§ Mr. WilsonI beg to move amendment No. 9, in page 1, line 9, after 'Group")', insert
'and management and employee buy-out teams'.
§ Mr. Deputy SpeakerWith this we are discussing the following amendments: No. 10, in page 1, line 9, after 'Group")', insert 'and trade unions'.
No. 11, in page 2, line 9, at end insert
'the provision that preference be shown to management/employee buyout bids'.No. 7, in page 3, line 7, clause 3, at end insert— 747
'(2A) The Secretary of State shall, having regard to section 2(2)(a) of this Act, give directions to the Group to allow a 10 per cent. share to employees and management desirous of aquisition of any undertaking or part of an undertaking.'.No. 13, in page 3, line 11, clause 3, after 'State', insert
'and to the interests of trade unions representing employees interests'.No. 19, in page 3, line 12, clause 3, at end insert
'any financial assistance made available for management or employee buyouts shall be available for up to three buyout attempts by existing management or employees within any one of the undertakings created by the Act.'
§ Mr. WilsonWe have heard from the Government at every stage that they are in favour of buy-outs. Like good weather, buy-outs are a desirable thing. There is as much in the Bill to ensure the success of buy-outs as there is to ensure good weather.
Once again, we are making it clear to the Minister and putting it firmly on record that, in its present form, the Bill does nothing to make it likely that the Government's words, which have been employed to make the Bill more politically acceptable in Scotland, will be translated into reality.
We want the Minister to say that sales will not proceed until there is agreement—not consultation—among the parties concerned to ensure the success of buy-outs. In each company, buy-out teams are working to put together plausible offers. We do not think that they should have been put to this trouble—we defend the status quo in the Scottish Bus Group.
Confronted with the Government's ideological measures, however, people are working in good faith and, in some cases, raising money in good faith, in an attempt to put a buy-out together. We think that a couple of buy-outs will be allowed to succeed as a form of window dressing. There will be many photo-calls involving the Minister, holding up his little blue bus again, just to show us that, as the Government said, buy-outs have succeeded.
The big sales, however, will go to private sector companies. I am sure that the Minister will not be the ultimate authority on these matters. The ideological jiminy cricket—the hon. Member for Stirling (Mr. Forsyth)—is not with us this evening. I am sure, however, that the idea of the entire SBG being given away or sold to some form of socialised ownership would not be too popular in that quarter.
We believe that one or two buy-outs will be allowed to succeed, but that many SBG assets will be sold to the crude private sector. To give us some reassurance, the Minister can easily accept the amendments which propose that the sale of components of the SBG will not be proceeded with until there has been agreement—not consultation—with interested parties, including management-employee buy-out teams and trade unions. That is a reasonable proposition because, if the Minister is sincere, the last thing that he would want would be to rush in to sell-offs when the buy-out teams were not ready to participate.
Our next concern is about the number of buy-out initiatives that will be given support by the Scottish Office. We have heard a great deal about the assistance that will be given to buy-outs. There will be a guarantee of £48,750 from public funds to the initiators of buy-outs if they do not succeed. Opposition Members do not believe that that 748 is very generous because we know that the cost of putting together a serious buy-out offer is likely to be nearer to £250,000.
In Committee we learnt from the Minister, almost by accident—it was not clear at earlier stages of our proceedings—that, within each privatised company, only one buy-out bid will qualify for the £48,750. That is unacceptable. We know that at least one of the companies that is to be sold off—a large company covering a substantial geographical area of Scotland—has two initiatives going ahead. One initiative is management-led and the other is employee-led.
It is entirely wrong and against natural justice for the Government to make a pre-emptive strike against one of those bids by saying that they will support the other with the financial guarantee of £48,750. In the legislation the Government have not said that they will support only one form of buy-out and no other. If they had had the courage to say that, they would have saved everyone a lot of trouble. English experience shows that there are various forms of buy-out. Everyone knows that there are various formats and varying degrees of emphasis on management and work force. Anyone who has contact with the real world knows that sometimes the management might not have confidence in the work force and the work force might not have confidence in the management. In those circumstances, surely each of those elements is entitled to try to put together a buy-out on is own initiative.
One of the amendments under consideration proposes that up to three potential buy-outs should qualify for Government support. That will not impose any great burden upon the public purse. We are talking about a maximum of 30 potential buy-out bids. Nobody thinks that there will be 30 bids in reality. It would be unlikely if in any more than two or three of the companies to be bought out there were rival bids from within the existing management and work force. However, to rule out the possibility and say that there are no circumstances under which management or employees will be allowed to diverge and put together rival bids to be considered on their merits is unacceptable and flies in the face of what the Government are supposed to espouse—competition.
If a worker-led bid came forward and there were employees within a company who had drive, initiative and new ideas about how it could be run more successfully and provide more services at no cost to the public purse, why should they, in effect, be disqualified without their case ever having been studied by those who are supposed to study the bids? If the Government adhere to their position, the decision on the bids would be taken not after due consideration and detailed examination but at the outset by telling one bid that it had not been selected to receive the £48,750 assistance.
In Committee the Minister said—
Mr. Robert HughesI just want to check my memory. Is it not the case that if the buy-out bid is successful, the money would have to be paid back?
§ Mr. WilsonThat is right. As my hon. Friend knows, that supports rather than contradicts my point.
It would be extremely unattractive to any group of workers or management to enter a serious bid if they had been told by the Scottish Office that the bid was so contemptible that it would not even qualify for assistance if it failed because another bid from within the same 749 management or work force had been judged as superior. That is what the Minister is suggesting and that is what we find unacceptable.
Within the framework of this short debate the Minister has an opportunity to say whether the Government will give any substance to their words. We lack confidence. Time and again we have put down the markers and placed on record that we would regard it as a perfectly reasonable alternative to what exists now if there were a series of companies throughout Scotland which represented the ownership of those at present employed by the Scottish Bus Group under the same conditions as at present and with the same commitment to the current level of services. In the legislation as drafted, where is any provision that underwrites the existing conditions of employment for those working in the Scottish Bus Group?
The only way that that can be ensured, as the Minister recognised in our debate on pension schemes, is if the buy-outs are given a real opportunity to succeed. On the basis of what the Minister says, we will learn whether the Government's thinking has advanced. We will discover whether there is a real commitment or whether it is simply words which they hope that the Scottish public will forget were ever uttered so that in the fullness of time they can shunt the companies off to the private sector to do with them as it will.
§ Lord James Douglas-HamiltonA large number of points have been raised by the hon. Member for Cunninghame, North (Mr. Wilson), but the preferences are those stated on the first day of our Committee proceedings. First, a preference is given to bids where there is a high level of employee participation through an employee share ownership plan or some other scheme designed to ensure significant employee participation. Secondly, for competitive reasons, new independent companies will also receive preference and, thirdly, companies which are locally based with their headquarters in the area to be served will receive a preference to increase local responsiveness.
Amendment No. 9 would require the Secretary of State to consult management-employee teams when drawing up the disposal programme. We have already made clear that we are determined to encourage management-employee buy-outs. We welcome the widespread interest that has been shown by management-employee teams in developing bids for their companies. Financial assistance will be given by the STG to one team per company to develop a bid. When considering bids, preference will be given to bids involving significant employee participation.
The STG and, through that, the Secretary of State will keep in touch with the development of bids. The disposal programme will set out the criteria against which the bids will be assessed, including the basis upon which a preference will be given to bids involving significant employee participation. It would not be appropriate to consult prospective purchasers, whether or not they are management-employee buy-out teams, in drawing up the disposal programme. The preparation of the programme is a matter for the Secretary of State, in consultation with the STG.
750 Therefore, the amendment is inappropriate. As I have said, we will keep in touch with the development of bids by management-employee buy-out teams and we shall take account of any relevant points that arise from that process.
Mr. Robert HughesThe issue of who receives assistance and who does not is extremely important. Will the Minister confirm that the Scottish Office, or somebody, will carry out an initial selection process if there is more than one employee-management buy-out effort and that there will be, in effect, a preferred bid for assistance? If a bid falls flat quickly, will it be possible for the Secretary of State to switch the assistance to the other bid which was previously ruled out and to give those involved the chance further to develop their proposals?
§ 6 pm
§ Lord James Douglas-HamiltonIf more than one bid is forthcoming from different management or employee teams in a given company, we shall, of course, consider those bids. All bids, from whatever source, will be given due consideration. I hope that there will not be more than one bid from within a company and I believe that it is unlikely to happen. Amendment No. 19 seeks to require the group to make any financial assistance offered to management-employee buy-out teams available for up to three buy-out attempts in any company.
It may be helpful if I remind the House of the basis on which financial assistance will be made available to management-employee teams. The assistance will be available to one team per company and will consist of an underwriting of 75 per cent. of the costs of the professional fees required to mount a bid up to £65,000—that is, a maximum of £48,750. The assistance will be required to be repaid in the event of the bid being successful. The assistance will be provided by the Scottish Transport Group, which will consider applications from management-employee teams against the background of promoting the buy-out of a controlling interest by management and employees. The best way to encourage and promote a controlling interest by employees, who include management personnel employed by the company as well as other staff, is to encourage strong competitive bids by management-employee teams. We have made it clear that bids involving a substantial degree of employee participation will receive a preference. Successful bids by management-employee teams would also help to meet the competition objective by establishing independent, locally based companies.
The best chance of success for a management-employee bid will arise if there is only one such bid from within the company. The hon. Member for Cunninghame, North made an important point on that. More than one bid would probably be counter-productive because of the substantial danger that neither of the two bids would succeed. If there were disruptive factors at work, one management-employee buy-out team might not come forward. I expect the Scottish Transport Group, before reaching a decision on assistance, to see what it could do to encourage any separate teams to come together to mount a single bid. I hope very much that management and employees in the various companies will be able to agree to mount one bid. I consider amendment No. 19 to be counter-productive in terms of what the Government and the Opposition wish to achieve.
§ Mr. WilsonI fully understand that the Minister hopes that one bid will emerge and perhaps that would be the best answer, but if one bid does not emerge, will the Minister maintain the right to dictate that either only one bid will emerge or that he will condemn those involved in an alternative bid to effective disqualification?
§ Lord James Douglas-HamiltonClearly, financial assistance will be given for one management-employee buy-out team per company and no more because that would be counter-productive. Were I to agree to do more than that, it might have the effect of making it extremely difficult for either management or employees to launch a successful bid.
§ Mr. WilsonSo the Minister categorically denies the right either for management to have insufficient confidence in the work force to mount a bid or, more probably, for the work force to have insufficient confidence in management to mount a bid. I remind the Minister that, when the National Bus Company subsidiaries were sold off to the private sector, the first thing that the private company did in many instances was to get rid of the management because of its dissatisfaction with it. That right will not exist for workers within a company. There may be a good relationship between management and employees in most companies, but if people are not prepared to go down the road together they will not be allowed to go down the road at all.
§ Lord James Douglas-HamiltonObviously, the hon. Gentleman feels strongly about this. We are not preventing anybody from making a bid, but we believe that there should be one form of assistance per company.The Scottish Transport Group will give advice about which body it should go to.
§ Mr. WilsonThe Minister must accept that if another potential buyer was coming cold on the scene, there would be no question of qualifying for financial assistance. Yet if there are two bids from within the company that is to be sold off, a unique pre-judgment would be made by the Scottish Office about the superiority of one bid against another. It is against natural justice for the mere existence of a bid to be the basis for judgment, rather than the quality of the bid.
§ Lord James Douglas-HamiltonI very much hope that that situation will not emerge. The Scottish Transport Group will made recommendations and give advice. I remind the hon. Gentleman that clause 3(2) provides:
The Secretary of State may, having regard to section 2 of this Act, give directions to the Group as to the manner in which they are to implement the disposal programme generally or in any case specified in the directions.I accept that the Secretary of State will have the ultimate responsibility because he will have to approve each sale. Any group can make a bid and will be considered seriously, but assistance will be given only for one management-employee buy-out team per company.
§ Mr. McAllionThe Minister said that there will be only one form of financial assistance per company, in the form of the £48,750 to help people to put together a bid in the first place. In Committee, it emerged that the Scottish Development Agency has been investing public money in the private operator Stagecoach to enable it to put together £5 million with which to buy some of the public assets involved in this privatisation. The Minister said that 752 the money that the Scottish Development Agency invested in Stagecoach was more than £65,000, but less than £1million. Will he tell us exactly how much public money the Scottish Development Agency has invested in the Stagecoach operation and whether the same level of investment will be available to every bid, including management-employee bids, that is made to buy one of the subsidiaries? If there are one, two or three management-employee bids within a company, will they all receive the assistance from the Scottish Development Agency that Stagecoach has received?
§ Mr. Bill Walker (Tayside, North)I want to speak briefly. As those hon. Members who were in Committee know, I have been giving advice to Strathtay, which is the current Scottish Bus Group company, and to Stagecoach, both of which operate in my constituency. I hope that both companies will be successful in the privatisation programme because both have much to contribute in different ways.
There is some merit in amendment No. 19, which deals with the possibility of more than one group within management and employees considering a buy-out. In any auction, the more who bid, the greater the likelihood of obtaining the best possible price. In this instance, that is in the interests of taxpayers and also of managers and employees because it is only through learning what the values are and what the method of bidding is that they will achieve a learning curve. Anyone who has had dealings with the present management of the Scottish Bus Group will realise that that is new, uncharted territory for most of them. Some people have previously worked in the English companies when they were privatised and have some direct experience, but the majority have not. There would have been merit in considering the possibility that more than one proposal might come forward in any given company in the group.
It is interesting that the Minister believes that that could have a damaging impact on the quality of bids and that it is better to receive one bid that represents management and employees. He must know—as I know —that some managers are more acceptable to some of the employees than others and that the employees may wish to follow those managers down this road. That is fairly common—there is nothing unusual about it. In any large, structured company, some people are better motivators and better at getting on with the work force than others. Although that does not necessarily mean that they are good or bad managers, it may have an impact on the employees' decision about whether they wish to be part of any bid.
We are talking about a lot of money. Although it may not seem much to people who are used to talking in millions, it will be a substantial risk for the individuals involved. That, too, will have an impact on the decisions made, especially by the employees.
I hope that both Stagecoach and Strathtay will be successful. Strathtay is a good operation and well put together. Those companies could be successful in different parts of the country. Strathtay could be successful in Tayside, and Stagecoach elsewhere. I have never made any secret of the fact—
§ Mr. WilsonWe know that the hon. Gentleman is advising both companies—he informed us of that in Committee and has said so again tonight—but is it correct 753 that he is backing Strathtay for his own area? Can he give us any reason why the same principle should not be applied to any part of the country that does not happen to be his own?
§ Mr. WalkerI can answer that easily. I do not know the facts and the background and have not met the people at other firms, but I am impressed by the quality of the management and the attitude of the employees at Strathtay. If I had the opportunity, which I have not had, to go round the rest of Scotland, perhaps I would form the same view of the rest. I am judging by the quality of the management, the leadership and the fact that Strathtay employees—the hon. Gentleman knows this because it came out in Committee—are having funds deducted from their pay every week to make their contributions to buying the shares. I do not know whether that is being emulated elsewhere, so I am asking rather than making a statement. However, as I have said, I am impressed by the quality and the attitude adopted and therefore hope that Strathtay will be successful.
In the final analysis, I hope that whoever acquires the independent groups will be committed to road transport and to public service vehicle activities. That applies equally to those in the private sector and to those who are now in the public sector but who hope to make some kind of management-employee buy-out. It is important to Scotland that those who end up running our bus operations are committed to bus operations. That is one reason why I have no hesitation in saying that I support Stagecoach also.
§ Lord James Douglas-HamiltonI thank my hon. Friend the Member for Tayside, North (Mr. Walker) for his speech. Obviously, he will give whatever support he can to his constituency, and that is welcome.
In Committee I promised the hon. Member for Dundee, East (Mr. McAllion) that I would follow up with the Scottish Development Agency the need for management-employee buy-out teams to receive the same treatment as any other applicant for assistance from the SDA. I confirm that my officials have written to the chief executive of the SDA to strengthen that point.
§ Mr. McAllionHas the chief executive of the Scottish Development Agency acted on that letter?
§ Lord James Douglas-HamiltonI have not yet seen a reply from the chief executive, but my understanding is that the position is exactly as I told the hon. Gentleman in Committee. There will be comparable treatment, which is what the hon. Gentleman wants.
§ Mr. WilsonWe have noted with interest the declaration from the hon. Member for Tayside, North (Mr. Walker) that he will support Stagecoach everywhere except in his own backyard—
§ Mr. Bill WalkerI have made it clear that I would not be unhappy if Stagecoach ended up with the Strathtay area, but that I would prefer Strathtay bus company.
§ Mr. WilsonThe hon. Gentleman has not added anything to my previous comment.
I come back to the Minister on the question of Scottish Development Agency assistance to Stagecoach. My hon. Friend the Member for Dundee, East (Mr. McAllion) 754 asked specifically how much it has received. My understanding is that it is no secret and that it is public information—that is unless it has received £250,000 or more. Surely it has not received £250,000 or more.
§ Lord James Douglas-HamiltonThe Scottish Development Agency, in syndicate with a number of other financial institutions, subscribed part of a total of £5million new money raised by Stagecoach. The SDA's investment was made in accordance with our normal commercial criteria to help to strengthen the financial and business position of an expanding company, headquartered in Scotland, which is prepared to provide the prospect of continued growth.
I stress that that money relates to new equity and is not directly linked to any specific plans by Stagecoach for bids for SBG companies. The point that the hon. Member for Dundee, East was making was about assistance to management-employee buy-out teams.
§ Mr. WilsonWith respect, that is not good enough. I am asking a straight question to which the Minister can either give or refuse to give the answer. How much public money has Stagecoach received through the Scottish Development Agency? The Minister should not give us that disingenuous stuff about new equity, which is not meant to assist with buying Scottish Bus Group companies. Stagecoach has been more honest and straightforward than that and has told us that it will bid for every part of the Scottish Bus Group. That will be the point at which the Minister's lip service to buy-outs will be put to the test. The Minister now has an opportunity to clarify that position. I assume that he has the information in front of him. Presumably public money is not dispensed with such largesse to Stagecoach or anyone else that the Minister does not know how much has been given. How much Scottish Development Agency money has gone to Stagecoach?
§ Lord James Douglas-HamiltonAs I said in Committee, it is less than £1 million. I shall check the exact figure with the SDA and, if I am in a position to reveal it, I shall do so.
§ Question put, That the amendment be made:—
§ The House divided: Ayes 120, Noes 199.
756| Division No. 103] | [6.16 pm |
| AYES | |
| Adams, Allen (Paisley N) | Cryer, Bob |
| Alton, David | Cummings, John |
| Anderson, Donald | Davies, Ron (Caerphilly) |
| Barnes, Harry (Derbyshire NE) | Davis, Terry (B'ham Hodge H'l) |
| Beckett, Margaret | Dewar, Donald |
| Beith, A. J. | Dixon, Don |
| Bennett, A. F. (D'nt'n & R'dish) | Dunwoody, Hon Mrs Gwyneth |
| Bermingham, Gerald | Eastham, Ken |
| Blunkett, David | Evans, John (St Helens N) |
| Boateng, Paul | Ewing, Harry (Falkirk E) |
| Bradley, Keith | Ewing, Mrs Margaret (Moray) |
| Bray, Dr Jeremy | Faulds, Andrew |
| Buckley, George J. | Field, Frank (Birkenhead) |
| Caborn, Richard | Fields, Terry (L'pool B G'n) |
| Campbell, Menzies (Fife NE) | Flannery, Martin |
| Campbell, Ron (Blyth Valley) | Flynn, Paul |
| Clark, Dr David (S Shields) | Foot, Rt Hon Michael |
| Clarke, Tom (Monklands W) | Foster, Derek |
| Clay, Bob | Fyfe, Maria |
| Clelland, David | Galbraith, Sam |
| Corbett, Robin | Galloway, George |
| Corbyn, Jeremy | Godman, Dr Norman A. |
| Golding, Mrs Llin | Michie, Mrs Ray (Arg'l & Bute) |
| Gordon, Mildred | Mitchell, Austin (G't Grimsby) |
| Graham, Thomas | Moonie, Dr Lewis |
| Griffiths, Nigel (Edinburgh S) | Morgan, Rhodri |
| Griffiths, Win (Bridgend) | Mullin, Chris |
| Hardy, Peter | Murphy, Paul |
| Hattersley, Rt Hon Roy | O'Neill, Martin |
| Haynes, Frank | Orme, Rt Hon Stanley |
| Heffer, Eric S. | Patchett, Terry |
| Henderson, Doug | Pendry, Tom |
| Hughes, John (Coventry NE) | Pike, Peter L. |
| Hughes, Robert (Aberdeen N) | Powell, Ray (Ogmore) |
| Hughes, Roy (Newport E) | Quin, Ms Joyce |
| Hughes, Sean (Knowsley S) | Rees, Rt Hon Merlyn |
| Ingram, Adam | Reid, Dr John |
| Janner, Greville | Richardson, Jo |
| Jones, Barry (Alyn & Deeside) | Robertson, George |
| Jones, leuan (Ynys Môn) | Rooker, Jeff |
| Jones, Martyn (Clwyd S W) | Ruddock, Joan |
| Kaufman, Rt Hon Gerald | Sheldon, Rt Hon Robert |
| Kennedy, Charles | Short, Clare |
| Kinnock, Rt Hon Neil | Skinner, Dennis |
| Lamond, James | Smith, C. (Isl'ton S F'bury) |
| Leadbitter, Ted | Spearing, Nigel |
| Lofthouse, Geoffrey | Steinberg, Gerry |
| McAllion, John | Strang, Gavin |
| McAvoy, Thomas | Taylor, Mrs Ann (Dewsbury) |
| McCartney, Ian | Wall, Pat |
| McFall, John | Wareing, Robert N. |
| McKay, Allen (Barnsley West) | Welsh, Andrew (Angus E) |
| McKelvey, William | Welsh, Michael (Doncaster N) |
| Maclennan, Robert | Wigley, Dafydd |
| McNamara, Kevin | Williams, Rt Hon Alan |
| McWilliam, John | Wilson, Brian |
| Madden, Max | Winnick, David |
| Mahon, Mrs Alice | Young, David (Bolton SE) |
| Marek, Dr John | |
| Marshall, David (Shettleston) | Tellers for the Ayes: |
| Maxton, John | Mr. Frank Cook and |
| Michie, Bill (Sheffield Heeley) | mr. Jimmy Dunnachie. |
| NOES | |
| Alexander, Richard | Clark, Dr Michael (Rochford) |
| Alison, Rt Hon Michael | Clarke, Rt Hon K. (Rushcliffe) |
| Amess, David | Colvin, Michael |
| Amos, Alan | Coombs, Anthony (Wyre F'rest) |
| Arbuthnot, James | Coombs, Simon (Swindon) |
| Arnold, Jacques (Gravesham) | Cope, Rt Hon John |
| Arnold, Tom (Hazel Grove) | Critchley, Julian |
| Ashby, David | Currie, Mrs Edwina |
| Atkins, Robert | Devlin, Tim |
| Baker, Rt Hon K. (Mole Valley) | Dickens, Geoffrey |
| Baker, Nicholas (Dorset N) | Dorrell, Stephen |
| Banks, Robert (Harrogate) | Douglas-Hamilton, Lord James |
| Batiste, Spencer | Dover, Den |
| Bellingham, Henry | Dunn, Bob |
| Bendall, Vivian | Durant, Tony |
| Bennett, Nicholas (Pembroke) | Dykes, Hugh |
| Benyon, W. | Eggar, Tim |
| Bonsor, Sir Nicholas | Evennett, David |
| Bottomley, Peter | Fallon, Michael |
| Bowden, Gerald (Dulwich) | Favell, Tony |
| Brandon-Bravo, Martin | Fenner, Dame Peggy |
| Brazier, Julian | Fishburn, John Dudley |
| Bright, Graham | Fookes, Dame Janet |
| Brown, Michael (Brigg & Cl't's) | Forman, Nigel |
| Browne, John (Winchester) | Forth, Eric |
| Bruce, Ian (Dorset South) | Franks, Cecil |
| Buck, Sir Antony | Freeman, Roger |
| Burns, Simon | Gale, Roger |
| Butler, Chris | Garel-Jones, Tristan |
| Butterfill, John | Gill, Christopher |
| Carlisle, John, (Luton N) | Glyn, Dr Alan |
| Carlisle, Kenneth (Lincoln) | Goodhart, Sir Philip |
| Carrington, Matthew | Goodlad, Alastair |
| Carttiss, Michael | Goodson-Wickes, Dr Charles |
| Cash, William | Gow, Ian |
| Channon, Rt Hon Paul | Greenway, John (Ryedale) |
| Chapman, Sydney | Gregory, Conal |
| Chope, Christopher | Griffiths, Sir Eldon (Bury St E') |
| Grist, Ian | Patnick, Irvine |
| Gummer, Rt Hon John Selwyn | Pattie, Rt Hon Sir Geoffrey |
| Hamilton, Hon Archie (Epsom) | Peacock, Mrs Elizabeth |
| Hanley, Jeremy | Porter, David (Waveney) |
| Hannam, John | Powell, William (Corby) |
| Hargreaves, A. (B'ham H'll Gr') | Price, Sir David |
| Hargreaves, Ken (Hyndburn) | Raffan, Keith |
| Harris, David | Raison, Rt Hon Timothy |
| Hayward, Robert | Rathbone, Tim |
| Heddle, John | Redwood, John |
| Hicks, Robert (Cornwall SE) | Riddick, Graham |
| Higgins, Rt Hon Terence L. | Ridsdale, Sir Julian |
| Hind, Kenneth | Rossi, Sir Hugh |
| Hogg, Hon Douglas (Gr'lh'm) | Sackville, Hon Tom |
| Holt, Richard | Sayeed, Jonathan |
| Hordern, Sir Peter | Shaw, David (Dover) |
| Howard, Michael | Shepherd, Colin (Hereford) |
| Howarth, Alan (Strat'd-on-A) | Shersby, Michael |
| Howarth, G. (Cannock & B'wd) | Sims, Roger |
| Howell, Ralph (North Norfolk) | Skeet, Sir Trevor |
| Hughes, Robert G. (Harrow W) | Smith, Sir Dudley (Warwick) |
| Hunt, John (Ravensbourne) | Smith, Tim (Beaconsfield) |
| Hunter, Andrew | Soames, Hon Nicholas |
| Irvine, Michael | Speller, Tony |
| Irving, Charles | Spicer, Michael (S Worcs) |
| Jack, Michael | Stanbrook, Ivor |
| Janman, Tim | Stanley, Rt Hon Sir John |
| Johnson Smith, Sir Geoffrey | Stern, Michael |
| Jones, Gwilym (Cardiff N) | Stewart, Andy (Sherwood) |
| Jones, Robert B (Herts W) | Stradling Thomas, Sir John |
| Kellett-Bowman, Dame Elaine | Summerson, Hugo |
| Key, Robert | Tapsell, Sir Peter |
| King, Roger (B'ham N'thfield) | Taylor, Ian (Esher) |
| Knapman, Roger | Taylor, John M (Solihull) |
| Knight, Greg (Derby North) | Temple-Morris, Peter |
| Knowles, Michael | Thompson, D. (Calder Valley) |
| Lang, Ian | Thompson, Patrick (Norwich N) |
| Lawrence, Ivan | Thurnham, Peter |
| Lightbown, David | Townend, John (Bridlington) |
| Lloyd, Sir Ian (Havant) | Tracey, Richard |
| Lloyd, Peter (Fareham) | Tredinnick, David |
| Lord, Michael | Trippier, David |
| MacKay, Andrew (E Berkshire) | Twinn, Dr Ian |
| Mans, Keith | Waddington, Rt Hon David |
| Marshall, Michael (Arundel) | Walden, George |
| Mates, Michael | Walker, Bill (Tside North) |
| Miller, Sir Hal | Waller, Gary |
| Mills, Iain | Ward, John |
| Mitchell, Andrew (Gedling) | Wells, Bowen |
| Mitchell, Sir David | Wheeler, John |
| Moore, Rt Hon John | Whitney, Ray |
| Morris, M (N'hampton S) | Widdecombe, Ann |
| Morrison, Sir Charles | Wilkinson, John |
| Moss, Malcolm | Wilshire, David |
| Moynihan, Hon Colin | Winterton, Mrs Ann |
| Mudd, David | Wolfson, Mark |
| Nelson, Anthony | Wood, Timothy |
| Neubert, Michael | Yeo, Tim |
| Nicholls, Patrick | Young, Sir George (Acton) |
| Nicholson, David (Taunton) | |
| Nicholson, Emma (Devon West) | Tellers for the Noes: |
| Onslow, Rt Hon Cranley | Mr. David Maclean and |
| Page, Richard | Mr. David Heathcoat-Amory. |
| Paice, James |
§ Question accordingly negatived.
§ Mr. WilsonI beg to move amendment No. 3, in page 1, line 12, at end insert—
'(1A) It shall be a condition of purchase for any undertaking proposed for sale under this section that the business shall not be re-sold within a period of five years without the consent of employees in the undertaking'.
§ Mr. Deputy Speaker (Sir Paul Dean)With this it will be convenient to take the following amendments.
No. 4, in clause 2, page 2, line 29, at end insert—
'(1A) In giving effect to subsection (1) above, no single buyer may own more than two of the subsidiaries set up for disposal'.757 No. 5, in clause 3, page 3, line 7, at end insert'and in giving such directions the Secretary of State shall direct that no fixed assets shall be sold by a disposed undertaking within a period of five years without the consent of the Secretary of State'.
§ Mr. WilsonWe now come to the disposal of assets of the Scottish Transport Group. The key amendment is No. 3. Amendment No. 5 deals with the assets of the undertaking and states that they should not be disposed of within five years after privatisation.
The Bill is a potential asset stripper's charter. There is no hypothesis in that. We have only to look at what has happened in England and Wales to see why the fears that Opposition Members are expressing are so strongly founded. We have only to look at the string of sell-offs of assets of the former National Bus Company groups after privatisation to demonstrate conclusively that those are not far-fetched fears or exaggerated concerns. It is the reality. Unless safeguards are introduced, sell-offs will Occur.
I want to look in particular at the case of Hampshire Bus which was based in Southampton. It was sold as part of the National Bus Company sale to a company about which we have heard a great deal in our deliberations, Stagecoach, which is based in Perth. Hampshire Bus was sold for £2 million. It owned two bus stations in Southampton. One was used for city buses and the other for long-distance coaches. At the time of privatisation it was well known that the city bus station was subject to a compulsory purchase order by the council and would be taken over for whatever sum. I have been unable to establish precisely what the sum was. It was apparently part of a complex transport property transaction.
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As I observed on Saturday when I visited Southampton, that site is now the scene of development building work. What was wholly unacceptable and certainly played no part in the deliberations prior to privatisation was that the coach station would also be sold. That was the surprise packet that Stagecoach pulled out of the bag. Having bought Hampshire Bus for £2 million, it sold the coach station for £4.1 million within a fortnight of the initial purchase. The profit on that deal was £2.1 million, with the great majority of assets still in hand.
Since then Stagecoach has disposed of a large part of the bus operations. They were sold to Solent Blue Line, which is a subsidiary of Southern Vectis on the Isle of Wight. It is believed that the selling price for the mobile assets of Hampshire Bus was about £1 million. We now know that Stagecoach has obtained a minimum of £5.1 million for the £2 million worth of public sector assets.
As I observed in Southampton, that leaves a problem for the travelling public. It can be defined as a lack of bus stations. Solent Blue Line no longer operates any sort of bus station in the town centre. Anyone who wishes information about bus services goes to a bus. "Where better?", Tory Members may ask. A bus has been turned into a mobile information centre, giving details of the times of services and other facilities provided. The bus stops in Southampton are ranged along the pavements with the various companies using those facilities—that is perhaps too strong a word—which leads to congestion.
758 The operational station—the enginering workshop and so on—which was previously accommodated within the bus station has been shunted off to a glorified shed on what can best be described as a piece of waste ground. That is the joy of privatisation in that particular case. Solent Blue Line offers no proper facilities, such as canteens, for workers and they cannot all crowd into a bus to take advantage of such facilities as it provides.
The progression has been as follows: Hampshire Bus was sold to Stagecoach for £2.1 million. Its city bus station was sold for development and its long-distance coach station was wholly unexpectedly sold for £4.1 million. Half the buses were sold for £1 million. The remaining facilities for city bus travellers are virtually nil.
Although Hampshire Bus's successor, Stagecoach, in what we were told was splendid entrepreneurial fashion, doubled its money in a fortnight by selling the coach station, it still left the problem that some people wanted to travel by coach. Fortunately, Southampton is under Labour control and there is an interest in providing public services. Despite the fact that the public purse had been so shamefully ripped off by the sales and the asset stripping, it was left to the ratepayers, through the local authority, to pick up the tab. Because of Stagecoach's speculation, the ratepayers of Southampton have had to fork out £138,000 to provide another coach station. The good, sturdy, private sector alternative would have been to leave people waiting in the rain. After all, why do they need a coach station? If Stagecoach has sold it, why should the contemptible consumers of bus services not just be left to suffer from market forces imposed on them by the Government through privatisation? The people of Southampton have paid £138,000 to assist Stagecoach towards its profit of a minimum of £3.1 million.
In the last few minutes of the Committee stage we had an interesting debate when the hon. Member for Tayside, North (Mr. Walker) defended what had happened. He said that it did not matter how the £3.1 million was acquired and that it was what the company did with the money that mattered. So long as it invested the money in buses, that was all right. That is an extraordinary doctrine of private enterprise. In other words, it is defensible to buy public assets cheap in order to sell them dear. It is a disgrace to the word "enterprise" to attach that claim to it.
§ Mr. Bill WalkerThe hon. Gentleman should look a little more carefully at what I said. I have not yet seen the Hansard report of our proceedings, but I said that the assets of any company are its resources, which are human as well as physical. Buildings and buses, as well as employees, are its assets. It is how the management employs those assets to the benefit of the whole that matters. It does not matter that a company has large capital assets if they are under-employed and if the company is going broke. It makes no difference. Management is required to maximise the use of assets. That is exactly what I said.
§ Mr. WilsonThat is a sophistication of what the hon. Gentleman said and the record will show that. I do not know whether the hon. Gentleman is distancing himself from what happened. If so, I welcome that.
Clearly, this case was an outrageous fraud on the public purse. Someone has said that the assets of Hampshire Bus were worth £2 million. Within weeks Stagecoach had turned. them into £5.1 million and still had half the 759 operation left. Does the Minister care to defend that? If nobody does, why the hell are the Government doing this again under this Bill? There is nothing in the Bill which gives the slightest safeguard against that sort of asset stripping by the same companies to which sections of the National Bus Company were sold.
We are playing for big stakes here. There are many big sharks waiting for the wee Minister to announce the terms of these sales. My advice is that the development value of Buchanan street bus station in Glasgow is £4 million. The development value of St. Andrews square bus station is extremely difficult to assess because in the last year alone commercial property values in the centre of Edinburgh have literally doubled. The best estimate that I can get is that it has a development value of £15 million. Even the Southampton example pales into relative financial insignificance compared with the huge sums that are at stake in the sale of the Scottish Bus Group companies. The Minister will have to agree that nothing in the Bill would stop whoever buys Eastern Scottish from selling the St. Andrews square bus station a fortnight later for £15 million or thereabouts.
On previous form today and in Committee, the Minister will say, "We hope that it does not happen. We do not want it to happen. We shall take into consideration the possibility that it might happen, but it would be dreadful if it did." But the Government will do nothing about it. When it does happen, all that the Minister will be able to say is, "It should not have happened."
In Committee I gave a list of the bus stations in town and city centres in England that had been sold off similarly to, although rather less spectacularly than, the station in Southampton. The record shows that it happened all over the country. Asset strippers and property developers are extremely interested in the property assets of bus companies, and nothing in the Bill would exclude them from bidding for bus companies. A property developer who was interested in bidding for a bus company would not put himself forward as such, but would acquire the acceptable face of a bus company. How will the Scottish Office separate one from the other? The answer is that it cannot and will not. Unless something is written into the Bill to prevent it from happening, what happened in Southampton will happen in the towns and cities of Scotland. Will the Minister write a safeguard into the Bill?
The other amendments in the group deal with the resale of the businesses themselves, which we suggest should not be done without the consent of employees in the undertakings. It is a modest proposition, but I do not expect the Minister to accept it. Time and again in England and Wales, the company that bought the bus undertaking in the first instance proved to be only a halfway house to resales, mergers and splits, and all the time the very last consideration was for the interests of the travelling public. If nothing is inserted in the legislation, that will happen again.
I want the Minister to deal with the details of the Southampton case and of the Scottish company involved in that case. Who advised the Government that the assets of Hampshire Bus should be sold for £2 million? Will those same advisers be involved in valuing property assets in Edinburgh, Glasgow and other cities and towns where the Scottish Bus Group has properties? I do not expect the Minister to say that the matter is outwith his ministerial 760 remit. No Minister could have introduced this legislation without having investigated extensively the experience in England and Wales.
If the Minister admits that monumental errors were made that allowed those profits to accrue to companies that were almost given the assets of the National Bus Company, he must tell us what will be inserted in the legislation to prevent those errors from being made again. The potential also exists for conspiracy, because the idea of people getting their hands on public property at a low valuation and of selling it for a different purpose at a high price is no novelty. Will the Minister safeguard against that, or will he make this Bill a charter for asset strippers and property developers?
Mr. Robert HughesMy hon. Friend the Member for Cunninghame, North (Mr. Wilson) has made a compelling case for the amendments, and I wish only to reinforce one or two of his points.
Before I do that, may I deal with the intervention of the hon. Member for Tayside, North (Mr. Walker), who said that there was a difference between asset stripping and freeing capital for use in a company? To some extent, he is right. We all know that some struggling companies that are trying to develop their business and put money into services might wish to develop by introducing modern buses, by erecting good bus shelters or by creating decent waiting facilities in their out-of-town operations. If that had happened after the sale of the National Bus Company, one could accept it as good business. Companies may run into cash-flow problems. To pay the wages, they may have to realise some of their assets. Had that been the case with the National Bus Company, one would not have quarrelled with it.
As the hon. Member for Tayside, North knows, the difficulty is that that is the opposite of what happened in England and Wales. Assets were sold not to be reinvested in mobile assets or to provide better services, but simply to take profits out of the company without regard to how they had been earned. The hon. Gentleman had better address his mind to that difference.
We believe that the amendments are vital because we have never been told officially the price of any of the bus companies.
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§ Mr. Bill WalkerThe hon. Gentleman must have studied what has happened in the company referred to, so he will know that it has used the assets to buy new buses. The hon. Gentleman understands how businesses are run. If one can spread a core cost over a larger operation one can offer cheaper fares. That is exactly what has happened with that company because the costs of the base operations have been spread over a much wider network. That is using assets, not stripping them.
Mr. HughesHad that happened, it would have been fine, but we know that it did not happen in the vast majority of cases.
The problem is compounded by the fact that we have not been told the prices realised by the sale of the NBC's subsidiary companies. What is more, we are told unequivocally that only those who are fortunate enough to live for another 30 years will be able to find out the purchase price of those companies. I presume that the 761 papers will become available then. It is a bit perverse that one's potential for getting public information depends on one's age. But that is what the Government rely on.
The Minister is a friendly young chap. I do not know the latest medical prognosis of how long he will live, but perhaps he is hoping not to be around in 30 years' time when the papers become available. If he is, he will know that he has repeated the error that was made in England and Wales.
The Minister has made matters worse. Several times in Committee, when defending differences of approach in the Scottish Office and slight differences in this Bill, he said that one of the great benefits of introducing this Bill some years after the privatisation of buses in England and Wales was experience. Yet on this important issue the Government have not taken that experience into account.
The Government say that they cannot tell us the value of the companies because the information is commercially sensitive. I do not understand how it can be against commercial interests to be told the selling price. I repeat the charge that we made in Committee which the Minister, regrettably, did not answer. If a local authority behaved as the Government have over the sale of public assets, its members would be disqualified and taken before the district auditor and might have to spend some time in gaol —and quite right, too. There should be no secrecy. We should be told precisely what the sale price is.
The Minister's only defence—I do not recall him using it in Committee—against the charge that he is wantonly selling public assets cheaply is that we always have recourse to the Public Accounts Committee. The trouble is that that Committee does not have the information on which to act. I have no information with which to write to the Chairman of the Committee asking it to investigate the sale.
Perhaps I had better measure my words carefully, as I do not wish to embarrass anyone. I made inquiries about one of the sales mentioned by my hon. Friend the Member for Cunninghame, North. When I asked how the Public Accounts Committee could examine what I regarded as gross excesses and a gross dereliction of duty by the Secretary of State for Transport, I was told-quite properly-that the PAC could investigate only specific charges. It was no use my saying, "I read in the papers that this happened", "I believe that this happened" or "There is speculation that this happened". The PAC wants hard and fast information, and it is right that it should. We do not want to pillory people without cause. I consider that one of the great benefits of public investigation is that not only are the guilty found guilty but the innocent are exonerated if false charges are made.
The Minister, however, is encouraging speculation and rumour. He is leading us to believe that the information will never be provided. That will fuel speculation. Indeed, we have good grounds for believing that the information that we have been given is accurate: I know that my hon. Friend the Member for Cunninghame, North would not have read out that list without a solid belief that the property speculators were busy.
Why should this matter? It matters in principle. Someone once said that principles were expensive things. The people who suffer if they are broken are not the owners, the shareholders or the board of directors, but 762 those who work in the industry—people who have given their lives to that industry, built up the companies' assets and made them into going concerns attractive for privatisation.
I am astonished to see that no Government amendments have been tabled. I certainly do not charge the Minister with dishonesty; if I were to do so I should be reprimanded. Nevertheless, he has not honoured the spirit of the words that he used in Committee, where we engaged in a long debate about the value of the assets and the effect on the workers. I regret that I cannot quote the Minister exactly, but I am sure that he will tell me if my paraphrase is inaccurate.
The Minister said that he understood the points that we were making and would undertake a close examination to find out what information could be made available. He hinted, at least, that he might be prepared to table a Government amendment on Report to cover the possibility of making the sale price known. In answer to a question from me to that effect, he said in his charming way—with the little smile that he wears when replying—"We shall have to look at it." Perhaps I am becoming too gullible in my old age. I believed that he might bring forward such an amendment, but he has not done so.
The Prime Minister believes that her words strike a chord with the British public. I shall not allow myself to be tempted to discuss devolution, Mr. Deputy Speaker, because, apart from getting into trouble with you, I should get into trouble with my hon. Friends. Let me, however, refer briefly to the speech in which the Prime Minister said that she was totally against devolution. Why? Because, she said, she wanted to devolve power to the individual, not to corporate bodies. That, incidentally, is the core ethos of Socialism; we want power for the individual. It seems odd that the Prime Minister should use the same words as us. I thought for a moment that she had been re-reading "Das Kapital" in her spare time, but 1 suspect that it was all a charade.
We have learned one thing from this Government, if nothing else. When the Prime Minister speaks, Ministers jump. Either they jump out of the Cabinet, or they jump around in it. If the Prime Minister had meant what she said, and if the Secretary of State—whom I am delighted to see taking an interest in the Bill—had conveyed her message properly, the Minister would have put down an amendment, and would by this time have leapt to his feet to accept amendment No. 3.
What better example of devolution to the individual could there be than the provision in amendment No. 3 that
It shall be a condition of purchase for any undertaking proposed for sale . . . that the business shall not be re-sold within a period of five years without the consent of employees in the undertaking.Perhaps the Prime Minister thinks that that is too modest. Perhaps the Minister will say that five years is not long enough, and will propose a Lords amendment providing that the business shall never be resold without the consent of the employees. I would accept that. I would go out of the Chamber with my tail between my legs. I would have to go to my constituency and say that I had been outbid by Tory Ministers, and that after complaining for all these years about their accruing power to themselves I had found that I had been wrong all the time. But I know that I am right. The Government have no intention of giving power to anyone except those who hold the purse strings. The paymasters of the Tory party have said, "You will 763 privatise. You will sell off the companies. The power will go with the purse strings, and the people who get the companies will be those who ray the most bucks."In Committee, the Minister said that he wanted to give a fair wind to employee-management buy-outs. None of us, however, is naive enough to believe that such a buy-out will necessarily succeed in every case. If a private entrepreneur comes along and buys the company, there must be a fall-back provision for employees to have a say on whether their livelihoods are to be bought and sold.
There has been great agitation about the fate of professional footballers—a cause close to the heart of my hon. Friend the Member for Cunninghame, North, and indeed of great interest to all of us who are football fans. The idea that a player was bound to a company for the rest of his life, and could be bought and sold like a chattel with no real say in the matter, went out of the window because it offended against the principles of individuality. I think that, having accepted that, we must also accept that the buying and selling of jobs in this context is also an affront to individuality. I know that the Minister believes that, and I hope that he will accept amendment No. 3.
The Minister said in Committee that he believed that if abuses were proven the Secretary of State would be able to act. I can find no reference in the Bill to his having the power to act: it must be one of the more nebulous powers in the legislation. I hope that if the Minister cannot accept the amendment he will take the matter seriously and will understand that we are dealing with people who, by and large, do not have the interests of the travelling public at heart, but are interested only in making money. They do not care about the people in the industry or those who may serve. The Minister ought to accept this group of amendments in principle—on ethical grounds—and I am sure that he will do so.
§ Lord James Douglas-HamiltonThe hon. Member for Aberdeen, North (Mr. Hughes) has raised again a question that he put in Committee about publication of the prices obtained for the subsidiaries. I said that once the process of privatisation had been completed we would publish the figure for the total proceeds, and also that I would reconsider the possibility of publishing individual sale proceeds.
The suggestion that we should publish the amount paid for each company raises difficult problems of commercial confidentiality. During the process of privatisation it will clearly not be a good idea to publish the amount received for each company, as it could well affect prices in subsequent sales.
Mr. Robert HughesIf the Minister will say that, once all the companies have been sold, he will publish the individual price, I at least will be willing to meet him halfway and accept that.
§ Lord James Douglas-HamiltonI have considered this matter carefully. Publishing the prices once the sales are completed also raises problems of commercial confidentiality because the companies involved may be concerned that the price they paid for a business should not be revealed to their competitors. The financial backers may also be sensitive about the disclosure of the purchase price that they had supported.
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With regard to the public interest, the important figure is the sum that is realised for the Scottish Bus Group as a whole. I have already said that we shall publish that figure once all the sales are completed. If individual purchasers want to reveal what they paid for a company, it is a matter for them. The hon. Member for Aberdeen, North is no doubt aware that Grampian Transport plc has revealed that it paid about £5 million for Grampian Regional Transport. After carefully reconsidering the issue. may I say that we would not want, as a matter of practice, to publish the proceeds from each company sold.
Mr. Robert HughesThe Minister should not pray in aid the Grampian experience, which is totally different. He knows that Grampian regional council is bound by statute to say how much it got from the sale; it cannot simply say that it will not tell anyone.
§ Lord James Douglas-HamiltonI stress that any company can reveal what it paid, but it is a matter for the company.
The hon. Member for Cunninghame, North (Mr. Wilson) asked about the Scottish Development Agency investment in Stagecoach. The investment was worth £500,000 and was made in the form of preference shares.
Amendment No. 3 would make it impossible for a Scottish Bus Group subsidiary to be resold within five years without the consent of its employees. That would impose a limitation on the Freedom of action of that company which would not apply to the companies with which it was competing. That could cause difficulties and if such an inhibition operated which did not apply to other bus companies it could make it difficult for management-employee buy-out teams to raise funds. However we are keen to see employees participating in their companies through share ownership. The more substantial that share ownership, the more voice employees will have in the running of their company and over issues such as change of ownership.
In privatising the Scottish Bus Group in the pattern we have chosen, we aim to set up a number of new, viable independent bus companies which will ensure healthy competition. We obviously want to see those companies continue as viable units. Successful operation is obviously the way to achieve that—not by giving employees a veto as proposed in amendment No. 3. In any case, it is not clear why the period of five years has been chosen. The best course is surely to encourage bids with substantial employee participation which will ensure that employees have a say in the operations of their company in the long term.
§ Mr. WilsonAs the Minister reiterates his enthusiasm for bids that give workers a substantial say, does he consider that there is any conflict between that and what he has told us about the SDA investing £500,000 to ensure that such bids do not succeed?
§ Lord James Douglas-HamiltonOut of a total of £5 million investment provided by a number of financial institutions, the SDA contributed £500,000 in the form of preference shares. That does not alter the reality, and representations have been made to the chief executive of the SDA arising out of what was discussed in Committee.
Amendment No. 4 would limit to two companies the number of bus companies which one purchaser could buy.
765 The prime aim of the privatisation is to increase competition, efficiency and service to the consumer. No limitations were written into the English and Welsh legislation, and I do not believe that such a limitation is appropriate in this case.
The House should reject the amendment, but should be assured that we have taken on board the point made by the amendment. We entirely accept the need to avoid a single buyer acquiring too many bus companies. In England, when 72 units were sold, no single buyer was allowed to acquire more than four. An application of a similar proportion to the 11 SBG subsidiaries—that is nine operating subsidiaries plus two other operations—would limit any single purchaser to acquiring one subsidiary.
We accept the need to avoid a single buyer acquiring too many bus companies. In part, of course, it depends where those companies are. However, given the nature of Scotland, with its urban concentration in the central belt, we accept the need to limit the numbers bought by one purchaser and will consider what can be said in the disposal programme, by which time the picture will be clearer.
The hon. Member for Cunninghame, North spent a considerable time addressing amendment No. 5, which would prevent any of the privatised bus companies from disposing of fixed assets within five years without the consent of the Secretary of State. It is obviously important to ensure that there is no asset stripping.
It is clearly essential to ensure that property is properly valued, not only on its existing use value for bus operations, but on other bases such as its full development value. We obviously want to avoid asset stripping and the selling on of assets at a large profit. Specialist property advisers have been appointed to value all the properties of the bus group and to advise on the best treatment of those properties in the course of the sale. There are essentially three options for dealing with the properties. The first option is to strip the property from the company and sell it separately. This might apply to a property that is not really essential for the running of a bus undertaking. The second option is to sell the property along with the company but ensure that the price received for the company fully reflects the range of values for the assets. The third option is to sell the property along with the company but with a legal charge on the property which will ensure that if the property is sold, say for development, within a specified period, the Government will receive a specified share of the development proceeds. A fourth option—I did not mention it in Committee—is to sell the property separately but arrange for it to be leased to the bus operating company.
A prohibition on sales of property without the Secretary of State's consent would not achieve the desired objective. The only control open to the Secretary of State would be to prevent the property from being sold for a period. It would not prevent the owning company profiting from the sale. After five years there would be no controls at all.
The hon. Member for Cunninghame, North also asked about the arrangements for the sale of the NBC and its assets in Southampton. That is a matter for the Secretary of State for Transport and I would not want to comment on it. I have made clear the actions that we shall take to 766 avoid asset stripping. The key element is to obtain professional advice on the value of the assets at current use and for development.
§ Mr. WilsonEven by the Minister's formidable standards, that was a pathetic reply. I may be naive, and possibly the Minister will tell us differently, but perhaps there were no professional advisers in England and Wales. Perhaps the number of such advisers was pulled out of a hat. What possible answer is it to say that there will be professional advice? Of course there will be professional advice, but we are talking about whether that advice will be any good.
We have already explained in some detail that the professional advice that the Government got in England and Wales stank. Whether that was due to incompetence or corruption, we shall never know, but we know that public assets were sold off cheaply to be sold on dear. That was done on the basis of professional advice.
The Minister has said that what happened with the NBC is nothing to do with him but is for the Secretary of State for Transport to consider. Scottish Office Ministers are extremely selective about when we are operating in a unitary Parliament with unitary interests and when we are operating as a small segment of the United Kingdom when that segment is not supposed to know what is going on in another. Is the Minister seriously saying that when he drew up the disposal scheme and the scheme for professional advice he had no consultation with the Secretary of State for Transport? If so, it is certain that the quality of the professional advice will not be any better in Scotland than it was in England and Wales. Once again I challenge the Minister to address the Southampton example. Would the Minister find it acceptable if the same sort of windfall profits were made by the beneficiaries of the sell-offs? Would there be anything wrong with that?
Perhaps the Minister could clarify the impression given by the hon. Member for Tayside, North (Mr. Walker), who believes that it is all right to buy from the public purse something for £2 million and then to sell off a fraction of it for £4.1 million a fortnight later as long as the proceeds of the sale go to buses. Perhaps the Minister could write a cheque. Why should the Minister sell off the subsidiaries? Why not give them away while saying, "Look here, have it, so long as you spend the proceeds on buying buses.". The public purse would not get anything; after all, it all comes to the same thing. If the Government had given away Hampshire Bus and the assets had then been sold for £2.1 million, the profit would have been the same to the buyer, and the loss to the public purse in real terms would have been no less. Does the Minister regard that as acceptable?
Will the Minister tell us the names of the professional advisers? Are they the people who gave such appalling advice about Hampshire Bus and other segments of the National Bus Company? Does the Minister have any information about that? Has any account been taken of the record of those advisers in past sell-offs? Is it the same old boys' network? Is it always the same advisers and no matter what advice they give and whether it is right or wrong they will always be there? The Minister must tell us something. He must not simply say that there will be professional advisers. I understood in Committee that they were already at work.
§ Mr. GrahamPerhaps they are the professional advisers who advised the Government to sell the royal ordnance factory in my constituency for a pittance to people who later recouped the price in one sale.
§ Mr. WilsonThat is an interesting question. My guess would be that they are the same advisers or perhaps from the same coterie of advisers. They are either bent or stupid, but they are not competent and certainly are not working in the public interest.
§ Lord James Douglas-HamiltonIs not the hon. Gentleman aware that I said in Committee that the advisers were Kenneth Ryden and Partners?
§ Mr. WilsonI am well aware that the Minister said in Committee that Kenneth Ryden and Partners were advisers on property values. He did not say whether they had been involved in any of the English advice or whether they were advising on the valuations as going concerns as bus stations or advising on the development values. He did not say whether two sets of values had arisen in the English context. I am sure that the Minister has consulted his right hon. Friend the Secretary of State for Transport about that.
Were there two valuations for the coach station in Southampton? We shall be grateful if the Minister can help us on that, but if he cannot perhaps he will help us another time.
I am grateful to the Minister for at least informing us that £500,000 of public money has been invested in Stagecoach in order, presumably, to help establish the level playing field which we are told is to exist in these sell-offs. I am surprised that at this sensitive time the Scottish Development Agency should have seen fit to invest £500,000 in Stagecoach, but I suppose that is a matter for the SDA—unless it did that under political direction. Perhaps the Minister will tell us about that as well.
§ Mr. Bill WalkerThe hon. Gentleman will be aware that since its inception the SDA has been investing in this way throughout Scotland and in companies. There is nothing odd about that. Why should it make fish of one and fowl of another? The fact that Stagecoach applied and was accepted is surely enough. There is no end of examples of companies obtaining assistance in this equity form and then going on to be assets to Scotland. Unfortunately, others have been disasters and much public money has gone into them. It is part of the risk that the SDA takes in evaluating this type of equity, and it goes on all the time.
§ Mr. WilsonUnlike Conservative Members, I am an admirer of the SDA and I am not attacking it in any way. I just find it a little odd that, at this sensitive time, when Stagecoach has announced that it will bid for every Scottish Bus Group subsidiary and is putting together a £5 million war chest for that purpose, the SDA is investing £500,000. That is especially surprising because the successful achievement of Stagecoach's aims appears to be in conflict with the Government's preference as repeatedly stated by the Minister. It is even against the wishes of the hon. Member for Tayside (Mr. Walker), because he has made it clear that he does not want Stagecoach to succeed in his area.
The other issue upon which the Minister was at his disingenuous worst was about why individual sale proceeds could not be revealed to us. The magic words 768 "commercial confidentiality" were incanted. As my hon. Friend the Member for Aberdeen, North (Mr. Hughes) capably said, a local authority does not have any such option because its dealings have to be a matter of public record. It has always been a mystery to me why the Government can hide behind commercial confidentiality while local authorities have to do things up front.
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The idea that the interests of the buyers should be protected is also mysterious. It is not like a pools entry when one can mark an X for no publicity. The public is entitled to know what has been paid for public assets; there can be no ifs or buts about that. That should be an entitlement, as it is in local government but for some reason is not in Government dealings. However, the truth will out and in each of the 72 National Bus Company sell-offs those who keep an eye on the industry were in a strong position to find out what was paid.
I assure the Minister that we shall keep a close eye on these sales. Even though the Government may be afraid to say what has been paid for the companies, we shall do so and will be able to compare the selling price with the asset stripping price when that process is engaged in.
The Minister was asked many specific questions about the lessons that were learned from the sell-offs and the asset strippings in England and Wales, which in some cases involved Scottish companies and certainly involved companies that will be engaged in the bids for parts of the Scottish Bus Group. What safeguards have been taken against the same thing happening in Scotland? The answer in simple terms is, none. The Minister said that there were four options, but did not tell us which one the Government had decided to implement. Perhaps he could help us on that.
Unless there are safeguards in the Bill, there will be asset stripping and property rip-offs on a grand scale. In many parts of Scotland bus stations that are centrally located in the interests of the travelling public will be sold by property speculators and will be replaced by facilities that are much less adequate arid less convenient. That is exactly what has happened in Southampton where, in spite of all the professional advice, the Government committed an offence against the public purse for which they should still be held accountable.
§ Question put, That the amendment be made:—
§ The House divided: Ayes 109, Noes 184.
770| Division No. 104] | [7.16 pm |
| AYES | |
| Adams, Allen (Paisley N) | Cohen, Harry |
| Alton, David | Cook, Robin (Livingston) |
| Barnes, Harry (Derbyshire NE) | Corbett, Robin |
| Beckett, Margaret | Corbyn, Jeremy |
| Beith, A. J. | Cox, Tom |
| Bennett, A. F. (D'nt'n & R'dish) | Cryer, Bob |
| Bermingham, Gerald | Cummings, John |
| Blunkett, David | Davies, Ron (Caerphilly) |
| Boateng, Paul | Davis, Terry (B'ham Hodge H'l) |
| Bradley, Keith | Dewar, Donald |
| Bray, Dr Jeremy | Dixon, Don |
| Buchan, Norman | Doran, Frank |
| Buckley, George J. | Dunnachie, Jimmy |
| Caborn, Richard | Dunwoody, Hon Mrs Gwyneth |
| Campbell, Menzies (Fife NE) | Eastham, Ken |
| Campbell, Ron (Blyth Valley) | Evans, John (St Helens N) |
| Clark, Dr David (S Shields) | Ewing, Harry (Falkirk E) |
| Clarke, Tom (Monklands W) | Ewing, Mrs Margaret (Moray) |
| Clay, Bob | Fields, Terry (L'pool B G'n) |
| Clelland, David | Fisher, Mark |
| Flannery, Martin | Mahon, Mrs Alice |
| Flynn, Paul | Marek, Dr John |
| Foster, Derek | Marshall, David (Shettleston) |
| Fyfe, Maria | Maxton, John |
| Galbraith, Sam | Michie, Bill (Sheffield Heeley) |
| Galloway, George | Michie, Mrs Ray (Arg'l & Bute) |
| Godman, Dr Norman A. | Morgan, Rhodri |
| Golding, Mrs Llin | Mullin, Chris |
| Gordon, Mildred | Murphy, Paul |
| Graham, Thomas | O'Neill, Martin |
| Griffiths, Nigel (Edinburgh S) | Orme, Rt Hon Stanley |
| Griffiths, Win (Bridgend) | Patchett, Terry |
| Hardy, Peter | Pike, Peter L. |
| Henderson, Doug | Powell, Ray (Ogmore) |
| Hood, Jimmy | Quin, Ms Joyce |
| Hughes, John (Coventry NE) | Rees, Rt Hon Merlyn |
| Hughes, Robert (Aberdeen N) | Reid, Dr John |
| Hughes, Roy (Newport E) | Richardson, Jo |
| Hughes, Sean (Knowsley S) | Robertson, George |
| Ingram, Adam | Short, Clare |
| Janner, Greville | Skinner, Dennis |
| Jones, Barry (Alyn & Deeside) | Spearing, Nigel |
| Jones, Martyn (Clwyd S W) | Steinberg, Gerry |
| Kaufman, Rt Hon Gerald | Strang, Gavin |
| Kennedy, Charles | Taylor, Mrs Ann (Dewsbury) |
| Kinnock, Rt Hon Neil | Wall, Pat |
| Lamond, James | Wareing, Robert N. |
| Leadbitter, Ted | Welsh, Andrew (Angus E) |
| Lofthouse, Geoffrey | Welsh, Michael (Doncaster N) |
| McAllion, John | Wigley, Dafydd |
| McAvoy, Thomas | Wilson, Brian |
| McCartney, Ian | Young, David (Bolton SE) |
| McFall, John | |
| McKay, Allen (Barnsley West) | Tellers for the Ayes: |
| McKelvey, William | Mr. Frank Cook and |
| McWilliam, John | Mr. Frank Haynes. |
| Madden, Max | |
| NOES | |
| Alexander, Richard | Douglas-Hamilton, Lord James |
| Alison, Rt Hon Michael | Dover, Den |
| Amess, David | Dunn, Bob |
| Amos, Alan | Durant, Tony |
| Arbuthnot, James | Evennett, David |
| Arnold, Jacques (Gravesham) | Favell, Tony |
| Arnold, Tom (Hazel Grove) | Fenner, Dame Peggy |
| Ashby, David | Fishburn, John Dudley |
| Atkins, Robert | Fookes, Dame Janet |
| Batiste, Spencer | Forsyth, Michael (Stirling) |
| Bellingham, Henry | Forth, Eric |
| Bendall, Vivian | Franks, Cecil |
| Bennett, Nicholas (Pembroke) | Freeman, Roger |
| Bonsor, Sir Nicholas | Gale, Roger |
| Bowden, Gerald (Dulwich) | Garel-Jones, Tristan |
| Brandon-Bravo, Martin | Gill, Christopher |
| Brazier, Julian | Glyn, Dr Alan |
| Bright, Graham | Goodhart, Sir Philip |
| Brown, Michael (Brigg & Cl't's) | Goodson-Wickes, Dr Charles |
| Browne, John (Winchester) | Gow, Ian |
| Bruce, Ian (Dorset South) | Greenway, John (Ryedale) |
| Burns, Simon | Gregory, Conal |
| Butcher, John | Griffiths, Sir Eldon (Bury St E') |
| Butler, Chris | Grist, Ian |
| Butterfill, John | Gummer, Rt Hon John Selwyn |
| Carlisle, John, (Luton N) | Hamilton, Hon Archie (Epsom) |
| Carlisle, Kenneth (Lincoln) | Hamilton, Neil (Tatton) |
| Carttiss, Michael | Hanley, Jeremy |
| Cash, William | Hargreaves, A. (B'ham H'll Gr') |
| Chapman, Sydney | Hargreaves, Ken (Hyndburn) |
| Chope, Christopher | Harris, David |
| Clark, Dr Michael (Rochford) | Hayes, Jerry |
| Clarke, Rt Hon K. (Rushclifie) | Hayhoe, Rt Hon Sir Barney |
| Coombs, Anthony (Wyre F'rest) | Hayward, Robert |
| Coombs, Simon (Swindon) | Heathcoat-Amory, David |
| Cope, Rt Hon John | Heddle, John |
| Currie, Mrs Edwina | Hicks, Robert (Cornwall SE) |
| Davis, David (Boothferry) | Hill, James |
| Day, Stephen | Hind, Kenneth |
| Devlin, Tim | Hogg, Hon Douglas (Gr'th'm) |
| Dorrell, Stephen | Howard, Michael |
| Howarth, Alan (Stratd-on-A) | Renton, Tim |
| Howarth, G. (Cannock & B'wd) | Riddick, Graham |
| Hughes, Robert G. (Harrow W) | Ridsdale, Sir Julian |
| Hunt, John (Ravensbourne) | Rifkind, Rt Hon Malcolm |
| Hunter, Andrew | Sackville, Hon Tom |
| Irvine, Michael | Shaw, David (Dover) |
| Irving, Charles | Shepherd, Colin (Hereford) |
| Jack, Michael | Skeet, Sir Trevor |
| Janman, Tim | Smith, Sir Dudley (Warwick) |
| Johnson Smith, Sir Geoffrey | Smith, Tim (Beaconsfield) |
| Jones, Gwilym (Cardiff N) | Soames, Hon Nicholas |
| Jones, Robert B (Herts W) | Speller, Tony |
| Kellett-Bowman, Dame Elaine | Spicer, Michael (S Worcs) |
| King, Roger (B'ham N'thfield) | Stanbrook, Ivor |
| Knight, Greg (Derby North) | Stanley, Rt Hon Sir John |
| Knowles, Michael | Stern, Michael |
| Lang, Ian | Stewart, Andy (Sherwood) |
| Lawrence, Ivan | Stradling Thomas, Sir John |
| Lightbown, David | Summerson, Hugo |
| Lloyd, Sir Ian (Havant) | Taylor, Ian (Esher) |
| Lord, Michael | Taylor, John M (Solihull) |
| MacKay, Andrew (E Berkshire) | Taylor, Teddy (S'end E) |
| Miller, Sir Hal | Thompson, D. (Calder Valley) |
| Mills, Iain | Thompson, Patrick (Norwich N) |
| Mitchell, Andrew (Gedling) | Th urn ham, Peter |
| Mitchell, Sir David | Tracey, Richard |
| Monro, Sir Hector | Tredinnick, David |
| Moore, Rt Hon John | Trippier, David |
| Morris, M (N'hampton S) | Twinn, Dr Ian |
| Morrison, Sir Charles | Waddington, Rt Hon David |
| Moss, Malcolm | Wakeham, Rt Hon John |
| Moynihan, Hon Colin | Walden, George |
| Mudd, David | Walker, Bill (T'side North) |
| Nelson, Anthony | Waller, Gary |
| Neubert, Michael | Ward, John |
| Nicholls, Patrick | Wardle, Charles (Bexhill) |
| Nicholson, David (Taunton) | Wells, Bowen |
| Nicholson, Emma (Devon West) | Wheeler, John |
| Norris, Steve | Whitney, Ray |
| Onslow, Rt Hon Cranley | Widdecombe, Ann |
| Oppenheim, Phillip | Wiggin, Jerry |
| Page, Richard | Wilkinson, John |
| Paice, James | Wilshire, David |
| Patnick, Irvine | Winterton, Mrs Ann |
| Pattie, Rt Hon Sir Geoffrey | Winterton, Nicholas |
| Peacock, Mrs Elizabeth | Wolfson, Mark |
| Porter, David (Waveney) | Wood, Timothy |
| Portillo, Michael | Yeo, Tim |
| Powell, William (Corby) | Young, Sir George (Acton) |
| Price, Sir David | |
| Raffan, Keith | Tellers for the Noes: |
| Rathbone, Tim | Mr. Michael Fallon and |
| Redwood, John | Mr. David Maclean. |
§ Question accordingly negatived.
§ Amendment proposed: No. 6 in page 2, line 5, leave out 'may' and insert 'shall'.—[Mr. Wilson.]
§ Lord James Douglas-HamiltonI regard the amendment, which would replace "may" with "shall", as a Willie Ross amendment. As Opposition Members have pointed out, Lord Ross of Marnock frequently tabled such amendments. It is also fair to say of Lord Ross that he was almost always able to say no to such amendments, although on one occasion I persuaded him to say yes. If hon. Members wish to know the example, let me say that a pop group wished to apply for a licence to practise in America, and they had to get the licence from the Bow street magistrates court in London. I suggested that it would be better if they could acquire it in Scotland and he replied that he would lay an order so that they would have to go to the stipendiary magisrates in Glasgow.
I have to tell the hon. Member for Cunninghame, North (Mr. Wilson) that I have considered the amendment carefully. I explained in Committee that I did not think that the amendment was necessary and that it was our 771 intention to include in the disposal programme a statement of the general approach which the Secretary of State intends that the group should adopt in carrying out the disposals in the programme, including the intended timetable for implementing the programme. As it is our intention that the disposal programme should contain a statement of the general approach which the Secretary of State intends that the group should adopt, I am prepared to accept the amendment, which would require the Secretary of State to do that.
I am therefore happy to accept the amendment. I hope that this is helpful, although it is far from being the case that I wish to tread in the inimitable footsteps of the late Willie Ross.
§ Mr. WilsonI do not want to let the amendment pass without some acknowledgement. This is the first crumb that we have been given in the entire passage of the Bill and I should accept it gracefully. Perhaps if I keep my speeches short on the amendments we shall receive more concessions.
§ Amendment agreed to.