressures that we believe improve a company's performance. Among the pressures to which management should be subject is the ordinary need to compete for market share and to achieve a decent return on capital by producing the right products and selling them in the market place, but, if performance falls, the threat of possible acquisition by people who believe that they can improve the performance of the company and who appeal to the shareholders with the prospect of acquiring the company and improving its performance is a perfectly legitimate commercial pressure.
I do not believe that all mergers are undesirable. Occasionally, the House goes into a fit to try to restrain them. Managers are usually against takeovers of their companies. If I were the manager of a company, I would want to resist anything other than a welcome acquisition of my company, because my position might be threatened. The pay and taxation of British management have now become extremely attractive and high rewards are available for high performance, although managers who take those rewards are not entitled to consider themselves as having a job for life, free from their shareholders being able to look to someone else who might acquire the 893 company and improve the management performance, if that person thinks that he can do better. In most cases, those privatised companies should be open to the same perfectly desirable pressures.
We have opted for the special share because we believe that too early a bid might be disruptive. It is fair to give a reasonable time for the company to become established as a private sector company before it is opened to those pressures. We are privatising British Steel at a time when there is still excess capacity throughout the European market. Some other European countries must face up to the need to shed unprofitable excess capacity which is no longer producing products that can be sold. We cannot return to a stable market until that has been done. We wish to protect ourselves against the prospects of the acquisition of British Steel by someone seeking to acquire it for the purpose of closing down capacity. That is a perfectly legitimate point, and another reason for having a time-limited anti-takeover provision.
The hon. Member for Redcar asked why we had chosen five years. There is no right time. We hope that eventually British Steel will act in the market like any other private sector company. Within five years, I very much hope that the excess capacity problem will have been resolved, and I believe that five years is long enough to give what might be described as a fledgling company to establish itself in the market place and to get rid of the risks of purely predatory bids designed to cut capacity.
§ Dr. BrayWill the Minister make clear the apparent limitation of the special share that he is proposing? Will he confirm, first, that the Government are able to agree to a person holding more than 15 per cent? They can agree to that at any time, so there is only the possibility that they might block a takeover bid. Secondly, will he confirm that the special shareholder will have no other rights in respect of other provisions in the articles or in respect of voting and that, in other words, it is solely a possible blocking function in respect of a person holding more than 15 per cent?
§ Mr. ClarkeThe hon. Gentleman is quite correct, but I shall not go into that in detail now. It may be a further point of division between us.
On the hon. Gentleman's second point, we do not intend to use the special share for the purpose of intervening in the company's commercial decisions. That is a case of division between the Government and, for example, the hon. Member for Great Grimsby, who believes that the Government should continue to exercise an influence. We do not intend to do that through our policy.
With regard to the hon. Gentleman's first point, certainly there is only a right to use the blocking mechanism. If the Government chose not to exercise that right, we would be answerable to the House for our decision if for some reason a larger than 15 per cent. holding was not contrary to the national interests or the interests of steel consumers or employees. The hon. Gentleman's description was quite right.
Finally, I want to consider why we have not included the special share in the Bill but are merely undertaking via a parliamentary answer to include it in the articles of association. I hope that hon. Members will agree that that 894 is a technical point. A parliamentary reply to a question is binding and we intend to include the special share in the articles of association.
The suggestion was raised in Committee that the golden share might give rise to litigation. No doubt we have all taken legal advice. However, anything can give rise to litigation, as lawyers are always happy to say. The prospects of litigation of the kind that hon. Members fear is slight. People who take shares in the private sector company when it is floated will be aware that they are taking shares in a company within which there is a special share. I am advised that they would have no prospect of redress if subsequently they tried to claim that the use of the special share was contrary to the overriding interest of the company to act in the interests of the shareholders.
There is at least some agreement between the Government and the Opposition on this amendment. The disagreements are about foreign holdings and foreign management. We see no reason to be against that in principle, but we see a need to protect the company against takeover while it is a fledgling industry. We see a need to protect the company while there is an excess capacity problem and the risk that competitors will buy the company to close it down. At least we have gone part way towards meeting the Opposition. I await the Opposition's response. Perhaps we will end on a note of happy accord.
§ Mr. Austin MitchellIf the Minister calls that moving part way, I am not sure what he would call long-distance running. The Minister's response was pathetic. It is no wonder that he had to trail his parliamentary answer this afternoon—which was itself a shabby device—so that we should not be too stunned by incredulity at the inadequacy of his comments. To assume that we were thronging the Library at 3.30 pm to skim through the parliamentary answers is an excuse designed to disguise the total shabbiness of the manoeuvre of leaking information in that way.
It is always possible to tell when something nefarious is afoot. It is leaked in a written answer to a stooge question asked by a page boy in this particular case—[Interruption.] Ministers could have given us information in Committee. They dared not do that. They held cut grandiose prospects of a golden share with real meaning, because they knew that if they told us the reality they would have to face long barracking opposition in Committee rather than the co-operation that they received. They knew that they would have to face much more hostility.
As defined in the Bill, the golden share is practically useless. It goes no way towards meeting the proposals that we have put forward. The limitations that the Minister revealed about the golden share in response to questions from my hon. Friend the Member for Motherwell, South (Dr. Bray) are pathetic.
It is not that the mountains of labour have produced a ridiculous mouse. The mouse does not even have a squeak. It is a pathetic creature. When we consider the golden share, we must bear in mind the nature of the world into which the BSC will be turned loose as a public limited company. It will not be sold to Sid like British Telecom or British Gas. Sid is not in the market. I imagine that Sid's hands are firmly in his pockets, if he has any sense.
The Minister clearly does not want to sell the company to the small shareholder. It is also clear from the parliamentary answer that he does not envisage much 895 employee participation. The gesture made to employees in the parliamentary answer is insulting. Seventy pounds worth of free shares and a further £2 of shares for each year of service is insulting as a gesture to those who have worked in the industry, seen it slimmed down and their jobs threatened. Nothing is offered to those who have sacrificed their jobs in the massive rundown of the industry that has taken place under this Government.
That share offer, which we shall be discussing tomorrow, is an insult. However, it is clear that a small shareholder company or an employer participation company is not envisaged. It will be a company for the big boys, turned loose for the big investors—the top I per cent. of the population, the institutions, and possibly, because the steel industry is an incestuous world, its competitors, too. We want to guard against that. In an area where big investors will be operating and in which British Steel will not have a broad shareholding base—which is what the Government wanted for British Telecom—there is a danger that it will fall prey to the wrong people. That is why we want the safeguards in our amendment.
Steel is a tough and peculiar industry. It is conventional to distance oneself from competitors by an occasional punch in the ribs and a sally of exports into competitors' markets. It is also conventional to take shareholdings in one's rivals, to damp down competition and to maintain cartel-like relationships. The danger is that competitors will take a stake in British Steel—particularly European competitors, because they are the closest and those with which British Steel is in most intense competition for its markets.
It is our contention that control of British Steel should remain in this country. Only British investors and the Government of this country have the interests of the nation in mind. It will be in the interests of others to take a stake in British Steel, perhaps to increase the company's prices, to dampen the competition that it poses and to reduce its exports. It may be their intention not to invest in British Steel but to run it down. Foreign shareholders do not want a healthy foreign competitor, and if they take a stake in British Steel it will be with those intentions in mind. We want to safeguard against that situation by means of the golden share.
It is also possible that foreign shareholders will wish to take a stake in British Steel for financial reasons. It will be possible for them to demand the maximum return and maximum dividends on the minimum investment, and to require that British Steel is run in such a way as to cream off the market rather than to build up the industrial strength of this country.
Contrary to what was said by the Minister, there is also a defence interest. By weakening the industrial capacity of this country, the Government have practically eliminated our ability to fight a war or a sustained conflict. They have decimated engineering and shipbuilding and done much damage to our steel-making capacity. It comes ill from such a Government to say that steel is not essential in the fighting of any conflict or in any other military endeavour. Steel is the very sinews of war. It would have been impossible to undertake even the Falklands conflict without it.
§ Mr. Kenneth ClarkeI have already made the point to the hon. Member for Rotherham (Mr. Crowther) about the dated nature of his argument. Defence sales represent about 5 per cent. of British Steel's turnover. The Ministry of Defence could decide, for purposes of tendering, to extend competition to German firms, for instance, because it must be remembered that the Germans are on our side now. West Germany is a friendly nation.
§ Mr. MitchellI am glad that the Minister is able to give me that permanent guarantee, and I look forward to exercising it in the future. Special steels in particular—it is a highly specialised field—are essential to any defence capability. For that capability to slip outside the control of this country will mean a loss of national sovereignty and of power. We cannot fight a sustained conflict without a steel industry. We want that industry to be sustained under British control and British investment. It must not become prey to competitors in the way that is likely to occur unless the special share is written into the Bill.
We want British Steel to produce to capacity as part of British manufacturing industry. Steel is a cyclical industry. If it is producing to capacity, money pours out of its ears, but if it is producing under capacity, it becomes a bottomless pit into which one must throw money. That is one risk, but the risk also is that under this Government British Steel faces a very hard future until we have a Labour Government in the 1990s dedicated to rebuilding Britain's manufacturing and industrial strength. That Labour Government will want a powerful, independent, British steel industry to produce the sinews of our manufacturing strength. That is why we shall pursue the amendment in the Division Lobbies.
§ Question put, That the amendment be made:—
§ The House divided: Ayes 198, Noes 240.
899| Division No. 309] | [10 pm |
| AYES | |
| Abbott, Ms Diane | Clelland, David |
| Adams, Allen (Paisley N) | Clwyd, Mrs Ann |
| Allen, Graham | Cohen, Harry |
| Alton, David | Cook, Frank (Stockton N) |
| Anderson, Donald | Corbett, Robin |
| Archer, Rt Hon Peter | Cousins, Jim |
| Armstrong, Hilary | Cox, Tom |
| Ashley, Rt Hon Jack | Crowther, Stan |
| Ashton, Joe | Cummings, John |
| Banks, Tony (Newham NW) | Cunliffe, Lawrence |
| Barnes, Harry (Derbyshire NE) | Dalyell, Tam |
| Barron, Kevin | Darling, Alistair |
| Battle, John | Davies, Ron (Caerphilly) |
| Beckett, Margaret | Davis, Terry (B'ham Hodge H'I) |
| Beith, A. J. | Dewar, Donald |
| Bell, Stuart | Dixon, Don |
| Bennett, A. F. (D'nt'n & R'dish) | Dobson, Frank |
| Blair, Tony | Doran, Frank |
| Boateng, Paul | Douglas, Dick |
| Boyes, Roland | Dunnachie, Jimmy |
| Bradley, Keith | Dunwoody, Hon Mrs Gwyneth |
| Bray, Dr Jeremy | Eadie, Alexander |
| Brown, Gordon (D'mline E) | Eastham, Ken |
| Brown, Nicholas (Newcastle E) | Ewing, Harry (Falkirk E) |
| Bruce, Malcolm (Gordon) | Fearn, Ronald |
| Buchan, Norman | Field, Frank (Birkenhead) |
| Buckley, George J. | Fields, Terry (L'pool B G'n) |
| Caborn, Richard | Flannery, Martin |
| Campbell, Ron (Blyth Valley) | Flynn, Paul |
| Campbell-Savours, D. N. | Foot, Rt Hon Michael |
| Canavan, Dennis | Foster, Derek |
| Carlile, Alex (Mont'g) | Foulkes, George |
| Clark, Dr David (S Shields) | Fraser, John |
| Clarke, Tom (Monklands W) | Fyfe, Maria |
| Clay, Bob | Galbraith, Sam |
| Galloway, George | Morley, Elliott |
| Garrett, John (Norwich South) | Morris, Rt Hon A. (W'shawe) |
| Garrett, Ted (Wallsend) | Morris, Rt Hon J. (Aberavon) |
| Gilbert, Rt Hon Dr John | Mowlam, Marjorie |
| Godman, Dr Norman A. | Mullin, Chris |
| Golding, Mrs Llin | Murphy, Paul |
| Gordon, Mildred | Nellist, Dave |
| Graham, Thomas | O'Brien, William |
| Grant, Bernie (Tottenham) | O'Neill, Martin |
| Griffiths, Nigel (Edinburgh S) | Parry, Robert |
| Grocott, Bruce | Patchett, Terry |
| Hardy, Peter | Pendry, Tom |
| Harman, Ms Harriet | Pike, Peter L. |
| Heffer, Eric S. | Powell, Ray (Ogmore) |
| Henderson, Doug | Prescott, John |
| Hogg, N. (C'nauld & Kilsyth) | Primarolo, Dawn |
| Holland, Stuart | Radice, Giles |
| Home Robertson, John | Randall, Stuart |
| Hood, Jimmy | Redmond, Martin |
| Howarth, George (Knowsley N) | Rees, Rt Hon Merlyn |
| Hoyle, Doug | Reid, Dr John |
| Hughes, John (Coventry NE) | Richardson, Jo |
| Hughes, Robert (Aberdeen N) | Robertson, George |
| Hughes, Roy (Newport E) | Robinson, Geoffrey |
| Illsley, Eric | Rooker, Jeff |
| Ingram, Adam | Ruddock, Joan |
| Janner, Greville | Salmond, Alex |
| John, Brynmor | Sedgemore, Brian |
| Jones, Barry (Alyn & Deeside) | Sheerman, Barry |
| Jones, Ieuan (Ynys Môn) | Sheldon, Rt Hon Robert |
| Jones, Martyn (Clwyd S W) | Short, Clare |
| Kaufman, Rt Hon Gerald | Skinner, Dennis |
| Kennedy, Charles | Smith, Andrew (Oxford E) |
| Kinnock, Rt Hon Neil | Smith, C. (Isl'ton & F'bury) |
| Kirkwood, Archy | Smith, Rt Hon J. (Monk'ds E) |
| Lambie, David | Soley, Clive |
| Lamond, James | Spearing, Nigel |
| Leadbitter, Ted | Steel, Rt Hon David |
| Leighton, Ron | Steinberg, Gerry |
| Lestor, Joan (Eccles) | Stott, Roger |
| Lewis, Terry | Strang, Gavin |
| Litherland, Robert | Straw, Jack |
| Lloyd, Tony (Stretford) | Taylor, Mrs Ann (Dewsbury) |
| Loyden, Eddie | Taylor, Matthew (Truro) |
| McAllion, John | Thompson, Jack (Wansbeck) |
| McAvoy, Thomas | Turner, Dennis |
| McCartney, Ian | Vaz, Keith |
| McFall, John | Wall, Pat |
| McKelvey, William | Wallace, James |
| McLeish, Henry | Walley, Joan |
| McNamara, Kevin | Warden, Gareth (Gower) |
| McTaggart, Bob | Wareing, Robert N. |
| Mahon, Mrs Alice | Welsh, Andrew (Angus E) |
| Marek, Dr John | Welsh, Michael (Doncaster N) |
| Marshall, Jim (Leicester S) | Williams, Rt Hon Alan |
| Martin, Michael J. (Springburn) | Williams, Alan W. (Carm'then) |
| Martlew, Eric | Wilson, Brian |
| Maxton, John | Winnick, David |
| Meale, Alan | Wise, Mrs Audrey |
| Michael, Alun | Worthington, Tony |
| Michie, Bill (Sheffield Heeley) | Wray, Jimmy |
| Michie, Mrs Ray (Arg'l & Bute) | Young, David (Bolton SE) |
| Millan, Rt Hon Bruce | |
| Mitchell, Austin (G't Grimsby) | Tellers for the Ayes: |
| Moonie, Dr Lewis | Mr. Frank Haynes and |
| Morgan, Rhodri | Mr. Allen McKay. |
| NOES | |
| Alison, Rt Hon Michael | Banks, Robert (Harrogate) |
| Allason, Rupert | Batiste, Spencer |
| Amess, David | Beaumont-Dark, Anthony |
| Amos, Alan | Bellingham, Henry |
| Arbuthnot, James | Bendall, Vivian |
| Arnold, Jacques (Gravesham) | Bennett, Nicholas (Pembroke) |
| Arnold, Tom (Hazel Grove) | Biffen, Rt Hon John |
| Ashby, David | Biggs-Davison, Sir John |
| Atkins, Robert | Blackburn, Dr John G. |
| Atkinson, David | Body, Sir Richard |
| Baker, Nicholas (Dorset N) | Bonsor, Sir Nicholas |
| Baldry, Tony | Boswell, Tim |
| Bottomley, Peter | Ground, Patrick |
| Bottomley, Mrs Virginia | Grylls, Michael |
| Bowden, A (Brighton K'pto'n) | Gummer, Rt Hon John Selwyn |
| Bowden, Gerald (Dulwich) | Hamilton, Hon Archie (Epsom) |
| Bowis, John | Hamilton, Neil (Tatton) |
| Boyson, Rt Hon Dr Sir Rhodes | Hampson, Dr Keith |
| Braine, Rt Hon Sir Bernard | Hannam, John |
| Brandon-Bravo, Martin | Hargreaves, A. (B'ham H'll Gr') |
| Brazier, Julian | Hargreaves, Ken (Hyndburn) |
| Brittan, Rt Hon Leon | Harris, David |
| Brooke, Rt Hon Peter | Haselhurst, Alan |
| Brown, Michael (Brigg & Cl't's) | Hawkins, Christopher |
| Browne, John (Winchester) | Hayhoe, Rt Hon Sir Barney |
| Bruce, Ian (Dorset South) | Hayward, Robert |
| Buchanan-Smith, Rt Hon Alick | Heathcoat-Amory, David |
| Buck, Sir Antony | Heddle, John |
| Burns, Simon | Hicks, Mrs Maureen (Wolv' HE) |
| Burt, Alistair | Hicks, Robert (Cornwall SE) |
| Butcher, John | Hill, James |
| Butterfill, John | Holt, Richard |
| Carlisle, Kenneth (Lincoln) | Hordern, Sir Peter |
| Carrington, Matthew | Howarth, Alan (Strat'd-on-A) |
| Carttiss, Michael | Howarth, G. (Cannock & B'wd) |
| Cash, William | Howell, Ralph (North Norfolk) |
| Chalker, Rt Hon Mrs Lynda | Hughes, Robert G. (Harrow W) |
| Chapman, Sydney | Hunt, David (Wirral W) |
| Chope, Christopher | Hunt, John (Ravensbourne) |
| Clark, Dr Michael (Rochford) | Hunter, Andrew |
| Clark, Sir W. (Croydon S) | Irvine, Michael |
| Clarke, Rt Hon K. (Rushcliffe) | Irving, Charles |
| Colvin, Michael | Jack, Michael |
| Conway, Derek | Jackson, Robert |
| Coombs, Anthony (Wyre F'rest) | Janman, Tim |
| Coombs, Simon (Swindon) | Jessel, Toby |
| Cope, John | Johnson Smith, Sir Geoffrey |
| Cormack, Patrick | Jones, Gwilym (Cardiff N) |
| Couchman, James | Jones, Robert B (Herts W) |
| Cran, James | Jopling, Rt Hon Michael |
| Davies, Q. (Stamf'd & Spald'g) | Kellett-Bowman, Dame Elaine |
| Davis, David (Boothferry) | Kilfedder, James |
| Day, Stephen | Kirkhope, Timothy |
| Devlin, Tim | Knapman, Roger |
| Dickens, Geoffrey | Knight, Greg (Derby North) |
| Dorrell, Stephen | Knight, Dame Jill (Edgbaston) |
| Douglas-Hamilton, Lord James | Knowles, Michael |
| Dover, Den | Knox, David |
| Dunn, Bob | Lamont, Rt Hon Norman |
| Durant, Tony | Lang, Ian |
| Dykes, Hugh | Lawrence, Ivan |
| Emery, Sir Peter | Lennox-Boyd, Hon Mark |
| Evans, David (Welwyn Hatf'd) | Lilley, Peter |
| Evennett, David | Lloyd, Sir Ian (Havant) |
| Fallon, Michael | Lloyd, Peter (Fareham) |
| Farr, Sir John | Lord, Michael |
| Favell, Tony | Lyell, Sir Nicholas |
| Fenner, Dame Peggy | McCrindle, Robert |
| Field, Barry (Isle of Wight) | Maclean, David |
| Finsberg, Sir Geoffrey | McLoughlin, Patrick |
| Fookes, Miss Janet | McNair-Wilson, M. (Newbury) |
| Forman, Nigel | McNair-Wilson, P. (New Forest) |
| Forsyth, Michael (Stirling) | Madel, David |
| Forth, Eric | Major, Rt Hon John |
| Fox, Sir Marcus | Malins, Humfrey |
| Franks, Cecil | Mans, Keith |
| Freeman, Roger | Maples, John |
| French, Douglas | Marland, Paul |
| Gale, Roger | Marshall, Michael (Arundel) |
| Gardiner, George | Martin, David (Portsmouth S) |
| Garel-Jones, Tristan | Mawhinney, Dr Brian |
| Gill, Christopher | Maxwell-Hyslop, Robin |
| Goodhart, Sir Philip | Meyer, Sir Anthony |
| Goodson-Wickes, Dr Charles | Miller, Hal |
| Gorman, Mrs Teresa | Mills, Iain |
| Gow, Ian | Moate, Roger |
| Gower, Sir Raymond | Monro, Sir Hector |
| Greenway, Harry (Ealing N) | Morrison, Hon Sir Charles |
| Greenway, John (Ryedale) | Morrison, Hon P (Chester) |
| Gregory, Conal | Moss, Malcolm |
| Griffiths, Peter (Portsmouth N) | Mudd, David |
| Grist, Ian | Neubert, Michael |
| Nicholls, Patrick | Taylor, Teddy (S'end E) |
| Nicholson, David (Taunton) | Temple-Morris, Peter |
| Nicholson, Emma (Devon West) | Thompson, D. (Calder Valley) |
| Paice, James | Thompson, Patrick (Norwich N) |
| Patnick, Irvine | Thorne, Neil |
| Peacock, Mrs Elizabeth | Thornton, Malcolm |
| Porter, Barry (Wirral S) | Thurnham, Peter |
| Porter, David (Waveney) | Townend, John (Bridlington) |
| Price, Sir David | Tracey, Richard |
| Raffan, Keith | Tredinnick, David |
| Rhodes James, Robert | Trippier, David |
| Riddick, Graham | Trotter, Neville |
| Roberts, Wyn (Conwy) | Twinn, Dr Ian |
| Rowe, Andrew | Vaughan, Sir Gerard |
| Rumbold, Mrs Angela | Waldegrave, Hon William |
| Shaw, David (Dover) | Walden, George |
| Shaw, Sir Giles (Pudsey) | Walker, Bill (T'side North) |
| Shepherd, Colin (Hereford) | Wardle, Charles (Bexhill) |
| Skeet, Sir Trevor | Warren, Kenneth |
| Speller, Tony | Watts, John |
| Stanbrook, Ivor | Wheeler, John |
| Steen, Anthony | Whitney, Ray |
| Stern, Michael | Widdecombe, Ann |
| Stevens, Lewis | Wolfson, Mark |
| Stewart, Andy (Sherwood) | Wood, Timothy |
| Stewart, Ian (Hertfordshire N) | Young, Sir George (Acton) |
| Stradling Thomas, Sir John | |
| Sumberg, David | Tellers for the Noes: |
| Summerson, Hugo | Mr. David Lightbown and |
| Taylor, John M (Solihull) | Mr. Richard Ryder. |
§ Question accordingly negatived.
§ It being after Ten o'clock, further consideration of the Bill stood adjourned.