§ The Secretary of State for Energy (Mr. John Wakeham)
With permission, Mr. Speaker, I should like to inform the House that I have been approached by Hanson plc which has expressed a firm and serious interest in making an offer for PowerGen plc.
I shall need to consider this approach. I have therefore informed the chairman of PowerGen about it, and appropriate information will be made available to Hanson.
The Government have taken no final decision to proceed with a trade sale of PowerGen. I have a duty to the taxpayer to get a proper return from the sale of the electricity companies. I therefore propose to pursue discussions with Hanson in parallel with pushing forward preparations for the flotation of PowerGen.
I should make it clear at the outset that, if Hanson decides to make a binding offer, I shall invite other companies to tender for PowerGen on a similar basis. Bids will fall to be considered under the competition legislation in the normal way.
The House will rightly want to know what a sale of this sort would mean for the management and work force of PowerGen and for the electricity supply industry generally. As the owner of PowerGen on behalf of the taxpayer, I would intend to lay down conditions which any single purchaser of the business must abide by. All PowerGen's contractual rights and obligations would continue.
In particular, PowerGen is party to the collective industrial relations arrangements for the industry: any new owner would take on the same rights and obligations as PowerGen has now. PowerGen would continue to participate in and be bound by the rules of the electricity supply pension scheme. There would be no change in the pension arrangements for present pensioners and employees of PowerGen. Arrangements would also be made for PowerGen employees to receive benefits broadly comparable in financial terms to those they would have received in a public offering of the company's shares. I shall be talking to the trades unions tomorrow. PowerGen's fuel purchase and electricity supply contracts would continue.
Further conditions would include a restriction on a purchaser's ability to dispose of all or a substantial part of PowerGen's business and a commitment to carry out certain expenditure on environmental plant. There would also be a provision, in line with my proposals for the rest of the electricity industry, to ensure that the taxpayer shared in profits from later property disposals.
The private sector has always thrived on competition to the benefit of customers, employees and shareholders. I believe that Hanson's approach is a vote of confidence in the company and its management which, however it is privatised, will be a major competitor in the new electricity supply market.
§ Mr. Frank Dobson (Holdborn and St.Pancras)
The statement shows that the Government's electricity privatisation programme is now in total disarray. Surely it signals the end of what they used to describe as "popular capitalism". The Government promised wider share ownership but now propose instead to sell PowerGen to 40 the major contributor to the Tory party's funds. That seems to me to be unpopular capitalism. Instead of the eager individuals hoping to buy shares that the Government promised, we have discovered that the Secretary of State has been shuffling around the City like a second-rate ministerial Arthur Daley, offering a nice little earner to his friends, hawking PowerGen round the City basically as a tax dodge.
This secret wheeling and dealing is a disgraceful way to treat valuable assets for which the public have paid. It is an even more disgraceful way to deal with the future of a vital industry and its hardworking, well-trained and committed staff. I am convinced that the people of this country would rather see PowerGen in the hands of its present managers than in the hands of the Hanson Trust, which is notorious mainly as an asset stripper. Hanson is interested in PowerGen because of its real estate portfolio and because it sees its potential as a high-tech tax haven, against which it can set its tax liabilities on other parts of its business. No one with those motives should be allowed to take over PowerGen.
The Secretary of State said that he would like to inform the House that he has been approached by Hanson. Can he confirm that his secret talks with Hanson have been going on since May and that, had I not leaked the information about this at the end of last week, he would have told the House nothing? Can he tell us precisely when the horse trading began? When did the Inland Revenue and the Treasury become involved? Can he tell us whether the Inland Revenue and the Treasury have been offering free expert advice on tax avoidance on this transaction as they did with the despicable Rover transaction? Can he tell us what other sweeteners, as yet undisclosed, are involved? Can he tell us what will be the total loss to the Inland Revenue on this transaction? What price have the Government been quoting for PowerGen in the talks with Hanson? Can he confirm that the price that the Government have quoted in those talks for PowerGen's 18,000 MW of plant is less than the cost of building 1,200 MW of plant at Sizewell B? Can he tell us what sort of fee Sir Michael Richardson of Rothschild will receive for his involvement in the transaction? Can he tell the House whether he would accept a similar proposition for the disposal of National Power or any of the other companies?
To return to the question I asked at Question Time, what has happened to the Government's solemn promise to the House that no individual or company would be allowed to own more than 15 per cent. of any of the electricity companies?
The whole electricity privatisation programme is a sleazy shambles. It is a long endless series: write-off, sell-off, rip-off, tip-off, pay-off and now, for the staff, lay-off. PowerGen is not a plaything but a vital industry supplying light, power and heat to the people of this country. In our view, the Hanson Trust is not fit to own it. The next Labour Government will hold it, like any other shareholders, to a maximum share ownership of 15 per cent., as promised by this Government.
§ Mr. Dobson
It will not cost the taxpayer a penny.
We will also hold a full-scale, independent inquiry into the whole sleazy process of electricity privatisation in which City companies have already made over £100 million 41 before a share has been sold. Before the Government decided on privatisation, the electricity supply industry was a large, up-to-date, well run and highly profitable public enterprise with a well trained, hard-working and highly motivated staff. Now it is a fragmented shambles and its managers and staff do not know whether they are coming or going.
In his first statement to the House as the Secretary of State, for Energy, the right hon. Gentleman saw sense and withdrew the nuclear power stations from the sale. He should now have the courage to abandon the whole crazy project of privatisation and ensure instead that this vital industry is in the hands of people with the skill, training and responsibility to run it on behalf of the nation and not for private gain.
§ Mr. Wakeham
I agree with the hon. Gentleman this far—this is an important industry. I wish that he had treated an important industry and important matters with a degree of seriousness rather than with the extravagant and nonsensical language in which he addressed most of his remarks. The hon. Gentleman said that the privatisation programme is in disarray but that is far from the truth. As I have told the House, we were on course to complete the privatisation when the approach was received by the Government.
§ Mr. Wakeham
I will come to that. Far from there being something secret about it, I have come to the House to make this statement, as I always intended to do, as soon as I had something which would make a proper and meaningful statement. That position did not appertain until this morning and I have come to the House now. There are no sweeteners or anything of that sort.
As a matter of fact, I have had no discussions with the Inland Revenue in connection with this approach.
Most of the hon. Gentleman's comments arise because he has misunderstood, in spite of my statement, the nature of the position. We have had an approach. No decision has been taken to proceed with a trade sale. If we do proceed with one, there will be a competitive tender. It has not been settled before.
With regard to the hon. Gentleman's comments about wider share ownership, I must point out to him that since the Government have been in power, privatisation has been a great success in widening share ownership and we have increased the number of shareholders in this country from about 3 million to around 11 million. Even if this particular trade sale proceeds, and I have said that that is by no means settled at this stage, 15 out of 16 of the companies, according to our present plans, will be floated and the shares sold to the public. I should also point out that PowerGen has under 10 per cent. of the electricity industry's work force.
The hon. Gentleman's remarks about Hanson plc were absolutely disgraceful. Hanson plc is a highly successful company with more than 90,000 employees. Its approach shows its confidence in PowerGen and the new electricity market. Hanson has hundreds of thousands of shareholders.
With regard to advisers, I must inform the hon. Gentleman that I have appointed J. Henry Schroder Wagg to advise me, jointly with Kleinwort Benson. I am sure that the hon. Gentleman will be pleased to know that if we 42 decide to proceed with a trade sale, the costs are likely to be substantially lower than for a flotation. I should have thought that the hon. Gentleman would welcome that.
The hon. Gentleman asked a question about National Power. My announcement is about PowerGen and it has no direct impact on National Power. I can confirm that, subject to market conditions at the time, the Government's present intention is to offer shares in National Power for sale to the public in February 1991. However, I must consider the interests of the taxpayer. If a serious offer were made for National Power, I should have to look at it. [Laughter.] Would those Opposition Members who are sniggering expect me not to look at it? They had better consider—[Interruption.] That is right. They may not like this, but their cavalier approach to public expenditure will cost them very dear at the next election. That is for sure. [Interruption.] The hon. Gentleman asked me a lot of questions and there is one more that I must answer.
The hon. Gentleman asked about the 15 per cent. and the golden share. The purpose of a golden share and the 15 per cent. trigger is to protect against a change in ownership after a flotation has taken place. The Government believe that, if a trade sale proceeds, a golden share would be inappropriate for a subsidiary. The Government believe that the public interest is better protected by a contractual provision in the sale and purchase agreement than in having an indeterminate special share. We seek the protection that we want, if we go ahead by this route, by the sale and purchase agreement and not by a 15 per cent. trigger and golden share which we do not believe would work.
§ Mr. Michael Alison (Selby)
Can my right hon. Friend confirm what I imagine to be the case, which is that nothing that he has said this afternoon will in any way interrupt the installation of flue gas desulphurisation equipment in PowerGen power stations where such installation is in prospect?
§ Mr. Wakeham
Absolutely. PowerGen, like all owners of large combustion plants in the United Kingdom, will have to comply with the large combustion plant directive. I shall require the retrofitting of 4 GW of FGD as a condition of sale. PowerGen has plans to fit FGD to Ratcliffe on Soar and the Ferrybridge C power stations. I have planning applications before me for those two projects so I must be careful what I say. I am confident that the ownership of PowerGen will not affect those plans.
§ Mr. Robert Sheldon (Ashton-under-Lyne)
In a number of respects this recalls the sale of Rover to BAe. Once the negotiations with Hanson have been completed., will genuine competitive bids be allowed and will more information be given to the competitors than was allowed to competitors of BAe? Will the Secretary of State also consider valuation? It will be essential that a proper valuation of all the assets is arranged before the deal goes through. I accept the right hon. Gentleman's move on clawback, but will the clawback provision to ensure that the taxpayer gets the proper value of assets that are undervalued at the time, because of circumstances that have changed, mean that the taxpayer will receive all the advantages or a major part of the advantages that are subsequently shown to have arisen? Has the Inland Revenue had consultations with Hanson over the bid?
§ Mr. Wakeham
I am certainly in no position to know what dealings Hanson has with the Inland Revenue. All I can say is that, quite properly, those have formed no part of my discussions. Unlike some of his Opposition Front-Bench colleagues, the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) has had some experience of these matters and he will know that consultations between a taxpayer and the Inland Revenue are confidential, and Ministers would not expect to be informed about them. However, I know of no such consultations and I should be very surprised if they have taken place in what must be considered a hypothetical situation. The right hon. Gentleman will also be aware that the Inland Revenue has enough work to do dealing with actual cases without our asking a series of hypothetical questions.
I agree with the right hon. Gentleman that, if there is to be a binding offer from Hanson plc, it is very proper that the competition that we will see take place is based on providing every other serious contender the same information that is being given to Hanson plc. That is absolutely right and we shall see to it. We shall see that the public interest is properly protected with regard to the sale of assets and proper arrangements will be made. I will ensure that I am properly advised, as I have been very careful to be properly advised in dealing with PowerGen as a public flotation, about a proper value for the assets.
§ Sir Trevor Skeet (Bedfordshire, North)
While the Scretary of State will certainly get a premium price for the sale which will be good for the taxpayer, will he consider the implications of what might follow from his statement? My right hon. Friend said that National Power could be sold. However, it could be sold to RWE of Germany or Electricit? de France, in which case most of the electricity manufacturing facilities in the United Kingdom would go to foreign countries. Will my right hon. Friend also consider that one of the principal beneficiaries of a sale of PowerGen to Hanson could be the American Peabody Coal Company and that could lead to the import of more sulphur-free coal into the United Kingdom?
§ Mr. Wakeham
My hon. Friend has read rather more into my statement than I believe it is possible to read into it. I described to the House the nature of the approach that I had from Hanson plc and how I intended to deal with it in the public interest. There has been no approach for National Power and, therefore, we are proceeding with its public flotation as we intended, in parallel with our negotiations on PowerGen.
On the question of the coal contracts with PowerGen, in the event of the Hanson bid becoming binding and its being the top bidder in any bidding arrangements that we make, the terms of the contract between PowerGen and British Coal for the supply of coal until 1993 will be honoured. Thereafter, it will be for British Coal to produce coal at the price and quality to make it the supplier of choice. That will not change. The position will still be the same, whoever owns PowerGen. As my hon. Friend knows, unfair price discrimination by any purchaser of coal would attract the attentions of the competition authorities.
§ Mr. Alexander Eadie (Midlothian)
Whether the right hon. Gentleman likes it or not, the statement is a major change of policy in relation to the privatisation of electricity supply—indeed, it is a volte face to some extent. 44 Does the right hon. Gentleman agree that if the present proposition were agreed, it would mean a major increase in coal imports in this country? The right hon. Gentleman has told us that he has had no contact with the Inland Revenue about the proposition. Of course the House will accept what the right hon. Gentleman says, but is he aware that, as a result of the statement which was sneaked through the House on Friday, in the regions it will mean £20 million tax paid to the oil company? Are we discussing today, as a matter of fact, millions upon millions of pounds of tax breaks due to whatever company gets PowerGen, and at the expense of the taxpayer?
§ Mr. Wakeham
I think that the hon. Gentleman misunderstands the statement in two ways. First, as I have said, I have received an approach from Hanson plc, and I have said not that I have accepted it but that I shall consider it and the way in which I shall consider it. To do less would be to fail in my duty to the taxpayer. The tax liabilities of any company, whether it be an oil company or whatever, are not matters for me. Such matters are not a concern of mine and I do not take part in any of the negotiations. I assure the hon. Gentleman that they have not been part of the discussions. There is no proposed change, sweetener or arrangement in the tax laws to facilitate this transaction.
Again, with regard to British Coal's future, British Coal will honour contracts until 1993, and thereafter it will be for British Coal to produce coal of the quality and price that will make it the supplier of choice. That will be the position whoever owns PowerGen.
§ Dr. Michael Clark (Rochford)
Does my right hon. Friend agree that the golden share that has been associated with other energy-related companies when they have gone into the private sector is a powerful device, as it ultimately gives the Government the opportunity of ensuring that the taxpayer is protected? Will he ensure, therefore, that the conditions and clauses to which he referred in his statement are comprehensive and can be guaranteed and underwritten by law to ensure that, in this instance too, the taxpayer will be protected?
§ Mr. Wakeham
My hon. Friend is right. Others may not fully appreciate it, so I should repeat that the purpose of a golden share is to trigger something in the event of there being a significant change in the shareholdings in a company. It is not an arrangement to protect a subsidiary, which, in this case, PowerGen would become, of Hanson plc or whoever bought it. The way in which to protect—
§ Mr. Wakeham
The hon. Gentleman really does not understand how these things work.
The way in which to protect the public interest in this case is to make sure that the purchase and sale agreement of the shares in PowerGen to whoever bids covers all the points that are required to be covered in the public interest. That is much more effective than taking a golden share in a subsidiary company, which is not quoted and for which no share transactions will be taking place.
§ Mr. Simon Hughes (Southwark and Bermondsey)
If the Secretary of State opts for a trade sale, would not it mean two reversals of policy? First, there would be the reversal of the policy that believed that flotation would be possible. Has he not received advice that it may not be 45 possible to float PowerGen and National Power next year with any success? Secondly, there would clearly be a reversal of the policy of public participation in asset sales. It can mean no other. Therefore, will the Secretary of State tell the House whether he is prepared to countenance those two further reversals of Government policy? Are there no conditions governing to whom such a business can be sold, no conditions governing whether they should be national or foreign, and no conditions governing, for example, whether they should be contributors to the Government?
§ Mr. Wakeham
Then he should not have asked a question that suggested that he had not listened. I set out at considerable length a range of conditions that needed to be satisfied before we would sell or agree to sell the shares in PowerGen to any purchaser. That protection will exist. The task that the Government have set is to put the electricity supply industry into the private sector. That is what we are seeking to achieve—
§ Mr. Wakeham
No, it is already in public ownership. We are now putting it into the private sector.
I am not saying for a minute that we have determined to go ahead with this trade sale, but, even if we do, as I have already said, 15 out of the 16 companies in the electricity supply industry will be floated and shares will be sold to the public. As I have said, PowerGen has well under 10 per cent. of the electricity work force.
§ Mr. Andy Stewart (Sherwood)
May I thank my right hon. Friend for his guarantee that the coal contracts agreed between British Coal and the power-generating companies will be honoured? Does my right hon. Friend agree that it is a bit rich for the Opposition to go on about importing coal when they had an opportunity to vote down the Associated British Ports (No. 2) Bill, but only 49 Opposition Members bothered to turn up and vote on Second Reading?
§ Mr. Wakeham
That is a matter in which I shall not get involved. The Opposition do not appreciate—if they do, they do not give credit for it—just how much the Government have done to support the coal industry over recent years. As I said in answer to questions today, the Government have given more financial assistance to the coal industry in real terms than all the Governments since nationalisation put together. That is a substantial record. Parliament recently passed a Bill that has written off British Coal's debts and given it a chance for the future. For the first time, we have a long-term contract for British Coal which will enable it to plan for its future and to become competitive in this industry.
§ Mr. Joseph Ashton (Bassetlaw)
Is the Secretary of State aware that, on the edge of my constituency, there are three massive power stations at Cottam, High Marnham and West Burton, on which several thousand families depend for a living? Will he give an assurance that, when he meets the unions tomorrow, there will be no redundancies and that, if there are to be any redundancies, workers will get the same redundancy money as the miners got, and not 46 just an assurance on their pensions? Is it a fact that in the case of Rover and British Aerospace the Government gave the buyers sweeteners to take the company away and that, in this case, the buyer is giving the Government sweeteners for their election fund to rip off the public?
§ Mr. Wakeham
Again, the hon. Gentleman does not want to understand the nature of the transaction which is that, should we have a binding offer, there will be an open competition between Hanson and the others. Questions on the number of employees in the industry and in the power stations are not for me but for the management of the industries concerned. I assure the House that they will continue to deal with such questions as sympathetically as possible and in the proper way, as they would under any management.
§ Mr. John Hannam (Exeter)
Does my right hon. Friend agree that if more than one firm bid is received for the company in the future that would show a welcome show of confidence in the privatisation of electricity generation? The Opposition, instead of threatening an 85 per cent. confiscation of the shares in the company, should support such an offer as in the best interests of the British taxpayer.
§ Mr. Wakeham
My hon. Friend is absolutely right that, contrary to what the Opposition have sought to suggest this is a vote of confidence in the industry. It shows that PowerGen is an attractive company and that sophisiticated investors already see the attractions of it. It is a good omen for the sale of National Power as well as a good omen for the sale of PowerGen, should we decide that, in the end, it is better to go for a public flotation.
§ Mr. Peter Hardy (Wentworth)
Would the Secretary of State give the House and the country an assurance that such pillaging of a public asset will not be subsidised or sweetened through the agency of the Inland Revenue? Will he also relieve my anxieties about this, because his predecessor, in a reply to me at the time of the introduction of the Electricity Act 1989, gave an assurance that that privatisation would not lead to unemployment? In fact the former Secretary of State said that there would be more jobs rather than fewer as a result of that privatisation. Are we not seeing yet another inconsistency in the Government's approach?
§ Mr. Wakeham
The numbers of people employed in the power-generation industry will be a matter for the management, not for me.
As for the continual reference to taxation matters, I can only say that they have formed no part of the discussions I have had. I know of no such discussions. There are no plans to bring into discussions any proposals that bear any relation to taxation. There is no intention, so far as I know, to change the law on taxation to change anyone's liability. Those matters are, of course, primarily for the Chancellor of the Exchequer, but, in so far as I have any knowledge of the matter, there is nothing in those suggestions.
§ Mr. Tim Smith (Beaconsfield)
Would it not have been irresponsible if my right hon. Friend has not given serious consideration to this approach from whatever quarter it came? Surely my right hon. Friend is right to give a high priority to the interests of the taxpayer. Can he confirm that on present plans it will, rather unusually in this case, 47 be possible to compare the price-earnings ratio for one company sold through a public flotation with the price-earnings ratio for another sold by a trade sale?
§ Mr. Wakeham
My hon. Friend is absolutely right. If the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), the Chairman of the Public Accounts Committee, found, in a subsequent investigation into these affairs, that the Government had treated in a cavalier fashion a serious offer for the purchase of the shares and had not investigated it properly, I would not like to be under the lash of the criticism that would come, quite rightly, from his Committee. The offer has been made by a successful company and the Government believe that it is serious. We have a proper duty to look into it.
§ Mr. Tim Dalyell (Linlithgow)
As the negotiations have been going on since May, can the Secretary of State clarify the exact nature of the commitment to which he referred in his opening statement to the House—that PowerGen would carry out certain expenditure on environmental plant? Are any costs tagged to what I imagine to be the desulphurisation of plant? What is the value of that commitment? Those who had been talking about it up to May should be clear about what that commitment means, given it was mentioned in the opening statement.
§ Mr. Wakeham
The details of any arrangement have not been talked about—they must be tied up before we have a binding offer, if we get one, from Hanson plc. The sort of conditions that I will require to see in the contract entered into by any purchaser will cover the question of FGD and deal with noxious gases. PowerGen has made a number of commitments in that respect and we shall require that the purchaser gives us a binding undertaking that those commitments will be fulfilled.
§ Mr. Michael Stern (Bristol, North-West)
Does my right hon. Friend agree that, in his most important statement this afternoon, the shadow spokesman on energy, the hon. Member for Holborn and St. Pancras (Mr. Dobson), committed a future Labour Government to renationalising at least 85 per cent. of PowerGen without compensation—[HON. MEMBERS: "No."]—and at no cost to the taxpayer, he said? Does my right hon. Friend further agree that it is somewhat rich for the Opposition, having spent months complaining at the costs of the privatisation, to criticise my right hon. Friend for finding a way in which to undertake that privatisation while saving those costs?
§ Mr. Wakeham
The hon. Member for Holborn and St. Pancras (Mr. Dobson), whom I have had the pleasure of knowing and working with for a number of years, takes a broad view of such matters, especially when dealing with questions of public expenditure.
§ Mr. Alan W. Williams (Carmarthen)
The Secretary of State will be aware that Hanson is a formidable bid-and-break-up machine. What assurances can he give us that massive asset-stripping will not take place should PowerGen pass to Hanson?
§ Mr. Wakeham
Again, I refer the hon. Gentleman to my statement, in which I said that the purchase and sale agreement would require binding contractual obligations 48 from the purchaser in respect of such matters. We would have to be satisfied that the public interest would be protected by that agreement.
§ Mr. Michael Morris (Northampton, South)
Is my right hon. Friend aware that his statement will be greatly welcomed on three particular counts? First, he has reaffirmed that the conditions on which power is generated will continue. Secondly, he has taken cognisance of what the PAC said—there will be a proper valuation of the assets and a proper clawback provision. On that point will he confer with the Comptroller and Auditor General on what the proper percentage should be? Thirdly, the statement is welcome because, at last, we have a Secretary of State who is prepared to come early to the House to reconfirm that he is not committed to this course, but that he will do what is in the public interest.
§ Mr. Wakeham
My hon. Friend speaks with considerable authority in these matters. I am grateful to him and I shall note carefully the points he raised.
§ Mr. Robert Hughes (Aberdeen, North)
Is the Secretary of State suffering from midsummer madness? Is he asking the House seriously to believe that the way in which to conduct competitive tendering is to have secret negotiations with a preferred bidder, and then to come to the House when he has been flushed out? He is now pretending that, after months of discussion, when all the information has been available and the bid agreed, he will make that information available to other potential bidders.
If the right hon. Gentleman is serious about competitive tendering even on a trade sale basis, why does not he make an offer to any company interested in buying PowerGen to come to the Government, look at the books and discuss an offer? If that is not the right hon. Gentleman's planned procedure, is not it reasonable to believe that Lord Hanson read the frank interview given by Lord King a couple of days ago when he defended giving money to the Tory party on the grounds that it was good for business? Is the sale to be Lord Hanson's pay-off?
§ Mr. Wakeham
The hon. Gentleman should ponder what he said, as I do not believe that he has the interests of the management or the work force of PowerGen at heart. At this moment I have no firm contract with anyone. I have received a serious offer of interest, which I am exploring. I shall seek professional advice on how best to proceed, but I have given a firm undertaking to the House that I intend to see carried through.
§ Mr. Wakeham
I think the hon. Gentleman had better listen.
I have given a serious undertaking to the House that, should we decide to proceed and a binding offer is made by Hanson plc, any information given to Hanson plc will be made available to any other serious bidder that comes along. In that way we shall have a competitive tender. That is the way in which I intend to proceed, if my advisers believe that that is the best way in which to protect the public interest.
§ Mr. Ian Bruce (Dorset, South)
May I preface my question by saying that I own shares in Hanson plc. Can my right hon. Friend confirm that, before the approach by Hanson, the electricity industry had been trying regularly 49 to talk down the value of its assets so that it would end up with a profitable company at a low purchase price and, therefore, show good profits against those assets? Does my right hon. Friend agree that the one certain thing about interest coming from Hanson or any other company is that the taxpayer will end up with greater value for the assets being sold than would otherwise have been the case?
§ Mr. Wakeham
I accept that, in the cut and thrust of negotiations, there are sometimes two different views about the prospects for the future. But my impression of all the electricity supply companies with which I have been dealing—both the generators and the former area boards—is that they have good managements that are anxious to do what is right for their present shareholders—the Government—and for their future shareholders. We have had tough, but, I think, frank and fair discussions on these matters and I have no complaints to make. Nevertheless, I agree that competitive tendering can do nothing other than demonstrate clearly the proper value of the company in the circumstances.
§ Mr. Bob Cryer (Bradford, South)
What cost is involved in obtaining the advice of J. Henry Schroder Wagg? Is it under £1 million or over £1 million in round terms? Can the right hon. Gentleman confirm that Hanson plc has given many thousands of pounds to the Conservative party? Can he confirm that, in local government, anyone involved with the receipt of such money by a political party would not be allowed to take part in debates or to vote? Does he agree that the Government can clear up the noxious whiff of political corruption surrounding this whole episode only by refusing to sell to Hanson or to any other organisation that has poured money into Tory party coffers? If they do not, people outside will draw the natural conclusion that what is involved is a pay-off for the bribe that the Tories have received.
§ Mr. Wakeham
I cannot confirm any such thing. The hon. Gentleman indulges in wild fantasies about these matters. I believe that the taxpayers' interests require that, when faced with an expression of interest such as this, a Secretary of State should be properly advised by people who are competent to advise. I am seeking such advice and an appropriate fee will be determined. For a limited time, the hon. Gentleman was a distinguished member of the Labour Government—although I recall that he found the restraints of office rather irksome—and he conducted his negotiations in the same way as we have conducted ours. I can say with absolute certainty that if we proceed with a trade sale, the costs are likely to be substantially lower than those involved in a flotation, and I am sure that the hon. Gentleman would welcome that.
§ Mr. Peter Rost (Erewash)
In addition to ensuring that the company realised a higher price at a lower cost, would not the sale of PowerGen by competitive tender, rather than by public offer for sale, be likely to increase genuine competition by reducing the risk of a cosy duopoly?
§ Mr. Wakeham
There are many things in the Electricity Act, in the control of the director-general and in, our competition laws to ensure that we do not run into the difficulties of a duopoly on which my hon. Friend has pondered, although I agree with him that if Hanson plc or some other company purchased the shares in PowerGen, the competitive nature of the industry would be improved.
§ Mr. John McAllion (Dundee, East)
The Government originally promised special rates to electricity employees and preference to electricity consumers in the buying of shares. How can those promises possibly be honoured in a trade sale to one of the Prime Minister's closest friends? Will the Secretary of State take this opportunity to rule out any possibility of this kind of corrupt practice being applied to Scotland, by specifically rejecting any question of a trade sale for either of the Scottish-based companies?
§ Mr. Wakeham
The hon. Gentleman can hardly expect me to give him any sort of assurances if he asks such unbalanced questions. I said in my statement that, if we proceed with a trade sale, those employees of PowerGen who would otherwise have received shares at a preferential rate will be compensated financially by an equivalent amount and will have the freedom to do whatever they like with their money.
§ Mr. Graham Allen (Nottingham, North)
I understand that the Secretary of State is still fairly well connected with the Conservative party. Will he tell us how much money Hanson plc has given to the Conservative party in the past 10 years and how much he knows it will donate to the Conservative party up to the next election? Is not this another case of a company from over here doing very well for hon. Members over on the Conservative Benches? When did the secret negotiations begin? Did the right hon. Gentleman know the truth in May? After all, we have discovered that the truth was known about other matters, such as the British Aerospace affair. Will the right hon. Gentleman now tell the House the truth and will he tell us how much the Government and the Conservative party will make from the deal?
§ Mr. Wakeham
One thing is certain: I have no ministerial responsibility to answer for the finances of the Conservative party and I do not believe that these are proper questions for me to be asked. I have not dealt with that aspect of the matter. I have told the House that I have received a serious offer from a highly respectable company and I have explained to the House how I intend to deal with the matter. I have also told the House that I reported to it as soon as I had something concrete to say. I could not have come to the House before now.
§ Mr. Dennis Skinner (Bolsover)
Why does not the Secretary of State admit that Lord Hanson is a favourite drinking companion of the Prime Minister? Why does not he admit that, after 10 years of explosive growth and asset-stripping, it was reported in the financial press last month that Hanson plc had run into trouble with its American interests and had to sell off Smith-Corona? Is not one of the reasons for the proposal announced by the Secretary of State today to bail out Hanson plc? Will the right hon. Gentleman now guarantee that when the company is sold off, no Cabinet Ministers will be given a job on the board? Will he also guarantee, on behalf of the Tory party, that not a single penny will be received by that party if the takeover is completed?
§ Mr. Wakeham
The hon. Gentleman goes on about drinking companions. I do not mind having a drink with him from time to time, but the Prime Minister is probably wiser if she prefers to have a drink with Lord Hanson.
§ Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)
Does my right hon. Friend accept that some of the 51 comments made about Hanson plc are squalid, foolish and narrow minded and that it is sheer nonsense to suggest that a political donation can enter into the sale or purchase of a public asset? Does my right hon. Friend accept, however, that in the sale of any public asset of the size of PowerGen, only a very limited number of companies—perhaps three or four—have the funds available to enter into a private auction? Does my right hon. Friend therefore agree that, if possible, one should enter into such negotiations with great care as there are huge dangers because so few people are involved? Does not he agree that it would be sensible to keep at least 40 per cent. of the shares so that, over a three-year period—this has happened before—we can see whether the prosperity can be shared and some of this foolish criticism can be abated?
§ Mr. Wakeham
I am grateful to my hon. Friend for his suggestions. As they came from him, I shall consider them, but I am not sure that the prospective purchasers of PowerGen are quite as restricted in number as he suggests. I think that there are rather more of them around, but we shall have to see.
§ Mr. Dobson
I seek clarification of two points. Will the Secretary of State confirm that, far from his coming to the House as soon as he could, these secret talks have been going on since May?
Secondly, we all accept that, as the right hon. Gentleman said in his statement, he has a duty to the taxpayer to derive a proper return from the sale of the electricity companies, but does not he have a parallel duty to ensure that the Inland Revenue does not lose an equivalent amount? Surely it is naive in the extreme to go into these negotiations without considering the tax write-off consequences for Hanson plc?
§ Mr. Wakeham
I have said that I came to the House as soon as I felt that I had something to say to it. This morning I received the last piece of information that I needed before I could make the statement.
I confirm that, in a broad way, discussions on the best way to effect the sale have been going on for a number of weeks, but it was not until last Monday when I saw the chairman of PowerGen that I felt able to give Hanson plc any information that was not already in the public domain. We have moved fairly rapidly since last Monday—
§ Mr. Wakeham
when the first confidential information was given to Hanson.
The hon. Gentleman does not understand the way in which our tax system works. The tax affairs of individual companies—if the hon. Gentleman will not take this from me, he can take it from his right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), a former Treasury Minister with whom I remember debating on a number of occasions—and of individual taxpayers are confidential, and Ministers, quite rightly, have no access to them. I have no knowledge of the tax affairs of PowerGen, or of Hanson plc, or of the hon. Member for Holborn and St. Pancras or of the hon. Member for Bolsover (Mr. Skinner).