ARTICLES OF ASSOCIATION

HC Deb 16 April 1991 vol 189 cc167-99

'In preparing the Articles of Association of the successor company, the Secretary of State shall make such arrangements as he deems necessary to preserve the nature of those business activities being undertaken by the Board and Corporation immediately prior to the appointment of the successor company.'.—[Sir Gerard Vaughan.]

Brought up, and read the First time.

3.45 pm

Sir Gerard Vaughan (Reading, East)

I beg to move, That the clause be read a Second time.

Mr. Speaker

With this it will be convenient to discuss: New clause 5—Independence of the successor company— 'It shall be the duty of the Secretary of State to ensure that the successor company shall take such steps as are necessary to preserve the independence of the British Technology Group to enable it to maintain and extend its services in the field of technology transfer.'. Amendment No. 5, in clause 1, page 1, line 11, after 'section 2', insert 'and subsection (1A) below'. Amendment No. 6, in clause 1, page 1, line 16, at end insert— '(1A) The Secretary of State shall not be empowered to vest the property, rights and liabilities as set out in subsection (1) above unless he publishes plans showing how the independence, impartiality and integrity of the successor company will be guaranteed.'.

Dr. Lewis Moonie (Kirkcaldy)

On a point of order, Mr. Speaker. I am disappointed to note that new clause 3 and amendment No. 4 have not been selected, given that they are the official Opposition's principal amendments to the Bill. I understand that that is because of a technicality in the drafting. May I have an assurance from you, Mr. Speaker, that in view of the reasonably wide-ranging nature of the new clauses and amendments that have been selected, we shall be able to cover in that debate the matters of principle that we had intended to cover in our new clause and amendment?

Mr. Speaker

I went carefully into the question of the selection of the amendments. I cannot select defective amendments. Matters of principle, but not the new clause and amendment to which the hon. Gentleman has referred, may be debated with the group.

Mr. Merlyn Rees (Morley and Leeds, South)

On a point of order, Mr. Speaker. I could not hear clearly, but am I right in thinking that matters of principle may be raised? I understand that the selection of new clauses and amendments is entirely a matter for you, Mr. Speaker, but would it be in order for me to speak to new clause 2 although it has not been selected? I wish to deal with a matter of detail, not simply a matter of principle.

Mr. Speaker

The right hon. Gentleman knows that I cannot give reasons for my decisions, but perhaps I could hint to him that that matter was fully debated in Committee.

Sir Gerard Vaughan

I believe that the purpose of new clause 1 is absolutely clear. We wish to safeguard the future in this country of a very special organisation. We wish to ensure that the British Technology Group becomes an independent corporate body with the vitality and freedom to carry out an extremely important role in academic research, inventiveness and commercial activity. Despite all the Minister's excellent work on the Bill to date, we do not think that he has so far given adequate safeguards to ensure that.

I am sure that we would all agree that the new BTG should be able to draw sufficient sums of money—at times quite large sums of money—to enable it to carry out its future role. At the same time, it must not be put at risk of being taken over by a huge industrial corporation or concern, which would almost certainly be from overseas, and which would have the sole object of taking over the 8,000 patents and future patents that BTG holds and of using them for its own commercial advantage. We must be sure that BTG could not be asset-stripped.

We are particularly concerned to protect the intellectual property and inventiveness of the universities. We want to see inventions marketed adequately, but we want them to be safeguarded. The intellectual property of the universities belongs in the first instance, of course, to the universities themselves. I suggest to my hon. Friend the Minister that the only way to secure such safeguards is to form a consortium in which the universities have a proper stake. The universities should also play a role on the management board of any future company.

I also suggest that the Government should hold a stake in any future organisation for at least the first few years to ensure that some undesirable organisation does not take advantage of it. I know that my hon. Friend the Member for Leeds, North-West (Dr. Hampson) will seek to say something about the university aspect.

I hope that the Minister will tell us that his first priority will be, not to extract as much money as possible on behalf of the Treasury, but to ensure that the future British Technology Group operates in the way that we have suggested. I am sure that the Minister's intentions are good, but statements of good intention are not really sufficient in this matter. He should not try to keep all his options open but should tell us clearly what he has in mind.

The wording of our new clause may not be perfect—the wording of amendments tabled by Back-Bench Members is rarely perfect—but if there are small faults in it I hope that my hon. Friend the Minister will accept the good intentions behind it and will undertake to table an amendment with improved wording, if he thinks it necessary to do so, when the Bill goes to another place.

We regard the Bill as extremely important for the future of our scientific and technological progress in Britain. The British Technology Group has played an important role already as a public body. We believe that it will gain enormously from being in the private sector, but it will do so only if there are proper safeguards for its future.

Mr. Rees

I and some of my colleagues on both sides of the House tabled an amendment which refers to articles of association. You, Mr. Speaker, were right in saying that we have already dealt with one aspect of the matter in Committee, but in Committee we were referring to members of the board of directors of the new company. I declare an interest as a member of the courts of London university and of the London School of Economics. Some of us felt that if we failed in the matter of individual members of the board the Government should have regard to the interests of the university in drawing up the articles of association of the successor company.

We do not argue that directors should necessarily be appointed to the companies in the way that we suggested in Committee, but the interests of the universities should be taken into account. While I accept your decision, Mr. Speaker, and the fact that we shall not be able to vote on our amendment, I should like to deal with the interests of the universities.

This is not simply another privatisation Bill. It is privatisation of a particular form of the British Technology Group which, from the day it was set up under a different name in 1947–48, was a concept different from other nationalisation measures of the time.

It is important for the House to take into account the nature of articles of association which lay down the objectives of a company. I have looked at the articles of association of my college, the London School of Economics, and of others, and the objectives of the company should take into account the interests of the universities, not those of the individuals who are appointed to the company.

All the briefing that we have had, which I shall not repeat because it was dealt with in Committee, shows that the BTG's intellectual property enanated from the universities and the research councils, as is mentioned in new clause 2, which says: The Secretary of State shall … have regard to the interests of the universities and the Research Councils … and shall consult with the Committee of Vice-Chancellors and Principals and the Research Councils". That is vital.

The Secretary of State must take into account the fact that the universities account for the largest single source of the BTG's intellectual property—about 60 per cent. if one takes into account the teaching hospitals. The research council institutes and the research associations account for 25 per cent. and the rest comes largely from Government laboratories. The BTG depends for its success on the high quality research and inventiveness of our universities. Therefore, the interests of those institutions should be taken into account when drawing up the articles of association. That argument has been made in a different context many times, so I shall not argue the case again.

The Minister met representatives of the Committee of Vice-Chancellors and Principals yesterday in a different context. He knows the worth of the arguments that are put forward by people in that group, the nature of the BTG, and that it is important that the intellectual property should be safeguarded so that it can be used properly in future by the successor company. Therefore, I hope that the Minister will give us an assurance about the nature of the articles of association and that he will safeguard the intellectual property of the universities.

We know about the problems that have long faced universities about the nature of fundamental research and applied research and as a result of a shortage of money. Earning money through the BTG has enabled them to have more students, particularly in the natural sciences, and so on.

Sir Gerard Vaughan

The right hon. Gentleman talks about safeguarding the interests of universities. Does he agree that they should have an active role in any future body? It is not enough simply to have people who think the way that they do; the universities should play a part in the management of a future body.

Mr. Rees

I was trying to observe Mr. Speaker's ruling and not put forward a more detailed argument. The short answer is that I agree fully. What matters is that the interests of the universities and research councils should be taken into account. It is up to the Government to determine the appropriate way of doing so.

We argued this case twice in Committee. At the end of the day I think that all members on both sides of the Committee understood that the privatisation of the BTG is different from other privatisations and that wherever the successor company gets its capital from, whatever the problems about pensions and asset stripping, it is vital that our universities, which lead the world in so many ways, should still be able to work in the new successor company for their own ends and for those of the country. That can be done only if the articles of association are drawn up in such a way that the interests of the universities are taken into account; and there are various means by which that could be done.

Although the new clause that I tabled has not been selected for consideration, I hope that the Minister will take it into account.

4 pm

Sir Trevor Skeet (Bedfordshire, North)

I support the new clause. It is important to take into account the assets that are at risk. The BTG represents a core team of specialists in technological transfer and patent protection. Some 8,200 patents have been granted and 500 licensing agreements reached. These bring in royalties—the bulk of the BTG income—of £29.5 million.

Although it is important to take into account the relationship between the BTG and the universities, it is also important to consider what the BTG represents. It has a staff of 188 and it employs six solicitors, 18 patent agents with trainees, 15 financial managers, plus six on the venture capital side and 60 specialists in technology transfer who work in the operating division. I would challenge anyone to say that there is any other group in the United Kingdom with such a team of experts as that in the BTG, which has operated for so many years. It would be disgraceful if those people were abandoned in the future, particularly if that were as a result of asset stripping.

The BTG has agreements with 50 universities, 17 polytechnics and eight medical schools. The right hon. Member for Morley and Leeds, South (Mr. Rees) has already mentioned that the universities are by far the biggest source of the BTG's intellectual property—they account for more than 50 per cent. of it, if the contribution from the teaching hospitals is included. Another 25 per cent. of that intellectual property comes from the research councils. Given that contribution, it is only right that the House should hold out for special consideration for the universities, polytechnics and medical schools. My hon. Friend the Minister has a tricky course to follow, but I hope that he will take into account that special consideration and protect it.

I have outlined the assets that are at stake, but it is important to consider it from a different angle—the risk to which those assets will be exposed. My hon. Friend the Member for Reading, East (Sir G. Vaughan) has already mentioned asset stripping, but the elimination of our competitive technologies would be equally disastrous. Some 70 per cent. of the licensed income of the BTG comes from abroad and it will be especially vulnerable to foreign takeover. Given that 40 per cent. of its income comes from the United States, and knowing how grasping that country is and how covetous it is of the BTG since the American equivalent is much smaller, I dare say that the United States will want to take it over at the first opportunity. We must do something to protect the BTG from that.

We must also prevent sector domination by a limited number of shareholders. Shares can be allocated to any one shareholder, but they must be strictly limited by number.

It is important to appreciate the earnings to BTG from its various intellectual property. Antibiotics provide £150 million for the BTG, magnetic resonance imaging £18 million and cholesterol measurement equipment another £6 million—a sizeable proportion of the total income of the BTG. One can imagine that a pharmaceutical company would say, "It is ripe for takeover and if we had it, we could strip out any of the assets that we didn't require and put them into the relevant side of the company".

Mr. Anthony Steen (South Hams)

Does my hon. Friend agree that what we want is not a friendly assessment of our case from the Minister, but an undertaking that when the Bill leaves Parliament it will contain provisions to protect the company? Is not that what my hon. Friend is saying that the Minister should do today?

Sir Trevor Skeet

I have not yet heard what the Minister has to say, but I agree with my hon. Friend's analysis. This is the Report stage and the Bill will soon be passed. I want the Bill to contain a clause to ensure that there is a reference to the articles of association, which will enable the Minister to say that there will be a ruling on anyone who sets up an independent company hereafter so that we shall have some control over it.

I espouse my hon. Friend's arguments, but I go further. The pharmaceutical industry—Du Pont, Bayer in Germany, Smithkline Beecham, perhaps, in the United Kingdom, Glaxo and others would like to take over the company. The BTG has 8,000 patents in 1,500 different sectors of technology, and they would all be extremely useful. Therefore, we must examine the issue carefully.

I do not want to detain the House for too long, but I wish to make one further important point about similar organisations and technology transfers. I mentioned the American Research Corporation. In the United Kingdom, we have 3i Research Exploitation Limited, which is smaller than the BTG but which is important because its parent company is a substantial size. It is possible that, in the future, that little organisation, backed up by a powerful parent company, may wish to take over the BTG. I am for competition, so I would not like to see the company taken over. Therfore, I suggest that we should be very cautious.

The BTG's chief executive, Ian Harvey, said: BTG's royalty revenues are greater than the total royalties earned by the entire US university and government research systems combined. The BTG is a plum to be picked unless we do something to safeguard it.

I know that the Minister is listening intently. He must say that he will safeguard the company once it is released from his control. My hon. Friend the Member for Leeds, North-West (Dr. Hampson) said on Second Reading that he could give safeguards through the golden share for two or three years, but a provision should be written into the articles of association to give further coverage in future and to ensure that the technology in which the United Kingdom has secured an advanced position is safeguarded for the next decade.

Mr. Simon Hughes (Southwark and Bermondsey)

I wish to speak especially to the new clause and the amendments tabled in my name, but I should like first to comment on new clause 1 and on the contributions made by the right hon. Member for Morley and Leeds, South (Mr. Rees) and the hon. Members for Reading, East (Sir G. Vaughan) and for Bedfordshire, North (Sir T. Skeet).

I support the proposition that there should be as much effort, thought and consideration as possible before a decision is made on principle by the Government to include academic and university interests in the future structure, as they have requested and as they are keen to ensure. I have read the contributions made by the Minister in Committee. Although I was not a member of that Committee, I have followed the Bill with considerable interest and, so far, the Minister has kept his cards close to his chest—not a single card has been revealed.

Mr. Alex Carlile (Montgomery)

Perhaps he does not have any.

Mr. Hughes

It is not for me to say whether he has any, but he will certainly have to play some cards if he wants to get the Bill through the House. He will have to open the Bill up to amendment either here or in the other place because eminent Members on both sides of both Houses will join in voicing substantial and significant concern.

The hon. Member for Bedfordshire, North described the BTG as a plum ripe for the picking. The BTG is our scientific and technological family silver, albeit recently acquired family silver—a collection built up over the past 40 years and, in particular, the past 10 years. The Minister knows that in the past six years the BTG has been pre-eminently successful. As the hon. Member of Parliament in whose constituency the BTG's headquarters are located, I feel somewhat defensive. I am concerned that we should not, as a result of our negligence, allow the assets to be pinched. There can be no excuse for that because we have all been alerted to the importance of the assets that we have in our possession.

Dr. Keith Hampson (Leeds, North-West)

I am sure that the hon. Gentleman, like most of us, would not mind selling an asset—even the family silver—if, in doing so, he could turn the result into an appreciating asset. I imagine that the BTG feels exactly the same.

Mr. Hughes

There is all the difference in the world between changing the management structure of the BTG for a good management reason and protecting rightful interests, and incorporating it, without individual justification, in the Government's general privatisation programme without affording it the protection that all hon. Members seek for it. I have talked to the chief executive of the BTG and have no doubt that the management are impressive in terms of both expertise and vision. I do not share the view that we want a BTG protected from any foreign interest. The chief executive confirmed what the hon. Member for Bedfordshire, North said about foreign interest and revenue-earning—par-ticularly from the United States and, increasingly, from Japan and so on. I know, too, that that source of funding will be increasingly important in future. But there is all the difference in the world between accepting that and allowing the BTG to be successful in the world market, and taking up the anchor and allowing the BTG to be bought out by whoever comes along, thus ensuring that a potentially great asset for British technology is no longer available to us or in any way under our control. The Minister must come clean about that this afternoon.

Sir Trevor Skeet

Let us forget technology for one moment. The company is attractive from another angle. Its gross profits rose from £3.5 million in 1987 to £9.5 million in 1990. Its income rose from £17 million in 1987 to £29.5 million in 1990. The company is a catch by any standards, quite apart from its technological importance.

Mr. Hughes

The hon. Gentleman is absolutely right. The BTG is not only important as a scientific and technological resource and because it is so valuable—as the hon. Gentleman said, its earnings last year were more than £29 million—but because it is one of the mechanisms by which Britain will succeed. It is a reserve of academic and scientific skill, expertise and cross-fertilisation between subjects which will allow us to do well in the world. It is a service mechanism for British inventions and allows us to convert those inventions into the best-developed and most saleable products while safeguarding the interests of our continuing public scientific and technological base. To get rid of the BTG or not to protect its future would be to allow all Britain's intellectual and academic experts to do their job with no guarantee that any of their work would be used in the interests of their national economy and scientific base. That would be folly indeed. I cannot think of anything more foolish, given how dependent we will be on such expertise in the future for our international economic success. If we throw away something that we do so well, we shall throw away a potential cornerstone of our achievement in the next century.

4.15 pm

As the hon. Member for Bedfordshire, North rightly reminded us, we are discussing a thriving, successful and visionary business in which several hundred committed people representing several disciplines are working together to ensure that its future is secure. That is one of its unique aspects, as is the support that it has been given by the academic community, to which it represents a bridge between pure, "blue sky" research and the commercial world. It has been a flagship for our inventors and their inventions—and if flagships are sunk on a regular basis, not much of a navy will be left.

The BTG has pulled itself out of the doldrums. It has done very well over recent years and it deserves support. I ask the Government to respond to our concern and to accept that they should not be given a blank cheque and told to do what they will with it. I shall press the Minister especially hard on new clause 5, which—along with new clause 1—he will probably find easier to accept than amendment No. 6.

New clause 5 seeks to impose on the Secretary of State the duty of ensuring that the successor company shall take such steps as are necessary to preserve the independence of the British Technology Group to enable it to maintain and extend its services in the field of technology transfer. The wording of amendment No. 6 follows the "three i's" definition given by the chairman of BTG, which has been quoted extensively both on Second Reading and in Committee—"independence, impartiality and integrity". It calls for the Secretary of State not to be able to pass on BTG through this enabling Bill without setting out how he will guarantee those qualities in the future. Those conditions will secure BTG's safety.

It is, I think, accepted that even BTG's current management do not consider the existing assurances and guarantees go sufficiently far. I do not believe that I am betraying any secrets in saying that new clause 1 was tabled with the support of the management. It is they who have argued over the years that BTG should change its status and have come out in favour of its transfer from what can be broadly defined as the public sector to the private sector; but they, too, want assurances. If they—the people who have been pushing hardest for the change—are not happy, others can reasonably be assumed to be even less happy.

Sir Gerard Vaughan

It is no use our country's having inventions if they cannot then be marketed to its benefit. It would be a tragedy if inventors lost confidence in the new body and did not make their inventions available to it.

Mr. Hughes

The hon. Gentleman is quite right. Some of the company's employees—who include constituents of mine—fear that the wrong sort of sale, without guarantees, would have two effects. First, it would not protect the public interest; and, secondly, it would not gain the confidence of the universities, which at present take their ideas to the company in the hope that they will be developed confidentially and intelligently so that they can be exploited to best effect. They will not go there if they believe that BTG will be bought. I am not against the idea of an international interest in it. A 10 per cent. American, Japanese or European Community shareholding might be entirely appropriate. Let us, however, consider a Japanese takeover of BTG. It is highly unlikely that many of those who currently confide the development of their invention to BTG and who come from a British academic background would continue to want to do so. They would understand that their invention would not be used, as it is now, for development at home of things that they want to develop at home. That is a practical concern. Therefore, the hon. Gentleman was right. That concern is shared profoundly by employees who are troubled by the proposals. We need to take account of their troubles and concerns.

Amendment No. 6 adopts the chairman's language. I ask the Minister to be much clearer than he was in Committee, where he said: Anxieties about the effect of privatisation on the 3i are important. The BTG chairman, Sir Colin Barker, stressed the importance of retaining 3i and several Opposition Members expressed similar anxieties. They want the Bill to include measures to safeguard the 3i after privatisation. The Government will take those anxieties into account when deciding the form of privatisation and whether safeguards are necessary in the articles or the agreement of sale. That was the point made by the right hon. Member for Morley and Leeds, South (Mr. Rees). The Minister continued: Other factors will be taken into account in determining the best route for privatisation."—[Official Report, Standing Committee G, 7 March 1991; c. 150.] However, the Minister refused to say specifically that he would give any guarantees or undertakings. To take those anxieties into account does not reveal the Government's hand. Independence has not been guaranteed.

The Minister was also asked to deal with whether it would be possible for a single purchaser to take over BTG lock, stock and barrel. However, he did not adequately do so. That question was put simply by the hon. Member for Liverpool, West Derby (Mr. Wareing): I was objecting to the idea of one company buying out the BTG and using its resources solely for its own interest. The Minister said that that was a possibility. The Minister replied: It is a possibility."—[Official Report, Standing Committee G, 28 February 1991; c. 97.] That should not be. Those who were not members of the Committee or who have not read the reports of the debates may not be aware that the Government accept that a wholesale acquisition is a possibility. That is unacceptable not just to those who were the progenitors of BTG and brought it into being in the 1940s, or to those who kept it in being during the 1980s, but to all those who are interested in BTG. Such an unconditional possibility is unacceptable to them.

If such a sell-out is possible, the conclusion must be that impartiality will be impossible. If a large or a monopoly shareholder decided not to accept or develop products if the new inventions threatened their market share in goods that they already produce, there would be no independence. If BTG were to be sold in an uncontrolled manner, without any limits on the size of shareholdings, or on the level of overseas shareholdings, the management's motivation would be affected. It would be much more likely to be motivated by the need to meet shareholders' demands for profits, not excellence.

The danger is that patents will be sold off to the highest bidder. That may be in our short-term commercial interests, but it would do no good to our long-term commercial interests. Shareholders could cream off the profits instead of making sure that we develop patents.

In conclusion, I ask the Minister the following questions. Will he tell the House unequivocally that he has no intention of selling BTG to the highest bidder? Can he assure us that that will not be possible? Will he tell us unequivocally that there will not be an overseas monopoly of shares in BTG? Will he tell us unequivocally that he intends to ensure, through the articles of association, that BTG will have a duty to consider all patents brought to it in an impartial manner, uninfluenced by the business interests of the shareholders? Will he tell us unequivocally that, in the articles of association, BTG will not have as a business objective the selling of patents for short-term profits rather than preserving the long-term interests of current and future patent holders and licensees? Lastly, will he tell us unequivocally that BTG will be required, if and when it is privatised, rigorously to defend the patents and licences that it has built up as part of its portfolio over the years of its success? We need some assurances and if they are not forthcoming we shall have to register our dissatisfaction.

I have spoken in a non-partisan way as someone who has been aware of the benefit of BTG for all the years that I have been Member of Parliament for Southwark and Bermondsey, not just because it is based in my constituency but because it is a key scientific resource. I hope that the message is clear across the House.

If the Minister can help us today, he will get far less of a rough ride from the other place. If he does not help us today, he must not underestimate that the other place may give him a very hard time. I have no wish to make the Minister's summer difficult or unpleasant, but I do not want him to be dogmatic about the BTG. There are ways of protecting its interests. If that is achieved none of us will be dogmatic about it, but if that does not happen we will have to stand firm and say that the Government are not being honest or straightforward and that they are not looking after the nation's interests as they should.

Dr. Hampson

It is worth recording officially that today is remarkable in one essential respect. This is the first privatisation that the Government have undertaken that the Labour party has not opposed. The amendments do not object to the privatisation. Their purpose is merely to ensure that the end product satisfies a common purpose.

Dr. Jeremy Bray (Motherwell, South)

I hate to disabuse the hon. Gentleman, but we voted against the Second Reading and, subject to what the Minister has to say, no doubt we shall vote against the Third Reading. We have steadily expressed our opposition to the Bill throughout. Certainly within the framework of Government policy we seek to improve the Bill as far as it can be improved.

Dr. Hampson

That just goes to show what a lot of charlatans the Opposition are. Anyone who has read what BTG has stated and particularly what the chief executive wrote in the Observer in March would have no argument against the Bill. When one talks to Opposition Members, they accept its validity. I thought that the Labour party had basically accepted five or six central points.

Dr. Moonie

Does the hon. Gentleman genuinely believe that the chief executive of the British Technology Group has only the good interests of the company at heart and not his own?

Dr. Hampson

That is one of the great giveaways of all time. I always thought that the Labour party was advocating that management should look after the interests of the company and its work force. Here we are saying that the man who is closest to the coal face, if one can use a Labour phrase, does not know what is in the best interests of the company. Since when did the Government know what are the best interests of the company?

One of the problems in this country has been that we have had no effective means of technology transfer between the originators in the academic world and delivery in business. We have been edging forward out of the grotesque bureaucratic apparatus which the Labour party supported and, from what we have just heard, seems still to support, into a much more flexible instrument. It is an instrument that is very successful in generating returns for the universities—£13 million a year. It is seen by the universities as one of the most effective means of promoting their inventions. As the universities themselves are not against this privatisation, it is extraordinary that the Labour party opposes it. But Labour has managed to get itself ideologically cocooned; it is simply against privatisation in principle, no matter what the context.

Dr. Moonie

I hoped that the hon. Gentleman, who is one of the more intelligent Members on the Government Back Benches, would be able to recognise the difference between making the best of a bad job and supporting a principle.

4.30 pm

Dr. Hampson

Now the hon. Gentleman is changing his tune. It is significant that there are hardly more than four Labour Members in the Chamber to take part in the great defence of their principle. The Opposition recognise that the future of this operation depends on its being in the private sector. The company itself says so. If it is to remain the world's leading technology transfer company. it will, they say, have to be "given the freedom and the stimulus of the private sector". If it is to succeed, it cannot be parochial. It must not be restricted within the bounds of an island off the greater part of the continent, and isolated from the rest of the world. This must be a global operation. It is vital that it has the critical mass which will give it the investment potential that is necessary if it is to draw on innovative capacity around the world, for the benefit of this country.

Governments will set limits on its operations, and have to approve board members and executives. Is the hon. Gentleman saying that the organisation should have to exist in a critical and competitive world with one hand tied behind its back? Is he saying that it should be kept in a financial straitjacket?

The Opposition do not seem to realise what has been happening in recent years. Today, the Treasury is more short term in its thinking than is any organisation in the City. The hon. Gentleman should take the trouble to read some of the remarks of the chief executive of BTG. Two years ago, on the orders of the Treasury, it had to pay dividends amounting to £8.6 million, despite the fact that its after-tax profit was £5.2 million. [Interruption.] The hon. Gentleman, instead of trying to intervene ideologic-ally, should listen. How does he justify the fact that a company that he wants to succeed had to pay dividends amounting to £8.6 million, although its after-tax profit was £5.2 million? That is a means of preventing this organisation from backing British innovation and from succeeding in technology transfer.

Dr. Moonie

The hon. Gentleman has referred to a Treasury straitjacket. But Treasury straitjackets are not immutable; they can be changed. The hon. Gentleman says that the company has one hand tied behind its back. But this is the world's most successful technology transfer organisation. No organisation in any other country comes anywhere near it. It seems to have done rather well in the straitjacket that the Treasury has provided for it. On the question of management, surely the hon. Gentleman is aware that a survey of the views of all the employees of BTG showed that an overwhelming majority were opposed to the principle and practice of privatisation.

Dr. Hampson

The hon. Gentleman has just given the game away totally. Only five minutes ago he was condemning the management; now he is praising it for having done a brilliant job in the straitjacket of the Treasury. He knows that the company will prosper without that straitjacket.

This debate is really about protecting intellectual property and the people who create it—the innovators.

Every one of the amendments that we are debating is, in a sense, flawed. We have all fallen into the trap of talking about the articles of the successor company. The successor company will be a Government company run by civil servants, and it may last a long or short time. The amendments' aim is to probe the Government's intention for the private operation, not the successor company, which is a technical term for the interim period before the company is sold.

I hope that we are seeking not blanket condemnation of the principle of privatisation but firm guarantees from my hon. Friend the Minister on the structure of the private company that will emerge. If he can give those guarantees, new clause 1 and new clause 5 become redundant. We shall have to wait and see whether my hon. Friend can go beyond what he said in Committee.

Dr. Bray

New clause 1 is not as defective as the hon. Gentleman suggests because clause 15 defines the successor company as the company nominated for the purposes of section 1"; and under clause 1 the successor company is the company that the Secretary of State may by order appoint all the property, rights and liabilities to". Only the sale of shares in the successor company constitutes the act of privatisation. The successor company, surely, continues, so new clause 5 is in order.

Dr. Hampson

There is a nice legal dispute about what the amendment means, but I ask my hon. Friend the Minister to clarify that. We are trying to ensure that the final structure of the company meets valid objectives, the critical one being that the British Technology Group is our primary instrument for transferring bright ideas and breakthroughs to the private sector. It must therefore remain independent and in no circumstances must it fall into foreign ownership.

I might as well jump my own gun and say that the most important point that my hon. Friend the Minister must clarify concerns the prospect of a golden share held by the Government. The model was water privatisation, where we established a five-year golden share, which must be a minimum period to prevent asset stripping, especially foreign asset stripping.

Dr. Bray

rose—

Dr. Hampson

I shall give way again to the hon. Member for Motherwell, South (Dr. Bray), but my brief intervention is becoming a summing up. I have replied to about six interventions. The Labour party is so sensitive on this issue that it cannot do other than constantly defend its position.

Dr. Bray

The hon. Gentleman is making a useful speech. He said that he would like to see a golden share. Will he support amendment No. 2, which creates such a golden share for the precise period that he specified?

Dr. Hampson

I shall wait to hear what my hon. Friend the Minister says. I am always hesitant to support amendments tabled by the Labour party; I am sure that its amendment is as inadequately drafted as amendments that I have tabled. I have long said that a golden share is the only sensible guarantee of avoiding asset stripping.

Mr. Simon Hughes

rose—

Dr. Hampson

I shall give way, but it must be for the last time as this is a short debate.

Mr. Hughes

Does the hon. Gentleman accept that the logic of his general principle—that we must protect this important mechanism—will not be sustained by the mechanism that he proposes? A golden share kept for, say, five years places as much uncertainty in the mind of the prospective inventor who wants to use BTG, because after five years there may be no golden share. We need a mechanism and guarantees that the structure will be circumscribed in certain respects. It will be in the private sector, but in these respects we shall have control over it. Five years is short term, with the risk that it all gets lost in five years' time. That will not provide the confidence that is one of the prerequisites for the operation's necessary success.

Dr. Hampson

I was coming to that point because I agree that short termism is a problem, and I have commented on that in one context already. It also applies in the sense that five years means that it will come, probably, in the political cycle. A body that earns perhaps 70 per cent. of its income abroad and has to deal with private companies and private enterprise in, say, Japan will have problems if we are not careful, with a Labour Government potentially always hovering around threatening to turn it into some nasty bureaucratic stranglehold operation. No national enterprise will ever be able to draw on the property rights of other, private companies. We have seen a couple of major examples already with BTG.

A golden share is essential in the transitional period and as the major protection against asset stripping, which may be by a British company; and may not be foreign. But I fear that the major Japanese conglomerates, with their huge banking resources and industrial strength, would thrive on the innovative power that BTG generates. So there has to be a ceiling, and this is the third point that I want to ask my hon. Friend to clarify. I want him to go beyond what he said in Committee and to say that there will be a ceiling on the equity holding of any foreign operation.

I endorse entirely what has been said by my hon. Friend the Member for Reading, East (Sir G. Vaughan) in moving the new clause. We are primarily interested in the independance of this operation. The consortium idea is a very attractive one because I believe that the universities are a critical force that has to be recognised. It is almost irrelevant whether they have one, two or more members on the board. It is the blocking stake in the operation overall that is important. I hope that they can generate the resources. We have to look quite inventively, as some operations in the United States have done, at how private industrial business capital can go through the university world to lock the universities into a major participating element of this company—a 20 per cent. stake—a blocking stake of some kind, to keep the universities as a central player in the operation.

Above all, I hope that what will emerge from what my hon. Friend says today is the recognition that a Major society, if I can coin a phrase, if it is to be an innovative society, must ensure that this form of partnership between the academic, innovating world and the private capitalist world, which is the dynamo of the world economy, thrives and succeeds. I believe that what we are doing today is the right way forward.

Mr. Mike Watson (Glasgow, Central)

It was stated on Second Reading and on a number of occasions in Committee that there is no need for the privatisation of the British Technology Group. I do not intend to go over that ground again, but one point that should be mentioned is that, if and when the BTG is privatised, the United Kingdom will be the only major industrial nation that will not provide backing for technology transfer. I believe that we should learn a lesson from some of our industrial competitors, such as the United States, France and Japan, all of which have industrial records that are considerably better than ours and all of which have state owned and controlled technology transfer companies which perform effectively.

I find it strange that the Minister and his colleagues have found little good to say on behalf of BTG and the job it is doing. We know that it is profitable and effective and that it is regarded highly by universities, research institutions, and so forth. Yet the Government are determined to force it into the private sector irrespective, apparently, of the effect that that will have on its effectiveness.

4.45 pm

Some comments of the hon. Member for Leeds, North-West (Dr. Hampson) about BTG were rather patronising. He talked of the Opposition's approach to BTG and referred to the so-called straitjacket within which he believed it was currently operating. There is little evidence of that, despite comments which the senior staff of BTG have made and which were repeated in Committee. It seems clear that the body is effective and ought to be allowed to continue in that way. However, we must be realistic and assume that the Bill will eventually become law and that BTG will be privatised. On that assumption, the question of safeguards, which is referred to particularly in new clause 1, is important.

The hon. Member for Bedfordshire, North (Sir T. Skeet) raised the question of assets. He talked of the prime assets of the company as being the staff. I would not disagree, but I thought that he was a bit restrictive. He talked of senior staff and of investment, knowledge, research, expertise, and so forth. There are 188 staff at the British Technology Group, and I think it is wrong to say that we should be absolutely certain that some of those staff stay with the group when it is privatised while others are of less importance. There is a contribution of expertise from the staff on a wider scale that should be valued and recognised.

Although staff are clearly prime assets of any organisation, I am also concerned—and this is not the first time that I have said so during the stages of this Bill— about the question of patents owned by BTG and what will happen to them subsequent to privatisation. I spoke on Second Reading on 12 February and made similar comments, which drew an intervention from the hon. Member for Bedfordshire, North, who said that he saw no problem with regard to patents. I raised the question again in Committee, addressing my remarks to the Under-Secretary, and said that I had had no assurances from him in his summing up on Second Reading and hoped that I would have some assurances on that later occasion.

The Under-Secretary said that the question of patents was one of the important points which the Government wished to draw out from the debate—I use his words. But it was never successfully drawn out from the debate in Committee and there is no evidence as yet that the hon. Gentleman or any of his colleagues is likely to give it any emphasis at this stage of the Bill.

It is very important that the question of patents is addressed and that assurances are given to universities and other research bodies. Many individuals who work within unversities need assurances about what will happen under the new ownership of the group. I hope that the Under-Secretary is listening when I ask again for such assurances. I see that he is not listening, but perhaps the message will eventually get through to him that the people responsible for inventions need assurances about patents.

One reason why we need such assurances concerns how patents might be defended following the sale of BTG. The fact that BTG pursued the Pentagon recently in a case that lasted for a considerable time and resulted in payments of some £6 million being made to BTG and the owners of the patents concerned has rightly received a lot of publicity. That is not a typical example, but BTG has been vigorous in defending the patents within its control and we need assurances that that will continue. Legal action is, of necessity, costly, particularly lengthy cases, often against powerful predators—multinational corporations perhaps —and these may not be attractive to the new owners of BTG.

I am particularly concerned about comments made by Dr. Ian Young, the manager of research on nuclear magnetic resonance, which has been a major earner for the British Technology Group. He said that he was concerned about overseas patent infringers. What would happen if the new owners of the group were faced with a similar situation in terms of one of the existing patents, or indeed a patent which came along subsequent to privatisation, and the estimation was made by the new owners that the cost of litigation in defending that patent could not be justified for any number of reasons, the least of which might be financial?

Some safeguard has to be written into the Bill. There is no safeguard whatsoever, and I am particularly concerned that this matter is addressed and that the Under-Secretary gives us the Government's views about how this problem may be dealt with after privatisation.

The last point that I want to mention was covered by the hon. Member for Southwark and Bermondsey (Mr. Hughes), for whom I have great respect. He is the Member who represents me through my London residence; therefore, I want to keep in his good books. I also have great respect for his knowledge of education matters and for his ability to extend his comments over a long period. On occasion that has been of benefit both in Committee and in the House. The hon. Gentleman is not here at the moment, but I should like him to know that I mean those comments kindly; no doubt his colleague the hon. and learned Member for Montgomery (Mr. Carlile) will pass them on.

The hon. Member for Southwark and Bermondsey talked about who might take over BTG when it goes up for sale. He expressed the view, which I wholeheartedly echo, that the highest bidder should not necessarily be successful. That is of great importance.

It is also important that consideration is given to expertise. The hon. Member for Leeds, North-West said towards the end of his contribution that universities might have a role to play in bidding for the British Technology Group. I hope that that possibility comes to fruition.

Dr. Hampson

I should like to correct the hon. Gentleman. I did not say that the universities should bid for BTG because that would be a gross waste of their resources; I do not even know how they would do it. However, I think that they have a part to play in a consortium arrangement in which they would have a blocking element, if for no other reason than that I do not want the ownership of BTG to be vested in an industrial corporation which would use the intellectual property rights generated in this country to block universities from commercial activity just because they were in competition with things that the company was already doing. I think that the universities have to be built into the system to look after the interests of the innovators, but I do not want the universities to own the company.

Mr. Watson

I value that qualification of the hon. Gentleman's remarks; I had misinterpreted what he said. The argument as to whether the universities and research councils should have representation on the board of the new company, by whomsoever it is owned, was addressed in Committee. Such suggestions came from the Opposition and were rejected by the Government. I share the concern of the Member for Leeds, North-West and hope that something will come of it.

I was addressing my remarks to the possibility that some universities may form a consortium with research organisations and foundations, possibly involving British Technology Group managers and employees, to bid for the company. That would not mean that it would be owned by the universities, but they would have an input financially and in expertise. It would not necessarily cost the universities a great deal to divert funds which might be used for other purposes at a time when they are being squeezed, but it would mean that there would be a direct input from universities, which would be much more desirable than commercial considerations being brought to bear on BTG which has shown over the years that it can conduct technology transfer in a way which, while being profitable, is not driven by profit as the main motive. It is important to stress that profit need not and should not be the main motive.

There is a great deal of expertise, particularly in universities and research councils, that must be used to ensure that the British Technology Group post-privatisation maintains its role of being effective in technology transfer. If it is run simply as a business proposition, it will have a short life. No hon. Member wants that. If the Government are prepared to take note of the comments of hon. Members on both sides of the House, I think that we will achieve some assurances of university and research council involvement. That is very important for the future development of the British Technology Group.

Mr. Alex Carlile

At one point during the debate we started to descend into the political arena as to whether the British Technology Group should be privatised because privatisation is a good thing or not privatised because it is perceived to be a bad thing. That was a little caricature of a sensitive and mature debate about the nature of the business activities carried out by BTG.

Everyone who has spoken in the debate shares the same sense of purpose that there should be at least a body, whether it is called the British Technology Group or something else, to which British invention can go with confidence, knowing that it will be supported not only in the short term but in the long term, that its intellectual property will be nurtured and that it may be nurtured in the national interest, which seems to be not an unreasonable end for which to aim.

The function of the British Technology Group includes securing, where the public interest so requires, the development or exploitation of inventions resulting from public research. That is entirely laudable. Neither on Second Reading nor in the Committee proceedings which I have studied have the Government been able to give satisfactory assurances that the strategic aims of the British Technology Group will continue. It seems possible that in a very short time the assets of the group will be sold to the highest bidder, who may not have our national interest at heart.

Hon. Members have mentioned selling the family silver. In one respect at least there is a danger of giving away rather than selling the family silver. I put to the Minister a point which I hope he will deal with in due course. It relates to the intellectual property of research carried out by or on behalf of the Ministry of Agriculture, Fisheries and Food. It has come to my attention that in February 1987 a confidential internal paper was circulated in the Ministry. It was written by Dr. C. E. Fisher and was entitled: Policy and Organisation Study of Exploitation of Intellectual Property in MAFF. Following the circulation of that paper and discussion on it, there was apparently an agreement that the British Technology Group would handle the exploitation and the export, where appropriate, of the intellectual property of the Ministry of Agriculture, Fisheries and Food. That agreement was marked by a MAFF press release dated 4 January 1990. It was not one of the most howling successes of MAFF's energetic publicity machine as all that it rated was a small piece in one, albeit distinguished, farming journal.

In the light of that, can the Minister tell us whether the British Technology Group will give up that agreement with the Ministry of Agriculture, Fisheries and Food before privatisation, or will it give away in the privatisation all the intellectual property of which it has the advantage arising from the Ministry's activities? If the intellectual property of the Ministry of Agriculture is simply to be given away to whomsoever purchases the group, that will be truly giving away the family silver.

A connected complication arises in relation to the royal botanic gardens at Kew. Since 1984 they have been funded by a grant in aid from the Ministry of Agriculture, Fisheries and Food. As I understand the position, any intellectual property that has arisen from research at Kew is part of the agreement to which I referred earlier. That means that the British Technology Group, under that agreement, owns the intellectual property—or at least holds the rights to it—arising from the world-renowned efforts of the researchers at the royal botanical gardens. For example, the gardens have the largest collection of wild plant seeds in the world, a major resource not only for third world development but for agricultural, horticultural and botanical development throughout the world.

Will the British Technology Group give away those potentially hugely valuable intellectual assets when it is privatised? Will that important piece of public property simply be handed over.. to a private purchaser? Will the Minister answer those questions when he replies to the debate?

5 pm

Dr. Hampson

The British Technology Group will not be giving away those assets if they are properly developed and exploited and become commercially successful. It all comes back to the nature of the company. We are not giving away public sector assets but trying to develop them. I do not mind if public sector inventions are developed by private companies. Does the hon. Gentleman mind?

Mr. Carlile

I have divulged to the House that, as a result of its public service position, the British Technology Group was given valuable assets which it would not have acquired had it not been in such a position. That has not been revealed to the House before and is a well-concealed fact. It should be part of the consideration when the House decides how to vote on the Bill. I suspect that when the matter is debated in another place, it will be an energetic debate led by some university chancellors and others from academic backgrounds, and those considerations will be important when they decide whether the Government have come clean about what is happening.

Is British public service inventiveness being protected? We must bear in mind what has happened in various privatisations. I do not suggest that there has been bad faith in the setting of prices for privatisation deals, although others might do so. It is clear with hindsight, at least in market terms, that the private sector has had some extremely good bargains as a result of privatisations. We must therefore have a full understanding of what is being sold. For example, when we are dealing with Ministry of Agriculture, Fisheries and Food intellectual property, which is very much part of the public service, should not the public service gain from exploiting that intellectual property? The public service and the Government are entitled to the profits of that exploitation.

Research is still being carried out, albeit in diminished terms, on behalf of or by the Ministry of Agriculture, Fisheries and Food. What will happen to the intellectual property in that research or research carried out by any other Department? Have the Government thought that through or will they hawk whatever intellectual property exists around the market to see who is the keenest taker? Do they really believe that companies will be prepared to take the long-term view that the British Technology Group has been prepared to take? The issue seems to be clarified by the words in the first new clause, to preserve the nature of those business activities". Will the Minister assure us that the type of business activities to which I referred will be preserved as public assets?

Dr. Bray

This useful group of amendments has attracted hon. Members who have a contribution to make to the subject of the Bill. Some of them spoke on Second Reading but were, unfortunately, excluded from the Committee, no doubt by the machinations of Committee selection procedure and the Whips, not to mention the Minister. Had they been members of the Committee, the Bill would have been in rather better shape now, and the future of the British Technology Group would be clearer. The Minister's mind would also be clearer. I doubt whether he will be able to shed much light on the Government's plans for the future of BTG, even this evening.

The hon. Members for Reading, East (Sir G. Vaughan), for Leeds, North-West (Dr. Hampson) and for Bedfordshire, North (Sir T. Skeet) have, for a long time, taken great interest in science and technology, research and its application to universities, and the integration of universities' output into industry. Had the Government listened more carefully to their views, not only on the Bill but on other matters over the past 10 years, the economy would be in a better shape today.

The amendments cover a wide range of issues and tackle the problem of BTG's future from a number of different directions. New clause I uses the instrument of articles of association, which is a useful but fragile method because articles of association can be amended by a decision of a majority of shareholders and therefore constitute no permanent guarantee of what will happen to the company. The new clause leaves the arrangements to preserve the nature of those business activities to the Minister's judgment and to the action that he deems necessary. New clause 5, in the name of the hon. Member for Southwark and Bermondsey (Mr. Hughes), requires that such steps as are necessary to preserve the independence of the British Technology Group be taken. That is a somewhat stronger requirement than new clause 1 and does not leave it simply to the Minister's judgment. It is a distinct approach.

Everyone is concerned about continuing to preserve the nature of the business activities of the British Technology Group. That nature is a strategic role in the technology transfer processes of this country.

The Government introduced the Bill without a clear idea of what they wanted to do with BTG or even what its role is, or has been, in the economy and the processes of technology transfer. They introduced it partly out of a desire to remove it from the public sector. If anyone has been doctrinaire on that issue, it has been the Government.

Furthermore, the manner in which the Government have behaved toward BTG in the past 10 years has been disgraceful. They stifled a great deal of management initiative, which led to frustration on the council. Although that led the council to accept the idea of privatisation, it wanted privatisation with sufficient safeguards of the independence, integrity and impartiality of the successor organisation.

Dr. Hampson

About eight years ago, everyone was condemning BTG as being bureaucratic and unsuccessful. We transformed it and it has been more flexible and successful under the present format. The Government stopped it taking part in Alvey and Link only because it is a nationalised body. If the hon. Gentleman had his way, the organisation would be constricted and constrained for ever in that way.

Dr. Bray

The hon. Gentleman claims too much by saying "we" transformed BTG, if he refers to Conservative Members or even the Government. The staff and management of BTG transformed its operations and tightened up consideration of the intellectual property from universities and research councils. The greater concern of pursuing and promoting applications and so on was not the result of Government initiatives but the proper response of BTG. I would not minimise the importance of the removal of the monopoly in stimulating BTG. We would not seek to reverse important development. We think that universities and research councils should be free to make whatever arrangements they consider appropriate for the application of the results of their research.

A number of influences have been at work. We certainly welcome the success that BTG has had in transforming itself into an operation that should—given reasonable luck because it remains risky—continue to be successful commercially. However, as hon. Members have repeatedly said in the debate, the Bill leaves the distinct possibility of the dismemberment, diversion or subversion of BTG. There are no safeguards for BTG's future, and the Government have given no assurances to provide adequate safeguards. BTG's assets could simply be stripped. If one were closing down the operation, the value of the office and the secure income revenue from the existing stock patents would certainly be sufficient to remunerate a substantial bid for BTG. However, the income that is in prospect and the assets in the building and bank deposits are there to facilitate the continuation of BTG in its present business. If that business were abandoned, assets would be available to an asset stripper and there is no safeguard against that under the Bill's provisions or in the sort of commitments that the Minister gave in Committee. We shall listen carefully to the Minister, but he is unlikely to give any more reassuring commitments tonight, so it may prove necessary to press a number of amendments to a Division.

It is not simply a matter of asset stripping. The sort of price that might be bid for BTG is small beer in relation to the value of single pieces of intellectual property. Were BTG fortunate enough to have the patents on Zantac, it would increase BTG's capital value one hundredfold. If there were reason to believe that a particular drug that BTG had patented on behalf of a client would lead to a large revenue, a drug company seeking to gain control of that patent could almost write off the purchase cost of BTG in its petty cash. In the high risk business about which we are talking, bidding for a company the size of BTG would not be a major consideration. The business is high risk and any such contingency is necessarily speculative, but that is the nature of the game in which we are engaged. It is because it is so speculative that the Opposition believe that BTG would, most sensibly, continue within the public sector where it can afford to take risks of the size incurred in such a game.

A further possibility is that, apart from the single, large, dramatic piece of intellectual property, some interests—most obviously, one or more Japanese companies—could seek to gain privileged access to a wide stream of intellectual know-how from British universities and research institutes. I was interested to find that the rate of investment by Japanese companies in new research facilities in this country was being closely followed, not only by people in this country, but by our partners in the European Community who, on a lesser scale than us, have had the same experience. I am told that there are a dozen Japanese research institutes, for example, in the Cambridge and Surrey university science parks, and near to Oxford, strategically placed to tap into the general stream of the British scientific tradition. In one sense, I say, "good luck to them", but if one adds to that factor the sort of facilities and lines of communication, and the continuing role in the transition that BTG offers, the Government's naivety is rampantly stupid. Nothing that the Government have said has dismissed such a possibility. There are ways to safeguard against such a threat, and the amendments would prevent such a development, but the Government have steadily resisted such proposals.

A further consideration is that BTG management, particularly the chairman, has rightly stressed the necessity for the continuation of BTG's business and the need to maintain its independence, impartiality and integrity. Independence is necessary in that an industrial enterprise might seek to gain control of BTG for specific purposes relating to a particular sphere of business. Impartiality is necessary in that BTG must plainly properly represent the interests of the inventor, developer, applyer and exploiter. Integrity is necessary in that, in the sort of negotiations that take place when concluding a contract on intellectual property, it is necessary to go into much detail, not only on the technical and scientific aspects, but on the economic, business, market and financial aspects of the deal. That is a matter on which, at present, parties negotiating with BTG can rely on its total integrity to safeguard the confidentiality of their interests.

5.15 pm

No formal undertaking has been given to the House, nor was such an assurance given by Ministers in Committee. Furthermore, no formal undertakings have been given by the Minister to BTG's council in reply to the representations that it has made in that respect. The Government have shown an extraordinarily wooden attitude. They must have some reason for failing to give comfort and reassurance, but what is it? I suspect that it has two parts. First, the Government totally fail to understand BTG's role and, secondly, they simply want to maximise BTG's selling price, perhaps under pressure from the Treasury, which plainly has a duty to urge the importance of getting a decent price.

The Government's failure to understand BTG's strategic role was amply evidenced on Second Reading when Ministers compared the size of BTG's investment in research and development with total United Kingdom research and development and Government expenditure on research and development. However, that is not BTG's business. It is not primarily a financier of research and development, basic, applied or industrial, but primarily a technological transfer organisation operating at the stage of patenting and licensing, and when research immediately surrounding the protection of the intellectual property of new inventions is developed and applied. That is necessarily a small part of overall expenditure by Government or industry, but it is a strategic part, and it is that strategic role that the Government have failed to grasp.

We must ask where we are in relation to that background. Hon. Members have talked about the need, indeed the possibility, of securing the participation of universities and research councils in BTG's future functioning and control. Only yesterday, the Minister met representatives of the Committee of Vice-Chancellors and Principals and he has not yet replied to a letter from the British Technology Group seeking his agreement to its putting together a consortium bid. It should be remembered that, since Second Reading, we have been stressing the importance of putting together an arrangement for the future management and control of the company that would secure its future.

Yesterday, the universities, through the Committee of Vice-Chancellors and Principals, demonstrated their willingness to take part in a consortium. They have an important role to play in the future of BTG as, along with research councils, they are the principal source of the intellectual property rights whose exploitation it is BTG's business to manage. Therefore, whoever runs BTG in the future will gain substantially from the participation and goodwill not merely of the universities and research councils but of the scientific community, and the formal presence of universities in the control of BTG would bring that participation about.

It is worth spending a little time studying the structure of the consortium that might emerge. It is my understanding that none of the parties—BTG, the Department of Trade and Industry and the universities —have started talking about numbers. Perhaps hon. Members, who are not engaged in the negotiations, can make a useful contribution by talking about numbers and the structure of control that would emerge.

The different parties that might be involved are trusts and foundations that are interested in research and have, and will continue to play, a valuable part in financing research and its industrial applications. They include the Nuffield Foundation and the Wolfson Foundation. Another group of institutions that offered a suitable element in the structure, given the financial record of BTG, and which would certainly be willing participants in an appropriate consortium, consists of a number of financial institutions whose present investment schemes are so large that BTG would be a relatively small but important part of their overall investment strategy, as it would open up, and give them familiarity with, a wide range of high technology venture capital developments.

I understand that the results of soundings of financial institutions have shown no lack of willingness. If the Government were ready just to consider open bids, there would be no difficulty in getting a bid that would financially exploit the assets of BTG in the ways that we were talking about earlier. Obviously, the number of financial institutions that would be prepared to participate in the continuation of BTG in its present business would be smaller, but there would be some, and they would be wise institutions at that.

The third element would certainly be some employee participation—for example, through employee share ownership plans or management buy-outs—so that the staff of BTG would have a continuing interest in the operation and success of the company.

The final partners will be the universities themselves. In such an arrangement, it is quite possible to ensure that no party has more than 20 per cent. of the controlling shares of BTG and that a majority of the shareholders would be parties interested in the continuation and development of BTG's present line of business. Therefore, within the financial control of BTG, one could secure the guarantee that BTG would continue as a technology transfer organisation operating in the United Kingdom to support and exploit the results of British academic and research council research.

The question is whether that is too narrow a range and whether it would cramp too much BTG's style in relation to foreign Governments, foreign universities and foreign industrial companies. I do not think that it would, but nor do I have any great objection in principle to one 20 per cent. or two 10 per cents. coming from some overseas financial institutions. However, it would be downright wrong if overseas institutions that would not have been acceptable had they been United Kingdom institutions were to invest in BTG. An example of this is an industrial bank with controlling interests over a wide range of activities in Germany or Japan, which might not be an industrial company but which has such strong industrial interests that it is interchangeable with the concept of an industrial company in this country.

If such a partner were willing to invest in BTG, there would be no difficulty in the trusts and foundations or the financial institutions finding ready money to put up. The usual arrangements would apply in the case of employee share ownership plans or a management buy-out. However, the universities are plainly in a difficult position because they are strapped for cash—they ain't got any. The educational investments that some of the wealthier Oxbridge colleges have made, and are making, are desperately needed for the support of education, given the financial straits to which the Government have reduced the universities. Therefore, it may well be necessary to look for some arrangement whereby the universities gain a proper share in the financial control of BTG without having to put ready money up front when the deal is made. For example, there could be an arrangement whereby the university interests could be financed by a loan from the Government, which could be repaid by earnings on that slice of BTG equity over a period. The universities would gain no immediate financial benefit from their share ownership, but would have financial control. The Government would not get quite as much cash initially, but would secure a viable arrangement for the future of BTG.

That is one of many possible formulae that could be mooted in negotiations. I would not expect the Minister either to endorse any formula in particular, or to rule out of hand the possibility of meeting the requirement, set out in some of the amendments, for the Government to make some such arrangement. These are practical arrangements and they are being considered by the separate parties. Negotiations have not yet begun on them and the Government could commit themselves, in principle, to some arrangement that would meet the misgivings that have been expressed so well by hon. Members on both sides of the House.

If that were to happen, and if BTG were to continue in its present business, that would by no means exhaust possibilities for its future development. We have talked about the role that we would envisage BTG continuing to play in the private sector—in the future development of research and its applications and in technology transfer in the United Kingdom. I shall give two examples of that. At present, BTG provides a modest amount of project finance for individual projects, for sums up to, at most, £1 million or so. That is in the nature of launch aid for new technology development. The principle of launch aid originated and still operates in the aircraft industry, where it involves hundreds of millions of pounds. There is a huge gap between the level of launch aid that BTG and venture capital organisations can tackle and the level of such assistance for which the Government have to take responsibility in the aircraft industry. It seems fairly unlikely that private financial institutions will bridge that gap, although they may hope to move up the scale. Arrangements could be introduced to encourage them to do so, and we have suggested some.

5.30 pm

However, it would be valuable if a public sector organisation could help to fill that gap. BTG could usefully play that role in the future. It has the management capability, the technical knowledge and the experience of the marketplace to enable it to operate on a very much bigger scale of project finance than hitherto. A developed BTG might also improve and extend the arrangements that are made between the universities, the research councils and industry in the exploitation of new areas of research, such as the Link programme. The hon. Member for Leeds, North-West (Dr. Hampson) said that decisions on the exclusion of BTG from the Alvey programme had set it on the right path. I totally disagree because if BTG had participated in Alvey and Esprit, we might well have achieved much more effective results.

Dr. Hampson

My point was that because BTG is a Government body or, one might say, a nationalised industry, it is thus debarred from programmes in which private sector companies participate. It has been prevented from doing deals in France and Spain because it has been seen as a Government or a public body. The world would be BTG's oyster if it were free from Government shackles which, to my surprise, the hon. Gentleman wants to maintain.

Dr. Bray

The nationalised industries were not generally excluded from participation in, for example, the European Community research programmes. Several such organisations have taken part in those programmes, but BTG was not allowed to do so simply because of a doctrinaire act on the part of the Government—

Dr. Hampson

There was no state involvement in Alvey.

Dr. Bray

The programmes in which British Steel has been engaged in the European Community would have been entirely open to nationalised industries, and were, indeed, used by them. It would have been possible for BTG to do so but for its arbitrary exclusion by the Department of Trade and Industry.

If we are looking for a more effective and balanced way to build a bridge between university research and industrial application, let us consider the work of the science and engineering research council, which spends £200 million each year on new engineering research. That must be the biggest single engineering research programme in the country. If there were appropriate partners, it would be reasonable to say to those grant applicants, "If your programme is successful, what lines of exploitation are open to you? Have you thought about this? Have you talked to potential partners about how they would take over, carry through, support and learn from your research? Do you have an industrial partner?"

Sometimes, the reply would be, "No, our research is into an enabling technology that would serve a wide range of people but we do not have a specific partner." To that, one would say, "Fair enough." Others would say, "No, we do not have an industrial partner because no British firm is engaged in this sector. Developing and applying our research would require a new British enterprise." Others would say, "No, we do not have an industrial partner because British industry is too dim to understand or apply the research on which we want to work."

At present, there is no way in which the science and engineering research council can say, "Come off it. If you cannot establish those lines of communication, perhaps we can help you or perhaps BTG or someone else could help you." We would need to set up a number of options by which the research community could shop around to discover the most appropriate industrial partners. In the end, however, it might be appropriate for a research council to say, "If, despite all these possible channels of support, there is absolutely no possibility of industrial application of your applied research, should we really be carrying out such research in Britain, given that our comparative advantage from its exploitation is so low?"

For all their talk about efficiency and effectiveness in the administration of research, the Government have dodged such tough decisions on science policy. If one is to be really efficient, one needs a degree and range of interventionist instruments to ensure that those bridges are built.

We should have liked to see BTG develop in that direction in the public sector, while continuing and extending its present activities. We should have liked it to expand into the work on technology transfer and industrial research and development and their application that, at present, it cannot undertake. We have said that if BTG is privatised, we would constitute a successor company to carry out the range of functions and operations that we regard as necessary for this country's industrial development. Whether and how that is carried out will obviously depend upon the nature of the BTG that emerges not only from this Bill but from the way in which it is implemented by the Government in any time that is left to them in this Parliament.

Our amendments are important, not only in terms of whatever negotiations follow in the next few weeks, but in terms of the spirit of the new BTG and the direction in which it moves and is allowed to move by the Government in the years to come. It is a die which, once cast, cannot be taken back. Therefore, I urge hon. Members and Ministers carefully to consider all the points that have been raised so powerfully by hon. Members of all parties in support of this group of amendments.

The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. Edward Leigh)

I am grateful to my hon Friends the Members for Reading, East (Sir G. Vaughan), for Bedfordshire, North (Sir T. Skeet) and for Leeds, North-West (Dr. Hampson), to the right hon. Member for Morley and Leeds, South (Mr. Rees), and to the hon. Members for Southwark and Bermondsey (Mr. Hughes), for Glasgow, Central (Mr. Watson) and for Motherwell, South (Dr. Bray) for their contributions to this long and interesting debate on what is clearly the key part of the Bill. I understand the concerns that are uppermost in the minds of those hon. Members, especially my hon. Friend the Member for Reading, East, and the Government recognise that the amendments are an expression of that concern.

We note hon. Members' anxiety that BTG's activities in technology transfer should continue after privatisation. I am sure that you, Mr. Deputy Speaker, would not want me to become involved in a debate on the merits or demerits of privatisation, although I was grateful to my hon. Friend the Member for Leeds, North-West for his stout defence of privatisation and its merits. I hope that we shall have time for a Third Reading debate, which would be the appropriate point for me to outline why I think that BTG should be privatised. However, that is not the central argument of the current debate.

Hon. Members of all parties want to ensure the continuation of BTG's activities. There is an ideological divide about whether that is best ensured in the private or the public sector, but we are united in wanting to ensure its continuation. I shall have to choose my words carefully, of course, but I hope that what I say this evening will reassure my hon. Friends.

I recognise the deep seriousness with which my hon. Friends and Opposition Members approach this subject. Let me say to my hon. Friend the Member for Reading, East that I agree with the general sentiment underlying the new clause. However, it is not necessary to enshrine it in the Bill, for reasons which I shall make clear in my speech.

Hon. Members may wish to know that these matters were discussed at some length in Committee. I know that some of my hon. Friends were not able to be members of that Committee. In Committee I sought, during some lengthy debates, to give reassurances on the very subject dealt with in the new clause. I shall give similar reassurances today, but I hope that I shall give them in language which, while carefully chosen, reassures my hon. Friends even more than they have been reassured hitherto. [Interruption.] My hon. Friends who served on the Committee were reassured by what I said, and I hope now to reassure other hon. Friends on Report.

I made it clear in Committee, and I repeat now, that the Government wish to see the British Technology Group privatised in a way that leaves a good prospect that BTG's current technology transfer activities will continue. That has always been part of the Government's publicly stated objective for the privatisation. We take that objective seriously. The House can rest assured that it will be uppermost in our minds in determining the exact form of the sale.

New clauses 1 and 5 are not dissimilar in their general intention. To put it in a nutshell, new clause 1 asks us to respond to the anxieties that have been expressed by enshrining in the Bill an assurance that BTG's current business activities will continue after privatisation. New clause 5 would require the Secretary of State to take steps to preserve BTG's independence and enable it to maintain and extend its technology transfer services.

First, I repeat what I said in Committee, although I shall not rest on it. I said: The Government will take those anxieties into account when deciding the form of privatisation and whether safeguards are necessary in the articles or the agreement of sale".—[Official Report, Standing Committee G, 7 March 1991; c. 150.] Since then matters have not stood still. We have actively considered what form of conditions of sale might be appropriate. Further to what I said in Committee, we have moved a stage further. We are actively considering the conditions of sale which will be necessary to meet the anxieties of my hon. Friends and those which will be appropriate to meet the Government's objectives which, as I have said, are good prospects that BTG's activities will continue.

We have now decided whom to appoint as legal advisers on the sale and shall shortly request them to consider the terms and possible conditions of, for example, the articles of association. So we have now moved to the process of appointing legal advisers. They will advise us on how we can frame the articles of association to meet the anxieties that have been expressed in the debate.

5.45 pm

Mr. Simon Hughes

The Minister said that he would be careful in what he said and we have been listening carefully. First, will he make clear that there is no semantic point in the difference between "very good" and "best" prospects? There is a great difference in practice. Secondly, have the Minister's thoughts—which he says have progressed since Committee—included or ruled out the possibility of the Government enshrining in legislation some of the conditions which the House has expressed a wish to see in legislation?

Mr. Leigh

On the second point, I shall have to disappoint the hon. Gentleman. I shall go into the matter in more detail later in my speech, but we do not think it appropriate—and it has not been done before—to enshrine in an enabling Bill such as this the type of conditions in which the hon. Gentleman is interested.

I had to use the words "a good prospect" of the continuation of BTG's activities—

Sir Trevor Skeet

It is nothing.

Mr. Leigh

My hon. Friend says that it is nothing. I do not think that it is nothing. Neither I nor any other Minister could go further than the words "a good prospect". I could not possibly give an absolute undertaking now that BTG's activities will continue in exactly the same way as at present.

Sir Trevor Skeet

My hon. Friend will realise that 8,200 patents rest in BTG and that if there is a sale they will all be assigned to the new buyer. It will be up to the new buyer to decide what to do with them. It could be very much a breach of confidentiality that they should be assigned and, of course, it could be against the interests of the inventors. I appreciate that the inventors have passed on their rights to BTG, but does my hon. Friend realise that not to include anything in the substantive legislation could prejudice their interests in the field?

Mr. Leigh

I realise precisely the point that my hon. Friend makes. He reiterates a point which is uppermost in my mind—the integrity, as well as the independence, of BTG when it is privatised. There are ways in which the integrity, independence and critical mass of BTG can be ensured. If my hon. Friend will give me time to develop my thoughts—

Sir Trevor Skeet

Plenty of time.

Mr. Leigh

Indeed, we have plenty of time. I hope that by the time that I sit down I shall have reassured my hon. Friend that, while it is not appropriate and has never been enshrined in legislation, we intend to privatise the organisation in such a way that its integrity and independence are preserved.

Dr. Hampson

We are touching on some important matters. I have argued the need for a Government golden share. In the past such a provision has been enshrined in legislation. Is my hon. Friend the Minister saying that the legal advice that he is commissioning and the framework of the conditions of sale will cover the possibility of golden shares without the need for legislation?

Mr. Leigh

I shall deal with the question of a golden share later. A golden share may, indeed, be necessary and it may have to be mentioned in legislation. I cannot predict that at this stage. But in previous privatisations the issue of a golden share has arisen later in the proceedings. I do not rule it out at this stage.

Mr. Steen

I hope that this comment will be helpful. My hon. Friend can have the best legal advice in the country. As a Minister he has access to the best lawyers that he can choose. Why does not he have that advice on Report? Why is the advice still being obtained? Why cannot it be put before the House so that we know what will happen?

Mr. Leigh

This is a fundamental philosophical point. Should we enshrine these matters in legislation or, knowing what shape we want BTG to have and that we wish it to continue its activities, and as we want to put together a sale which will ensure that those activities continue, should we not wait until we know the nature of the buyers of the organisation? I emphasise the word "buyers", to which we might return in a moment. When we know the nature of the buyers will be the moment to frame the articles of association with the advice of our lawyers and, if necessary, to consider a golden share to ensure that our wishes are carried out.

Dr. Bray

It depends on who "we" are. If "we" are the Government, they can decide to do that at any stage that they choose. But today "we" are the House of Commons. This is the last occasion on which the House will be able to include the requirement which Members on both sides of the House urge upon the Government.

Mr. Leigh

I do not know whether it is in order to mention another place. Hon. Members would not want me to say that we are simply waiting until the Bill goes to another place to give more details. I am not saying that for a moment.

If hon. Members will allow me to proceed, they will see that I have a form of words which I hope will reassure them that we intend to take their anxieties into account. It may be appropriate later to talk of articles of association and a golden share. Let me proceed to utter those words. Before I finish, I want to talk in some detail about the interesting meeting that I had yesterday with the university vice-chancellors because that meeting and what arose from it is pertinent and I have not yet had an opportunity to acquaint the House with those details.

Mr. Simon Hughes

I want to press the Minister once more about the objective and why it is not possible for him, as the Minister in charge of the Bill, to say that the Government's objective is the "best" prospect of keeping the present activities of BTG as opposed to "very good". That is an important difference.

Mr. Leigh

Clearly we have a duty to the general public which was outlined in the words that I used repeatedly in Committee and which I repeat now with Treasury advice. We are clearly under a duty to maximise returns to the taxpayer and I would be failing in my duty to the general public if I did not mention that. But we have always said that that must be consistent with the good prospect of the continuation of the BTG's activities. I have said that many times, and I do not think that I can add anything further.

Let me give the sort of conditions that we are considering which I hope will be of interest to hon. Members and which I do not think I dealt with in detail in Committee. They include measures to prevent a purchaser from asset stripping, whether through selling the assets or through collecting the revenue from existing patents without further investment—the hon. Member for Glasgow, Central referred to patents—and from ceasing to carry on the technology transfer activities of the BTG. One way in which we could do so might be through articles of association or, alternatively, through the sale contract with the buyer. We are also looking carefully at whether it would be appropriate and effective for the Government to retain a special share for a limited period so as to ensure that changes are not made to the fundamental business without the Government's consent. That would be an entirely reasonable way of proceeding.

We are also aware that some believe that the sale of BTG to a commercial or manufacturing concern might deter other customers in the same technology sectors from using the BTG. That was a point of particular concern to my hon. Friend the Member for Bedfordshire, North. That is also a point which we will take into account in deciding the form of the sale and any other possible safeguards. As I said in Committee: The detailed wording of such articles is best left until we are clearer about the form of sale and the prospective purchaser."—[Official Report, Standing Committee G, 7 March 1991; c. 153.] To do otherwise and decide now what restrictions to put in place could prejudice the prospect of a sale and the potential proceeds. We will first want to see who the prospective purchasers are and what their plans are for the BTG may itself be the most effective guarantee for the group's future.

Mr. Alex Carlile

The Minister says that the identity of the purchasers will be a guarantee of the group's future, but what about those who purchase from the purchasers and those who purchase from them? He cannot guarantee the group's future if the purchasers decide, as a private organisation, to sell their business.

Mr. Leigh

I cannot give an undertaking now about what will happen in five, 10, or 15 years' time. I cannot commit the Government or this Parliament to what might happen in future. But I can say that if the kind of sale that some people have mentioned is put together that might be extremely unlikely. If the hon. and learned Gentleman is patient, he may see some light descending on that.

I and my right hon. Friend the Secretary of State have already met to discuss this and other issues with the BTG's chairman, with representatives of BTG's employees, with inventors and with the Committee of Vice-Chancellors and Principals. Contrary to what the Opposition may assert, we are listening to the views of interested parties. The House may also wish to know that I had a constructive meeting with the Committee of Vice-Chancellors and Principals at which they voiced their interest in seeing the BTG continue as a strong commercial entity. We hope to take forward in further discussions the universities' interest in the future of the privatised BTG.

That is the constructive way to take forward concerns about the role of the privatised BTG—in practical discussions on the form of the sale rather than heavy-handed amendments to the enabling Bill.

New clause 1 suggests that it will be necessary to insert special conditions in the articles to achieve a satisfactory outcome. However, a misunderstanding over the timing of the successor company may have led to the new clause being tabled. It is the Government's intention to have a short interval between the appointment of the successor company and the date it is sold. That makes the clause unnecessary, and for that reason it would not be appropriate to include the new clause in the Bill. I had an opportunity to discuss the matter with my hon. Friends this morning and I am grateful to them for tabling the new clause because it gives me the opportunity to clarify the Government's position. The new clause may be technically flawed, but it has performed a useful purpose.

New clause 5 takes a similar approach, but it is also based on misunderstanding. It would, in effect, put a duty on the Secretary of State to oblige the successor company and its new private sector owners to take steps to preserve its independence and, for good measure, tell the successor company how to go about its business. How can such a statutory imposition, which has no time limit, practically be applied to an independent private sector organisation? The Bill's fundamental purpose is to free the BTG from statutory and Government control. It will be for the new owners to decide exactly how to go about running the business and what areas to expand into.

Mr. Simon Hughes

The Minister's latter comments increase my concern. It is suggested that there would be no continuing condition upon any prospective purchaser or purchasers. As I said to the hon. Member for Leeds, North-West (Dr. Hampson), it is the fact that it is a time-expired guarantee that worries some of us. There is no on-going guarantee. I hope that the Minister will think again about his answer to the new clause.

Mr. Leigh

The hon. Gentleman probably was not listening to what I said about conditions of sale and the articles of association, and mention has been made today of the golden share.

Mr. Rees

I am interested to hear about the role of the legal adviser. The Government will tell the legal adviser what they want, but how he translates it in practice is a different matter. At what stage in the process would the articles of association be drawn up and published?

Mr. Leigh

If the Bill meets with the approval of the House and the other place, we will initially be talking of a vesting day. This is an enabling Bill. A successor company will be formed which will be entirely publicly owned, presumably in the hands of named civil servants. At that stage, the Secretary of State will decide how it should be privatised. Discussions have already started and will continue and it may well be appropriate to talk in terms of articles of association not now but far closer to that date, which may not be until the autumn.

Mr. Rees

Will the articles of association come before the House at any time in some appropriate fashion?

Mr. Leigh

No, I do not think that they will. As I have tried to explain, the appropriate time for drawing up the articles of association is when the Government have a clear idea of who the purchasers are and what is necessary to retain the critical mass, independence and integrity of the BTG—an aim in which we are all interested.

Sir Trevor Skeet

I am trying to follow the Minister's argument. What he seems to be saying is that we should identify the buyers and then determine what conditions are appropriate, by which time the Bill will have gone well beyond this House and the other place. We are being asked to sign a blank prospectus.

Mr. Leigh

I do not think that it is a blank prospectus. If my hon. Friend had listened to what I said, he would know that I tried to explain in some detail the Government's intention in privatising the company. Our intention is to ensure a good prospect of continuing the BTG's activities. For the moment, he has to take my word for it. It would be unique at this stage in an enabling Bill to enshrine articles of association. Given the nature of the BTG that we want to exist in the private sector and the fact that we want its activities to continue in the future, it clearly makes sense to ensure a form of sale that guarantees that. At that stage the articles of association can be framed. I do not see how I would assist that process if I suggested to the House that we should lay down rigid articles of association now. That would not be helpful and it would not achieve what is desired by my hon. Friend the Member for Bedfordshire, North.

6 pm

Mr. Alex Carlile

All the lawyers in this House and the many hon. Members who are involved with companies will be aware that in virtually every instance the articles of association are prepared on the instructions of the promoters of the company. Can the Minister name a single instance in which the articles of association have been prepared in consultation with, or as a result of knowing the identity of, the purchasers of the company? That is an extraordinary new doctrine. Where does the Minister get it from?

Mr. Leigh

There is nothing extraordinary about it. Nothing that I have suggested today is unusual. We are proceeding in exactly the way in which we have privatised other businesses. I have already outlined when it would be appropriate to frame the articles of association.

Mr. Steen

I am sure that my hon. Friends understand that, although my hon. Friend is advocating a type of blank prospectus, the Government are extremely competent: they will get it right. My hon. Friend is asking us to have complete confidence in him as the Minister to put the articles of association in place once he knows who the buyer will be. I believe that my hon. Friend's message to the House is that it must have confidence in the Government. Is that correct?

Mr. Leigh

Yes. I am not asking for a blank cheque. When my hon. Friend reads Hansard, he will be reassured by what I said. He will appreciate that I have given certain undertakings and commitments. I hope that he will be prepared to accept them and the serious manner in which I have approached them.

It will be clear to the House why we do not wish to see a duty of the kind envisaged in amendment Nos. 5 and 6, which would require the Secretary of State to report on his plans for guaranteeing the BTG's future independence, impartiality and integrity. The Secretary of State would be prevented from vesting the property, rights and liabilities in a successor company—which is the first step towards privatisation—until he had published those plans. Clearly such a duty to report immediately in advance of the Bill taking effect would tie our hands before we knew what was really necessary. We do not want to place unnecessary burdens on the new company. It is meant to be a private sector company, free to operate without onerous constraints.

The Opposition have consistently tried to suggest that we have not consulted the universities on the proposed privatisation. In fact, we did consult the universities through the Committee of Vice-Chancellors and Principals in 1988. Only a small minority of the respondents—less than 20 per cent.—favoured the Opposition's option, which is that the BTG should remain as it is. About 20 per cent. of the universities responding favoured a sale to a commercial or financial institution, while 10 per cent. favoured a sale to the BTG's existing management and 50 per cent. wanted to see the BTG established as a private foundation or trust with objectives linked to university research.

Hon. Members may also be interested to know that I met with the Committee of Vice-Chancellors and Principals yesterday to hear its views on the privatisation of the BTG. It was a helpful, constructive, and, from the viewpoint of both parties, highly satisfactory meeting.

The collective concern of the committee was that BTG should be a lively, commercial business in the private sector. Those are not my views but the committee's—and I hope that my hon. Friends will heed that as it is crucial. The committee wants the BTG to continue to exploit the fruits of academic research, which is entirely consistent with the Government's objective in the proposed sale.

The committee also argued for a "small, not negligible" stake in the privatised company. The Government recognise the substantial and valuable input of universities to other progress and prosperity of BTG over the years. BTG in turn has been, and I hope will continue to be, an important outlet for universities research in technology. We wish to see this partnership continue after privatisation. That is why I gave the committee an unconditional assurance that its views and proposals will be carefully considered and will be taken on board when we finally decide how the BTG will be privatised.

My hon. Friends may wish to know that, when the committee came to see me yesterday, far from opposing the privatisation of the BTG, it showed its interests in acquiring a "small, not negligible" stake in it. In the light of that attitude, I should be interested to know where that leaves the Opposition. We had a lengthy speech from the hon. Member for Motherwell, South, and I do not want to put words in his mouth, but he seemed to suggest that if the BTG was to be privatised the Opposition's favoured option would be for the universities to have a stake in the new organisation. That is certainly what the hon. Member for Kirkcaldy (Dr. Moonie) has said on a previous occasion.

If a consortium was formed that consisted of a stake held by the Committee of Vice-Chancellors and Principals, a stake held by a management buy-out and one held by financial institutions—assuming there was a limit on foreign ownership—we may well—

Mr. Steen

That sounds good.

Mr. Leigh

I cannot predict the final outcome, but my hon. Friends will have heard what I said. They appear to like it.

Mr. Roy Beggs (Antrim, East)

rose—

Mr. Leigh

The hon. Gentleman has just come into the Chamber, and, if he will forgive me, I shall not give way.

I hope that I have given the reassurances that my hon. Friends need, and I hope that my hon. Friend the Member for Reading, East will withdraw the new clause.

Sir Gerard Vaughan

My hon. Friends and I accept my hon. Friend's assurances and therefore I beg to ask leave to withdraw the clause.

Motion and clause, by leave, withdrawn.

Mr. Simon Hughes

On a point of order, Madam Deputy Speaker. May I ask for a vote on new clause 5, which appears in the same group of amendments?

Madam Deputy Speaker (Miss Betty Boothroyd)

The hon. Gentleman is perfectly in order in seeking a vote if he moves the new clause formally.