HC Deb 23 July 1991 vol 195 cc1085-98

Lords amendment: No. 3, in page 4, line 13, leave out from "disposal" to end of line 14 and insert— of the whole or a substantial part of the equity share capital of the successor company to—

  1. (a) managers or other persons employed by the company; or
  2. (b) another company the whole or a substantial part of whose equity share capital is owned by managers or other persons so employed."

Mr. McLoughlin

I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker

With this, it will be convenient to take Lords amendments Nos. 23 and 30.

Mr. McLoughlin

The amendments aim to rectify a possible shortcoming in the Bill's provisions enabling support to be given to a management and employee team engaged in bidding for a port.

Where such a situation exists, it is normally the case that the managers and individuals involved, rather than acting as a group of individuals, will form a company to act as a vehicle for making the bid. It was possible that, on a strict interpretation of the Bill's provisions, such a company would not have qualified for support because the wording used— managers and other persons employed"— could have been held to refer only to individuals. This group of amendments is intended to preclude that possibility.

6.45 pm
Mr. Stuart Bell (Middlesbrough)

Opposition Members believe that these amendments go to the heart of the Bill as it stands, because they deal with the subject of management buy-outs. We are grateful for the fact that, when the amendments were discussed in the other place, as a result of probing by the Opposition, we were given the Secretary of State's guidance notes relating to the procedure for the sale of trust ports. The notes form a most helpful document.

I asked the Leader of the House to consider incorporating the guidelines into the Bill, so important are they, but there was not sufficient time. As the right hon. Gentleman said on the Floor of the House at the time, I accept that it might have been on the late side, but, as I have said, we discovered that the guidelines existed only as a result of the prodding of Opposition Peers. Not only did that reveal the existence of the guidance notes, but it led to their being placed in the Library. I am grateful to the Secretary of State for Transport for making his final guidelines available.

I am sure that the Minister can confirm that the guidelines that have been produced by the Secretary of State will cover all trust ports, including the Tees and Hartlepool. Although we have consistently opposed the movement of the Tees and Hartlepool port into the private sector, as the will of Parliament is reflected in the Bill and in the amendments that have been tabled in the other place, it is of the utmost importance to put on record our view that a satisfactory employee buy-out would be the best option available to the Tees and Hartlepool— provided, of course, that it was a valid buy-out, on behalf of the employees, and not a glorified management buy-out, which some of us suspect to have been the present management's long-term objective when they embarked on their own privatisation scheme through the private Bill route.

We must place the amendments in the context of paragraph 15 of the Secretary of State's guidance notes relating to the procedure for the sale of trust ports, which state: that the trust port will be required to appoint appropriate advisers to provide it with an independent benchmark valuation of the undertaking and an independent assessment of the bids received. This assessment should include advice as to whether the bids properly reflect the value of the port undertaking … that the trust port will need to make this benchmark valuation and assssement available to the Secretary of State in putting forward its own proposals regarding the sale of the port to the Secretary of State for his agreement. That these proposals will need to take into account the extent to which the bids meet the objectives of sale and will not therefore necessarily recommend that the highest bid should be accepted. That last point is of the utmost importance in the context of these amendments to clause 5.

The guidance notes also state: a trust port may wish to recommend that a price preference should be applied to a bid from a management and employee buy out team. The Secretary of State will be prepared to consider a limited preference of this kind in individual cases and will have regard to the particular circumstances of each case. As can be seen from the amendments, the Government are in a dilemma of their own making. On the one hand, as we saw in Committee, thanks to the work of hon. Members of all parties, they concluded that management buy-outs should be encouraged. On the other hand, however, they are enamoured of the principle of competitive tendering—in fact, they are so enamoured that that phrase appeared yesterday in the so-called citizen's charter which was announced by the Prime Minister.

What is to happen to the Tees and Hartlepool and the other trust ports that are covered by the Bill? Will the management buy-out be given preferential treatment, or will that management buy-out have only a limited prospect of success, being faced with a more gigantic bid from an outside firm that might even be a foreign firm? We are not, of course, allergic to foreigners on Teesside, and especially not to European foreigners.

In racing terms, I am reminded of the apprenticeship races in which, having had 10 winners, the apprentice loses his apprenticeship status. I am glad to see that the hon. Member for Langbaurgh (Mr. Holt) is, as usual, in his place for such a debate. Far be it from me to say that an apprentice, who has a big race coming up and who does not want to lose his apprenticeship status, will hang back, but that was always the case in the stories that I read of old.

It would not be surprising at this stage if, like the apprentice with nine wins to his credit, the Tees and Hartlepool decided not to push itself to be first past the post. In other words, the Tees and Hartlepool might not benefit from the amendments and might not want to be the first in line for privatisation, because it knows that it might be swallowed up by a competitor or foreign company and that its management buy-out would then be left high and dry.

Dr. Godman

Is my hon. Friend satisfied that, following a buy-out or the privatisation of a trust port, the new authority would not be able to evade the responsibilities that the Port authority currently carries out? The important dredging operation on the upper reaches of the Clyde is now carried out by the Clyde port authority. That essential task must be carried out, or the river will silt up.

Mr. Bell

I am grateful to my hon. Friend for his intervention, but I am not the Minister of the Crown who can or should answer that question. My understanding of the Bill is that the dredging would fall within the statutory authority of the port and would be a statutory requirement for whoever takes over the port. A port would be disadvantaged, because investment in it might suffer if the proposed buy-out came from a firm that decided to invest elsewhere. I am grateful to my hon. Friend for drawing that point to my attention and to that of the House.

Mr. Tony Worthington (Clydebank and Milngavie)

My hon. Friend cannot be completely familiar with the upper reaches of the Clyde. I wish to put it on the record that the Clyde port authority has a power which allows it to dredge the Clyde but that it has no duty to do so. That will be the case in the future. We are fearful that an entirely commercially oriented body would be interested only in property development and not in the welfare of the river. I am grateful to my hon. Friend for letting me put that point.

Mr. Bell

I am grateful to my hon. Friend for making that point. Undoubtedly, the Minister will respond to it. It is on the record, and it is an important point. It is one of the reasons why the Opposition consistently opposed the privatisation of the ports, as embodied in the Bill.

To return to the amendments, trust ports might also like to take the opportunity of a management buy-out. My hon. Friend the Member for Greenock and Port Glasgow (Dr. Godman) mentioned the Clyde Port Authority Bill. It is becalmed in the other place and will be extinct when the Bill is given Royal Assent. A private Bill is extinguished when it is confronted with a statutory measure such as this.

Other trust ports may take the view that they should wait to see what happens with the Tees and Hartlepool port authority proposals before going ahead with their own management buy-out proposals. They might conclude that they should wait for two years in accordance with the terms of the Bill and then have the Secretary of State demand their plans for privatisation.

The board of the Tees and Hartlepool port authority might be well advised to leave its privatisation bid until two years have elapsed after the Bill is enacted rather than seek privatisation and lose out, like the apprentice who wins his 10th race and loses his apprenticeship status. Indeed, my advice to the Tees and Hartlepool port authority is that, unless it can obtain a categorical assurance from the Secretary of State that the management buy-out is acceptable under the terms of the guidelines, it is ill advised to be the first port to seek privatisation and face the prospect of the port falling into foreign hands.

A great debate took place in the other place on these amendments. I shall not refer to that debate today. The Secretary of State's guidelines were referred to. While the Opposition pressed hard in the other place to ensure that the guidelines gave first priority to a management buy-out rather than competitive tendering, we were given no assurance in the other place that the amendments would give preference to a management buy-out. My specific question to the Minister is whether there will be a preference for a management buy-out or whether it will be only a limited preference, which will amount to no preference at all.

Sir Teddy Taylor (Southend, East)

I apologise to my hon. Friend the Minister for stepping in at this stage. If it is in any consolation, I assure him that I do not intend to speak many times. I appreciate that the Bill has been carefully considered by the Committee, but I wish to make one minor point.

As hon. Members will be aware from the Register of Members' interests, I have been an adviser to the Port of London Police Federation for many years. In that connection, I wish to raise a minor issue on amendment No. 21, which refers to the transfer of local regulations. The Port of London authority has the power to have a police force. As my hon. Friend the Minister will be aware, we are transferring that power to the port of Tilbury. One of the advantages of such a transfer is that, as we are all aware, Tilbury has a splendid Member of Parliament to look after its interests. However, my hon. Friend the Minister will be aware that, in the transfer from the port of London to the port of Tilbury, the persons involved will lose considerably, even though they will do the same job, in the same place and in the same way.

The port of Tilbury is certainly as aware as the port of London of the immense benefit of having a statutory police force. But the Minister will be aware of the losses that people will face. First, the tradition has been that PLA police salaries were in line with Metropolitan police salaries. That will not necessarily be guaranteed after the transfer. The rent allowance was linked to the Metropolitan police but in future will be related to the Essex police.

I know that my hon. Friend the Minister is a kindly person who, throughout his activities on the Bill, has shown consideration for all the people involved. But we must remember that, in such a transfer, we transfer not only cranes but people. I hope that the Minister can assure us that, although there is adequate provision to protect individuals' pension rights, there will also be some basis on which individuals can seek arbitration, understanding or some assurance that they will not lose if they do the same job in the same way in the same place.

I hope that the Minister will bear it in mind that, if the port of Tilbury is transferred to a trust and a company is established to run it, we shall have no guarantee about what will happen in five or 10 years. There is a real danger that assurances given by the port of Tilbury may not be inherited by a successor company.

Therefore, I hope that the Minister will give some thought to the matter and that he appreciates that it is necessary to safeguard the position and give some assurances to the port of London police who have served the port well, who will continue to do the same job extremely well and who are rather worried about their future.

Mr. Eddie Loyden (Liverpool, Garston)

I wish to take up the point raised by my hon. Friend the Member for Middlesbrough (Mr. Bell), which was given great emphasis in Committee, about our worries about those who take responsibility for our ports. As I have said on previous occasions, the ports will remain an important part of Britain's economy and transport structure, but in view of what has already happened in the ports and of the Lords amendments, it appears that the Government have neglected to deal with the future of the port transport industry in Britain. Our anxiety remains.

Those who have an interest in the ports industry are those who work in it and operate the ports. The evidence is that, almost without exception, the ports have been run successfully over many years by the people who managed and worked in them. Therefore, the possibility of a management takeover is very important. I re-emphasise the points made on that matter. Whatever powers the Government have in the Bill, they must ensure that the bodies that inherit our ports will be responsible by statute for upholding all the necessary practices in the port transport industry.

We have all expressed anxiety about dredging, conservancy and other matters. I hope that, even at this late stage, the Government will undertake to monitor what happens in our ports and ensure that any movement away from the port's interest is arrested and that our ports retain a future and are not surrendered to the rest of Europe.

Mr. Richard Holt (Langbaurgh)

After the bizarre intervention by my hon. Friend the Member for Southend, East (Sir T. Taylor), I am not sure what we are supposed to be debating. I thought that we were debating the amendments to which the hon. Member for Middlesbrough (Mr. Bell) addressed himself. I should like to get back to those amendments by assuring you, Mr. Deputy Speaker, the hon. Gentleman and the House that you need not worry about the Tees and Hartlepool port authority. It is in good hands—apart from anyone else's, mine. That means that the hon. Gentleman need not worry whether the port will be slow off the mark in seeking privatisation by the management team.

If the hon. Member for Middlesbrough, the backwoodsmen on Teeside and those who live in the past instead of the future had allowed my private Bill to go through, the port would already be privatised, we would have the new business, and jobs would be available. The Labour party, as ever, went further and further backwards.

7 pm

I am not too displeased about that, because it is beginning to show the people in the north-east of England that, over the centuries and the decades, it has been socialism that has held back the region. We in the north-east are now doing away with socialism, and we are seeing the benefits. Jobs are flowing in the area. Despite the recession, the north-east is the one area in the country where the jobs position has improved in the past few months, and it continues to do so. Much results from the work of the development corporations. Much could have been the result of the development of the Tees and Hartlepool port authority, if the legislation had not been brought to a halt in another place.

One hears and talks about democracy, yet three wayward peers in another place can stop the will of this House. I was interested to hear the hon. Gentleman speak of the "will of the House". That will was usurped in another place. It did not matter, because, as ever, the Government came to the rescue with their Bill, which is probably improved as a result of the pioneer work that I did on the private Bill.

When the Minister replies, he will undoubtedly make it clear that the Tees and Hartlepool port authority is not like the apprentice waiting for ever to ride a 10th winner. All apprentices must ride that 10th winner as quickly as possible because afterwards they can ride a Derby winner and win the real prizes. That is what the Tees and Hartlepool authority will do.

Dr. Godman

I would not dream of engaging in the debate on the state of socialism in the north-east of England, because you, Mr. Speaker, would rule me out of order. As a Member of Parliament in another country from that of the hon. Member for Langbaurgh (Mr. Holt), I can tell him that it is the Conservative party that is slipping away in Scotland, but I shall not go further down that road, either.

The amendments may improve matters slightly for the Clyde port authority. The Clyde Port Authority Bill seems to have foundered in the other place, or perhaps it has just come to some sort of anchorage—I say foundered, and the Minister talks about anchorage. A management-employee buy-out of the Clyde port authority may be vastly superior in all sorts of ways to the management buy-out envisaged in the private Bill that has either come to grief or is tied up somewhere.

Recently, there was a management-employee buy-out in Dundee and the operation is heading towards success. I am referring to a major bus company. The Transport and General Workers Union and the employers, with financial advice from, I think, the Clydesdale bank, although it may be the Royal bank of Scotland, bought the company. They are not turning it into a co-operative. They have set up a company which meets the entirely legitimate demands and requirements of the work force. The same should be done on the Clyde.

Port authorities must meet obligations, so that ports and estuaries can survive. In that respect, I wish to raise with the Minister the important question of dredging the Clyde. A management buy-out may be less of a prospect if no financial assistance is provided for the form of dredging that is so important on the Clyde. I simply remind the Minister of that. The cost of buying another dredging vessel, for example, may deter a management buy-out. Therefore, it is an important consideration. When these authorities are privatised, they must honour their obligations to local communities and local work forces.

Ms. Walley

The debate about employee-management buy-outs was developed extensively in Committee. We were disappointed that there was nothing in the Bill at the outset about how they could be achieved. The amendments and their further clarification is some proof that we made some progress on the idea.

As my hon. Friends have already admirably pointed out, there is a gap between what we would like to see and how the Bill is finally shaping up. Although we have got some concessions from the Government on this, the legislation is inadequate. Given the discussions in another place, at this late stage it is difficult to see how we can assure the trust ports that employee-management buy-outs will be favoured.

Mr. Bell

Can my hon. Friend refute the argument of the hon. Member for Langbaurgh (Mr. Holt) who, with his usual grace, entirely misunderstood my remarks? If the Tees and Hartlepool authority were to be the first in line for privatisation, as it does not have the clear-cut assurance from the Government that a management buy-out will be preferred to a competitive tendering bid, there is every likelihood that it will lose its management buy-out and end up in the hands of a foreign firm with no particular interest in Teesside. Is not that the point of not hurrying towards privatisation under amendments, but of waiting for two years to pass so that we can see exactly what foreign interest there is in our ports?

Ms. Walley

I am grateful to my hon. Friend for raising the issue, in relation to Tees and Hartlepool in particular. Two private Bills proceeded through Parliament—one for the Clyde port authority and the other for the Tees and Hartlepool port authority—and it is clear to everybody that the proof of the pudding will be in how the Bill relates to and compares with the private business that came to such an abrupt end when it was previously considered in this House.

My hon. Friend is right: we want absolute priority for an employee-management buy-out proposal. He spelled out the position accurately. I should like to see whether the Tees and Hartlepool port authority decides to proceed with an employee-management buy-out. We should like that to happen and for the procedure to change only if the port does not wish so to proceed. We should give the port that opportunity. As my hon. Friend so clearly pointed out, the Bill gives no clearer commitment to an employee-management buy-out than the first draft of the legislation.

We do not want trust ports to be privatised. They should make a commitment to the local community. If the legislation is enacted on Thursday, we want it to include an absolute priority for employee-management buy-outs, should that be the wish of the port concerned.

As my hon. Friends have said, the legislation applies not only to Tees and Hartlepool, but to the London port of Tilbury. Many employees throughout the country may see the proposal as the best option in the circumstances, but they may feel worried that, in the market economy that prevails, it will not advantage those who wish to undertake an employee-management buy-out. I am going on at some length, Mr. Deputy Speaker, because this is an important issue which is fundamental to the Bill. We have wrung some concessions from the Government—[Interruption.] If the Home Office Minister wishes to make a contribution rather than interrupt from a sedentary position, he is most welcome to do so. We are pleased that it will be easier to have employee-management buy-outs.

Mr. Bell

The hon. Member for Langbaurgh (Mr. Holt) said, in relation to the amendments, that there could be management buy-outs at Tees and Hartlepool. Is it not a fact that, had it not been for our opposition in Committee, helped by some Conservative Members—we are always glad to see the hon. Member for Thurrock (Mr. Janman) in his place and look forward to his presence when we discuss the clawback—even the limited preference buy-out scheme that we now have would not exist? That is entirely due to our opposition in Committee in which we were aided by a few Conservative Members. The great golden dream of the hon. Member for Langbaurgh of a management buy-out on Teesside, for which he and his colleagues wish to take credit, would not have come about but for the opposition of Labour Members.

Ms. Walley

I am always glad to give credit where credit is due. My hon. Friend the Member for Middlesbrough (Mr. Bell) is right to speak of the way in which the Opposition pressed for a policy that was not even included on the face of the Bill—albeit with some assistance from Conservative Members, who realised that ports could well be bought out by foreign interests and closed down because those foreign interests might have no regard for port activities. We take the credit for obtaining a firmer commitment to employee-management buy-outs. However, that commitment does not go far enough; we would like the Bill to have given complete priority to the concept of employee-management buy-outs, but that is not contained in the legislation.

Not long after we debated the issue in Committee, word came through that foreign firms, particularly Japanese, were interested in the London port of Tilbury. We expressed concern on behalf of the work force who, even if they had wanted to press for a management buy-out, could not do so unless the Government could give a firm commitment, which the Government were perhaps unable to do. For those reasons, we are concerned that the amendment does not give the firm commitment to employee-management buy-outs for which we have constantly pressed. Many trust ports throughout the country share our views.

Dr. Godman

I was not a member of the Committee. I note my hon. Friend's misgivings about the amendments emanating from the other place. If the amendments are accepted, it would enable employees of the Clyde Port Authority to take a much more active part in the acquisition of the CPA than would have been the case under the terms of the Clyde Port Authority Bill, which came to grief in the other place. That is an important distinction, and it is why I gave the example of the Dundee bus company, where the employees and their representatives were part of the negotiating team discussing financial considerations. If the amendments are passed, CPA employees would at least have a more active involvement in their future than would have been the case under the terms of the dreadful CPA Bill.

Ms. Walley

I am grateful to my hon. Friend and I am sure that his constituents in the Clyde district are aware of the point that he makes. We are concerned to make absolutely certain that employees who have given their life's work to the ports are as involved as possible in the port's future. We have to do so bearing in mind the fact that the employees have to contend with legislation that forces the ports to become privatised.

Dr. Godman

I am grateful to my hon. Friend for giving way. I had not intended to take part in the debate, principally because I am not feeling very well.

Is my hon. Friend satisfied that European Community legislation cannot prevent the Government of the day from expressing sympathy for a management-employee buy-out as against the would-be acquisition of a port by some foreign multinational company?

7.15 pm
Ms. Walley

My hon. Friend makes a valid point. I can well foresee circumstances in which local employees may wish, at all costs, to proceed with an employee-management buy-out to avoid the horrendous implications of a foreign company buying out the trust port. If that could not be made possible because the provisions did not exist in the Bill, those employees would wish to use every option open to them to ensure the employee-management buy-out. We would insist on exploring our need to operate in harmony with European directives to ensure that employees do not lose the option of an employee-management buy-out.

Mr. Bell

I hesitate to intervene in the speech of my hon. Friend, but no doubt she has read—as I have—the debate on the amendments in the other place and will have noted the great anxiety felt there, as it was in Committee, about the possible privatisation of the port of Poole. We are glad to see the hon. Member for Poole (Mr. Ward) in his place tonight. In Committee, he expressed concern that the port of Poole might be privatised.

Is not the port of Poole a classic example of where, even though employees may not wish the port to be privatised, it may be privatised against their will? The amendments will facilitate that task. It might be opportune if we could hear the views of the hon. Member for Poole on the amendments. Does my hon. Friend the Member for Stoke-on-Trent, North (Ms. Walley) agree that, although a port such as Tees and Hartlepool is even now reluctant to be privatised, other ports such as Poole are totally opposed to the idea?

Ms. Walley

I shall be guided by you, Mr. Deputy Speaker, as to whether it would be in order for me to respond to the comments by my hon. Friend the Member for Middlesbrough, which may have been slightly outside our remit.

Mr. Deputy Speaker

I am grateful to the hon. Lady. I am getting worried that the discussion is almost turning into a Second Reading debate. I hope that most of the arguments will be used on this group of amendments and that after that we may proceed more rapidly.

Ms. Walley

I am grateful for your advice on that, Mr. Deputy Speaker. I would also understand if the hon. Member for Poole (Mr. Ward) wanted to intervene now, rather than later, but I have no doubt that he will make a contribution if he wants to.

There is anxiety throughout all the trust ports about the implications of the legislation. There is a fundamental objection to the amendments involving compulsion. However, if it is accepted that that argument has been lost and nothing more can be done, the amendments relating to employee-management buy-outs give the trust ports some let-out and provide the only opportunity for the ports to continue under the direction of local people who are concerned about them.

We should have liked the legislation to give complete priority to the concept of management-employee buy-outs—a concept that could have been modified and further clarified during the Bill's progress. At this late stage, there is still confusion because the Government have not said whether, if that concept is the preferred option, they will go along with it. That is a matter of great concern and regret to the Opposition.

We still do not know whether the Government will let employee-management buy-outs go ahead if other bids worth far more money are made. The trust ports share our concern. The principle of management-employee buy-outs had cross-party support in Committee. However, at the end of our deliberations we have been left with the same assurances that we had at the beginning. We have been told that the Government will consider what they can do. They will only consider, they will not give the firm commitment that my hon. Friends and I want.

We are forced to conclude that the Government are not keen on anything except window dressing. We have learnt from other debates this week that what the Govenment might say is different from what they do. We should not have such a window dressing when it comes to employee-management buy-outs; we need a firm commitment that those buy-outs will go ahead.

The clawback property tax was designed to deter land predators from asset stripping ports. Although the ideology is right, in practice the tax has no effect other than to reduce correspondingly the tender offer to meet that possible liability. That reduction means that a management-led buy-out is not financially viable, but the aim of such buy-outs is to promote and develop a port and to use the land for the purpose for which it was acquired—port development.

The Government have not granted any concession on the basic 50 per cent. levy for management-led schemes. However, it is worth noting that the Finance Act 1990 offered a 3 per cent. concession. The Government now seem loth to offer a meaningful discount, which is necessary to achieve a successful bid.

My hon. Friend the Member for Middlesbrough said that we had pressed for the guidelines in Committee. We were then assured by the Minister that those guidelines would be available. We were content to take advice from the Government about how they would proceed to firm up the proposals for employee-management buy-outs. The Government should have followed the proper procedures and made the guidelines available to those in another place who were discussing them. However, I gather that the guidelines were first made available to the Association of British Ports. The Government's handling of the guidance notes is another example of the way in which they have been remiss in their entire handling of employee-management buy-outs.

Mr. Bell

The guidelines appeared in draft form in the other place. On insisting that they be placed in the Library, my hon. Friends and I discovered that they were sent to the managing director of the British Ports Federation, Mr. J. Sharpies, by a Mr. M. W. Jackson—apparently he is a civil Servant. It was only because of the unofficial title of those notes—"The Secretary of State's guidance notes on the procedure for sale of trust ports"—that we ascertained that they were the guidelines for which we were looking. Does my hon. Friend agree that it is remarkable that we have to suss out those guidelines from the Library as a consequence of a debate in the other place? Does my hon. Friend agree that it is remarkable that those guidance notes were not sent by the Minister to members of the Committee for the use in the House today?

Ms. Walley

I am grateful to my hon. Friend for drawing the details of the issue to the attention of the House.

We pressed for the guidance notes to be made available and we had every confidence that they would be sent to the other place in due course. No one was more astonished than me when I read Hansard of the other place and discovered that the debate was adjourned for half an hour before those guidance notes could be discussed. Far be it from me to suggest that this place does exactly the same.

In an earlier point of order concern was expressed that Ministers may be making announcements other than in the House, which denies hon. Members the opportunity to question Ministers. I agree with my hon. Friend the Member for Middlesbrough that the guidance notes should have been available at the appropriate time so that those discussing this important Bill could have had the opportunity to peruse them and so discover their implications for management-employee buy-outs.

We eventually got those guidance notes, but we understand from reading them that there is still confusion about the Government's exact commitment. The purpose of this debate is to try to discover whether there is a firm commitment from the Government to allow an employee-management buy-out. Other types of sale should go ahead only when employee-management buy-outs are not an option.

Mr. Bell

Does my hon. Friend agree that, in essence, it is clear from the guidelines that there is no firm Government commitment to the management buy-out option? We are committed to that option. Does my hon. Friend agree that, unless we have a firm assurance from the Minister that the Government will show a preference for such buy-outs, we may yet divide the House on this amendment?

Ms. Walley

My hon. Friend has said it far better than I could. This issue is of great concern to us.

If the Government are so in favour of employee-management buy-outs why was that commitment not included in the Bill in the first place? As time has gone on, we have attempted to clarify the position. We still do not believe that the clauses are perfect. However, I know that time is pressing and that it is important for the House to have an opportunity to discuss other important amendments.

Although we welcome the improvements that have been made, we do not believe that they go far enough. However, I do not believe that it will be necessary to divide the House as my hon. Friend the Member for Middlesbrough has suggested, but I shall look to my hon. Friend for guidance on that.

Mr. McLoughlin

This has been an interesting debate. I wonder what the Opposition's attitude would have been if the Government had given an absolute commitment to management-employee buy-outs which therefore substantially reduced the price of the ports? Let us then suppose that, at a later stage, the ports were sold. I am sure that the Opposition would have been the first to complain that we had not attracted sufficient revenue to the Exchequer. They would have been the first to complain about the taxpayer being ripped off.

I cannot understand why the Opposition argue that we should give an outright commitment to management-employee buy-outs without testing the market. The hon. Member for Greenock and Port Glasgow (Dr. Godman) said that he was impressed by some of the buy-outs relating to Scottish buses, but I doubt whether they met with the universal support of the Labour party at the time when they were announced.

Mr. Tim Janman (Thurrock)

Does my hon. Friend agree that it is hypocritical and richly ironic for the Labour party to argue so hard for management-employee buy-outs? If we had a Labour Government today, we would not have this Bill, and not one set of managers or employees would have the right to buy anything in our ports.

Mr. McLoughlin

My hon. Friend makes the very point that I was about to make.

In the main, I want management-employee buy-outs to be successful. Paragraph 5 of the guidance notes states: a statement of objectives … need to be agreed on a port-by-port basis with the Secretary of State. In framing their draft objectives ports should have regard to the desirability of encouraging the disposal of the whole or a substantial part of the successor company's equity share capital to managers or other employees of the port. A limited price preference for a management and employee buy-out may be appropriate, as described in paragraph 15 below. Paragraph 15 says: In particular a trust port may wish to recommend that a price preference should be applied to a bid from a management-employee buy-out team. The Secretary of State will be prepared to consider a limited price preference of this kind in individual cases and will have regard to the particular circumstances of each case. We believe that the right way forward is to consider the ports case by case, and I think that the Opposition agree. The trust ports are not all the same, and we must take into consideration the conditions in each one.

7.30 pm

My hon. Friend the Member for Southend, East (Sir T. Taylor) spoke of the Port of London authority police. We can deal with that point when we debate Lords amendment No. 35, which relates to the PLA. I recognise my hon. Friend's interest in this matter and I congratulate him on the way in which he has, on a number of occasions, vigorously raised with me both this issue and that of pensions, which has also been raised by a number of other hon. Friends, including my hon. Friend the Member for Thurrock (Mr. Janman).

Parity of the PLA police with the Metropolitan police was never guaranteed. The PLA endeavours to match the Metropolitan police within its means. The conditions and contracts of employment will transfer with the transfer of the scheme. However, the new owners will be able to make changes, but only through the negotiated process, as would need to be the case with any employees. It would be a dangerous precedent to set out what should happen in five or 10 years. I take the point made by my hon. Friend the Member for Southend, East. We shall be watching the situation and shall take the point on board when the PLA comes to us about the sale of Tilbury.

My hon. Friend the Member for Thurrock made the point well. We are keen to see management-employee buy-outs. If the Opposition had their way, these would not be an option, because the Bill would not be before the House.

Mr. Bell

I am sorry to take up more of the Minister's time, but we said earlier that, if we were not satisfied with his explanation, we would divide the House. If he gave me an assurance that, although the guidelines talk of "limited preference" being appropriate, he will knock out "limited" and simply leave it as a "preference", we might be able to avoid a Division.

Mr. McLoughlin

We are not discussing the guidelines. The wording enables the Government to have discretion between port and port. I should have thought that that would be welcome. I would not want to declare in advance what the position would be for each and every port, because decisions will be made in due course. It would not be practicable to say that, come what may, management-employee buy-outs will be successful. I hope that, in the vast majority of cases, such buy-outs are successful.

Sir Teddy Taylor

I am sorry to interrupt my hon. Friend, but this is terribly important. Has he the approval of the EEC Commission for his important statement that preference will be given to a management buy-out, even at a lower cost? My understanding is that what he said is contrary to European Community law and that he will get hammered by the European Commission if he tries to insist on it.

Mr. McLoughlin

One always takes seriously my hon. Friend's cautions about our position within the Community and about what the Community law says. This is in line with what we did when we privatised the Scottish Bus Company. The same words were used in that case, so I am content that we are not breaking any treaty obligations in the way my hon. Friend fears.

Dr. Godman

I hope that what the Minister has said is borne out by the events. He was the Minister who had to change the Merchant Shipping Act 1988. That change was inflicted on the Government by the president of the European Court of Justice. Is he completely confident that a similar change will not be imposed on him as a result of these amendments?

Mr. McLoughlin

That is going rather wide of the amendments. I remember the incident because it was my first appearance at the Dispatch Box. However, I have no doubt that what the Bill sets out is acceptable to the Commission.

Mr. Bell

On competition, the situation under these amendments would not be dissimilar to the television franchises. As the Minister has been so frank and forthright on this issue, and given the assurances that he has made about management buy-outs, it does not appear necessary for us to divide the House.

Mr. McLoughlin

I am grateful to the hon. Gentleman. If anybody wishes to give me any similar assurances when we debate other amendments, I shall be only too pleased to give way. I can hear my Whip telling me not to be too generous. I commend the amendments to the House.

Question put and agreed to.

Back to
Forward to