§ Motion made, and Question proposed, That this House do now adjourn.— [Mr. Sackville.]
§ Mr. King
No, not on that but, with your indulgence, I should like to raise a point of order about the Official Report which, as you know, is the guardian of the spoken word in the House. I refer you to column 403 of yesterday's edition, which contains an exchange of views between her Majesty's Leader of the Opposition and the Prime Minister.
When making his point about interest rates charges as they affect small businesses, the Leader of the Opposition stated:Small businesses which used to have arrangements to pay 3 per cent. above base rate on their overdraft facilities are now paying as much as 17 per cent.— [Official Report, 6 June 1991; Vol. 192, c. 403.]There was then an interruption, of which I was a part, which was an expression of incredulity about the fact that base rates for some businesses could be the base rate plus 17 per cent. which is what we understood the Leader of the Opposition saying. He was making a highly ambiguous statement. If you read on a little further, Mr. Speaker, you will see that my right hon. Friend the Prime Minister also believed that the Leader of the Opposition was saying that the lending rate for small businesses was the base rate plus 17 per cent., because he expressed astonishment and frank disbelief at those allegations.
The Leader of the Opposition has since gone public and has written a letter to the Prime Minister, which is well reported in today's press, expressing his concern about the Prime Minister's ignorance of actual interest rates. My point—
§ Mr. Speaker
Order. Would this not make an interesting contribution to the debate? [HON. MEMBERS: "No."] I think that it probably would because, as far as I can see, it is not a matter for me. After all, I am frequently astonished at what I hear in the Chamber but, provided that it is in order, I have to let it go.
§ Mr. Speaker
I am not aware that Hansard has been asked to make that correction. I repeat that the hon. Gentleman's point would probably be in order if he were to make it in a fairly sophisticated way in the debate—that is, if he is fortunate enough to catch the eye of the Chair.
§ The Financial Secretary to the Treasury (Mr. Francis Maude)
It is relatively rare for the House to have an opportunity to discuss an important theme such as this, which runs right across all sorts of departmental responsibilities. Understandably, there is a tendency for debates to be focused on relatively narrow areas of Government and public life. It is therefore useful to have an opportunity for a wide-ranging and relaxed debate on something of profound importance that applies right across British life.
As you have said, Mr. Speaker, the title of the debate on the Order Paper, "Nationalisation, denationalisation and renationalisation", has been chosen to allow us to range fairly freely, and to allow the hon. Member for Newcastle upon Tyne, East (Mr. Brown) to make a few things a little clearer than they have been.
There used to be a complaint that in Britain we suffered from pendulum politics. The issue of private and public ownership of industry was used as an index of that. Ownership tended to lurch from private to public, public to private and back to public again. One had sympathy with those who worked in the steel industry, who were subjected to the pendulum. For years, the pendulum swung towards nationalisation and state ownership. From 1945 until the late 1970s, more and more areas of the economy came under state ownership. Since then, of course, the pendulum has begun to swing back.
In such matters, we should always seek to establish as broad a consensus as possible between the parties. Today gives us an opportunity to explore what scope there is for such consensus, how much of what it claims to believe the Labour party truly believes, and what we can agree.
The history of nationalisation and state ownership is lengthy and sorry. I do not doubt the motives of those who pursued the dogma. I accept that they believed that state ownership would somehow transform the lives of businesses. Indeed, it did so, but not in quite the way that was envisaged. I found an excerpt from the Labour party manifesto of 1945. It is an important and interesting historical document. It contains statements of the following nature:Amalgamation under public ownership will bring great economies in operation and make it possible to modernise production methods and to raise safety standards in every colliery in the country. Public ownership of gas and electricity undertakings will lower charges, prevent competitive waste, open the way to co-ordinated research and development, and lead to the reforming of uneconomic areas of distribution.That is just a flavour of the spirit—I accept that it was sincere—in which the exercise was embarked upon all those years ago. It was believed that the process of state ownership would create dynamic companies with a work force driven to Stakhanovite effort by the knowledge that they were working, not for themselves, wicked capitalists or coal owners, but for society.
The commanding heights of the economy—railway, coal, steel, gas, electricity and companies such as Cable and Wireless, all the way through to Pickfords and Thomas Cook all fell sway to state ownership. I do not blame Labour for that. It was warned at the time that the 507 policy would be disastrous—which it was. However, Labour was in the grip of a dogma, and those who are in the grip of a dogma do not always respond rationally to warnings. Of course, many other countries apart from Britain were doing likewise. In eastern Europe, not only the commanding heights but the sunlit uplands, the deeps of the valleys and every part of the economy was subject to the liberating and dynamic hand of state ownership. One can see the results clearly.
For example, in 1938 the per capita gross domestic product of Czechoslovakia was the same as that of Switzerland. By the time that the Communist tyranny was removed in 1989, the GDP had sunk to a third of that of Switzerland. Such is the dynamising effect of state ownership. I do not wish to dwell on the record of nationalised industries in Britain. It is a sad and depressing saga in our nation's life. We all remember the British Steel Corporation, with its losses of £1 million every day of the year. We all remember British Telecom being in the Guinness Book of Records for the largest loss ever. We all remember the sloppy standards, the waiting lists for telephones, the ever-rising prices, the dingy tale of failure, the contempt for the customer, the craven management and the political interference. British Telecom was stifled by bureaucracies and governed by overweening trade unions. It had one theme running throughout—utter contempt for the customer.
In the early 1980s, when the Conservative Government started to blaze the trail that has now burned worldwide, what was Labour's response? Was it a pragmatic response of concern for the customer? Was it a questing, practical approach and an attempt to seek common ground? Sadly, no. The reaction throughout in every case without exception was blind opposition and crusted reaction. The Labour party desperately held on to the hands of the clock to stop the march of time.
§ Mr. Michael Grylls (Surrey, North-West)
Before my hon. Friend gets too deep into the incredibly—or perhaps naturally—negative attitude of the Opposition to all the privatisation measures, may I take him back to what he said about the Labour party wanting to conquer the commanding heights? He will recall a well-known organisation of the 1970s called the National Enterprise Board. It was not only interested in the commanding heights but invested in the most ridiculous small businesses. That is not to say that small businesses are ridiculous. They are the most important part of the economy. But the investments were ridiculous because they were unsuccessful.
§ Mr. Grylls
My hon. Friend the Minister will remember, because of his excellent memory and the research that he has done, a firm called Thwaites and Reed, which was a tiny, unsuccessful clockmaker on the south coast—not that is a fault. The south coast is a good place to be and we should probably all prefer to be on the south coast now. But there was Thwaites and Reed—one of the commanding heights of the economy. The NEB put £140,000 into it, which went down the drain. The NEB then put another £180,000—
§ Mr. Speaker
Order. The hon. Gentleman is making a most interesting speech which should be made a little later.
§ Mr. Grylls
I was drawing my hon. Friend's attention to that example, because it seemed to fit in with what he was saying about the commanding heights. Does my hon. Friend agree that the commanding heights are rather more than the commanding heights? Therefore, there is a danger that, if Labour ever returned to power, it would tackle the lower heights, as well as the commanding heights.
§ Mr. Maude
It is entirely true that the Labour party used to talk about the commanding heights. It usually managed to level down substantially what it referred to as the commanding heights, so that the heights were rather less high at the end than they were to begin with. My hon. Friend the Member for Surrey, North-West (Mr. Grylls) does the House a service by reminding us of the tendency of the last Labour Government, as my hon. Friend the Member for Amber Valley (Mr. Oppenheim) put it, to pick losers with a sure and certain touch and to roam the byways of the British economy looking for something that they could make worse. Frequently they did so.
It is astonishing that, in spite of the self-evident failure of state ownership, when the Conservative Government came to reverse it and free businesses from the dead hand of state ownership and put them into the private sector where they could serve the consumers whom they were supposed to serve, the Labour party still clung to the dogma. It not only clung to the dogma and opposed what we sought to do but predicted the worst of disasters in every case. It predicted that there would be higher prices and less investment, that investment would cease, that poorer service and disbenefits for the consumers would be the result.
Let us examine what happened in practice, taking as an example British Telecom. Labour predicted that British Telecom would neglect public payphones and that they would disappear. What happened? In 1984, there were 77,000 British Telecom payphones. Today, there are more than 97,000, with Mercury payphones available on top of that.
§ Mr. Maude
My right hon. Friend, with his detailed knowledge of the company, is able to provide up-to-the-minute information. He, too, does the House a service. Some 95 per cent. of payphones now work, compared with the shabby, shameful record under state ownership, when up to a third of payphones did not work.
Does the Labour party admit that it was wrong? I am a fair-minded man, as my hon. Friends will accept. I should like to give the Opposition Front-Bench spokesman, the hon. Member for Newcastle upon Tyne, East an opportunity to admit that the Labour party was wrong. Will it now apologise to all those who depend on 509 call boxes for deliberately misleading and frightening them, many of them elderly people? Will the Labour party, just once, admit that it was wrong and say that it is sorry?
§ Mr. Marshall
Does my hon. Friend regard it as significant that only two Labour Members are present? Does he think that the rest have gone out into the highways and byways to find more losers into which to put public money? Does he agree with me that Labour Members regard their policy as such a loser that they do not want to speak about it?
§ Mr. Maude
I fear that it is worse than that. I fear that the Labour party has abandoned its policy of simply picking losers. If it got into government by some unhappy mischance, it would scour the economy and every highway and byway of it to find successful businesses it could ruin. Instead of just pouring taxpayers' money into failures, it would take successes, the successes which have transformed the British economy during the 1980s, and ruin those as well.
§ Mr. Oppenheim
Is it not possible that many of the Labour Members who should be sitting opposite have slunk off into the well-known highways and byways to hide their heads in shame at the abject failure of their predictions? It is noticeable that 50 per cent. of Labour Members present is the hon. Member for Derbyshire, North-East (Mr. Barnes), who obviously feels so committed to clause 4 of the Labour party constitution that he has taken time off from his duties as collector-in-chief for the bail-out fund of his friend the leader of Derbyshire county council, Councillor Bookbinder, to be present today. We are very honoured that he is.
§ Mr. Maude
I wish that I could share my hon. Friend's optimism that Labour Members are hiding their heads in shame. I do not believe they are. I believe that they are preparing things that are worse, and I shall hint later at what they have in mind for the future.
Once again, I am prepared to give the hon. Member for Newcastle upon Tyne, East, who is a straightforward chap most of the time, a chance to say honestly and in a straightforward, manly fashion, that the Labour party was wrong, that it misled and deceived the public. It should say that it is sorry, but I am afraid that the hon. Gentleman will not do that.
§ Mr. Nicholas Brown (Newcastle upon Tyne, East)
I hope that this will not come as a terrible shock to the Minister, even at this hour of a Friday morning, if I tell him that I will not say anything of that sort. I shall make my own speech, in my own time and in my own way.
§ Mr. Maude
The House will be united in disappointment at that poor intervention. The hon. Gentleman has shirked an opportunity to put matters right.
What were the Labour party's predictions about investment in British Telecom? It predicted that it would cease. However, in 1991, capital investment is running at £3 billion a year, double the 1984 level, since when total investment has reached £14.5 billion. In the 1970s, under 510 the benign hand of the Labour Government and state ownership, British Telecom fell victim to Labour's capital spending cuts. When the bailiffs came in, the first thing to be cut was capital spending in the nationalised industries and in the health service and education. Since 1984, British Telecom has been able to invest heavily. How would it be able to invest without profit?
I have another question for the hon. Member for Newcastle upon Tyne, East which he may care to reply to in his speech. Is it better for companies such as British Telecom to suffer under Government capital spending cuts, as it did in the mid-1970s, or is it better for a company to be self-sufficient and able to invest heavily in capital out of its own profits? I know what the customers think. They firmly believe that what happens now is better.
What about service to the customer? Throughout the debates on privatisation, the Labour party has harped on the theme that service to the customer will suffer. This year, British Telecom has offered a system of compensation to customers whose phones are not repaired within two working days. Did nationalised British Telecom ever do that? Is it conceivable that it would have been able to do that? Is the service now worse than the one that the customer previously received? Who now has to wait six months for a telephone number? Which is better, the performance of British Telecom when it was nationalised or the performance now?
Let us consider prices. I readily accept that call charges have risen. In one year, overall charges rose by 60 per cent. and local call charges doubled. Which year was that? It was 1975-76. Since 1984, call charges have fallen by 20 per cent. They will now be set at 6.25 per cent. below the June retail prices index increase, and it is not difficult to predict that that is likely to mean a fall in real terms. Clearly it is, and it is also likely to mean a fall in cash terms. Which is better for the customer: an increase of 60 per cent. and a doubling of local call charges, or a fall in real and cash terms? The hon. Member for Newcastle upon Tyne, East may like to answer that, too.
Let us consider pricing in the two decades. The cost of a three-minute, cheap-rate local call went up by 16 per cent. between 1971 and 1981. Between 1981 and 1991 it fell by 36 per cent. Will the hon. Gentleman say which was better? British Telecom has delivered better standards, higher investment and lower prices in the private sec1or than it could ever have done in the public sector.
A similar story is told by the water industry in the brief period since it has been in the private sector. The quality of water has improved. In Severn Trent Water, my own area, 96 per cent. of the sewage works now comply with discharge consents, against only 76 per cent. before privatisation. Wessex Water is bringing forward the deadline to cease dumping at sea by five years, and it will comply with legislation to remove pesticide contamination from supplies three years early. Thames Water will open its London ring main ahead of schedule next year.
Capital investment in the water industry is rising sharply. In Thames Water, it rose by 59 per cent. last year, to nearly £400 million. North West Water spent more than £400 million on its core capital programme last year, and that is expected to rise to £500 million this year. Only five years ago, we were being told that the capital investment required by the water industry to replace the Victorian mains could not reasonably be met. What is happening now? The investment is being met by private sector 511 companies raising capital in the private sector, and they are doing a far better job than they could ever have done in the public sector.
In the past five years, electricity prices have fallen by 5 per cent. in real terms. Under a Labour Government, one has to admit that they rose by only 2 per cent.—2 per cent. every six weeks. Again, the hon. Member for Newcastle upon Tyne, East may like to comment on which was better for the consumer. Is he interested in the consumer or is he interested only in those who work for the businesses?
Throughout the debates on privatisations, Labour claimed that catastrophe was looming. In 1983, during a debate on the Telecommunications Bill, the right hon. Member for Bethnal Green and Stepney (Mr. Shore) said:the Bill will undermine and frustrate the development of the telephone service as a universal amenity for all our people." —[Official Report, 21 November 1983; Vol. 149, c. 37.]What has been the reality? There are 3 million more private telephones for our people and lower charges have been introduced. The Labour party said that the customer would be ripped off, standards would fall and prices would rise. That was all wrong and irresponsible scaremongering. Will the Labour party apologise? So the record of privatised companies is higher quality, more investment and reasonable or falling prices.
The hon. Member for Newcastle upon Tyne, East may claim that some of those companies' profits are too high and should be lower. The idea that shareholders who have invested their money in the companies should get a return on that capital is still anathema to him and his hon. Friends.
Does the hon. Gentleman accept that those profits mean that the state receives more in tax receipts from those companies than it ever received under state ownership? Does he believe that investment is better from profit or that it is better borrowed, subject to political control and whim? Whose judgment does he believe is better of what amounts to an acceptable rate of return? For example, for British Gas, does he believe that the sober, hard-headed judgment of Mr. Mackinnon, the director-general of the Office of Gas Supply, is to be preferred to the judgment of the hon. Member for Holborn and St. Pancras (Mr. Dobson)? I know whose judgment the British public at large prefer.
Profits are subject to control. If they are excessive—if it is judged to be an unreasonable rate of return—there is tougher regulation for those industries than ever there was under state ownership. The Office of Telecommunications has far greater powers to interfere and intervene, in detail if necessary, with the operation of British Telecom on behalf of the customer than ever the Government could have done. So the complaint that there are excessive profits says far more about the attitude of the Labour party than about the companies. Too often, Labour Members show how they hate success. Those profits show—at the same time as charges and prices have been falling in real terms —that businesses are performing better for the customer.
Considering that record of success, it is small wonder that privatisation is spreading far and wide. The Labour Government in Australia are proposing to privatise the Commonwealth bank, airlines and satellite communications.
§ Mrs. Teresa Gorman (Billericay)
My hon. Friend has not referred to the appalling record of labour disputes that we used to have when those industries were owned and run by the state, with overmanning and so on. At that time, we had an appalling level of disregard by unions of the public's interest, leading up to the terrible crisis of 1979, when people were not even being buried. That was an appalling aspect of national ownership and control and political interference in industry.
§ Mr. Maude
My hon. Friend is right. A grubby set of negotiations between the Government and trade union barons managed the state-owned companies under Labour Governments. Where, so often, were the interests of the consumer? The consumer was left out of the calculation. It was entirely to do with deals done between Labour Ministers and trade union bosses. I hope that we never see that again. The hon. Member for Newcastle upon Tyne, East can help us over that. Does Labour propose to return us to that state of affairs?
I was referring to parts of the world where privatisation has now taken hold. In Sri Lanka, the textile industries, television, hotels and distilleries are being privatised. In Greece, there is a list of 150 potential sales in preparation, including petrochemicals, vehicles manufacturers and refineries. In Eire, the list includes Irish Sugar and B and I Line ferries.
§ Mr. Campbell
If the position of the sugar industry in Ireland is considered by the Minister to be a compelling part of his argument, he is stretching for examples to prove his point. Surely he has better examples to give the House.
§ Mr. Maude
I am giving examples in random order, and I shall be favouring the House later with some better ones. I hope that the hon. and learned Gentleman will take part in the debate and say whether he thinks all those people are wrong and the Labour party is right.
In Hungary, telecommunications, construction industries, oil industries, chemical businesses and hotels are being privatised. Large companies in Czechoslovakia are lodging proposals now, and full-scale privatisation starts this summer. In Poland, 1,000 companies are being privatised this year. In Argentina, telecommunications, airlines, electricity businesses and shipping are all headed for the private sector.
In Brazil, the steel industry and a wide range of other industries are heading out of the public sector into the private sector. In East Germany, 1,200 companies have already been sold and other, more difficult, candidates are planned to be sold. In Japan, telecommunications, the railways and tobacco industries are all heading for the private sector. In Mexico, banks, the steel industry, telecommunications and television are being privatised. In New Zealand, the telecommunications business is being privatised.
In the Philippines, airlines, banks and oil are heading out of state ownership. Banking, steel and newspaper industries in Portugal are all heading out of state ownership. In Venezuela, airline businesses, banking and telecommunications are being released from the dogma of state ownership. In Cuba, they are selling housing.
513 In other words, in countries in every continent, under Governments of every complexion, privatisation is now the watchword. It is happening almost everywhere but, sadly, not quite everywhere. I think particularly of three redoubts of reaction, three bastions of the old dogmas. There is no commitment to privatisation in North Korea, Albania or—[Interruption.] My hon. Friends have probably guessed the third. It is the British Labour party. Walworth road lines up alongside North Korea and Albania. Labour Members have opposed every move to privatisation with every ounce of fight they could muster.
§ Mr. Steve Norris (Epping Forest)
My hon. Friend may not be aware that I have had the interesting privilege of visiting Albania several times. Before he links the newly elected democratic Government in Albania with the British Labour party, may I ask him to put on record the distinction that at least in Albania they recognise that nationalisation was wrong and are intent on changing the system?
§ Mr. Maude
A valuable part of this debate has been the way in which hon. Members have introduced up-to-the-minute information from all parts of the world, and my hon. Friend testifies that the list is now down to two. Only in North Korea and Walworth road do the dogmas lie untouched. Even in Albania, in Tirana, the world is moving forward. The thinking there is more advanced than it is in Walworth road.
Labour has opposed privatisation at every stage, and the hon. Member for Newcastle upon Tyne, East now has the whole morning before him to set out his stall. He has had all week in which to consult his hon. Friends so that he can array their pledges before the House in sparkling order for scrutiny. He may also wish to answer a few questions. For example, is clause 4 still an integral part of the Labour party's constitution? [Interruption.] We note that the hon. Member for Newham, North-West (Mr. Banks) has joined the hon. Gentleman on the Opposition Front Bench. The hon. Member for Newcastle upon Tyne, East may wish to seek some ideological reinforcement from his hon. Friend. Does the common ownership of the means of production, distribution and exchange still bind the Labour party in the way that it always did? What is the current interpretation? Are there plans to repeal it? If not, what will the Labour party do? Perhaps the hon. Member for Newcastle upon Tyne, East will choose not to answer those questions, in which case we must look elsewhere to see what others have said about it. In 1986, a document intriguingly called "Social Ownership" said that clause 4 of the party's constitutionis as relevant today as it ever has been".Does the hon. Gentleman believe that it still exists? Does he propose that it will operate under a future Labour Government?
The right hon. Member for Birmingham, Spark brook (Mr. Hattersley) said that British Telecomis coming back into public ownership in its old form immediately".I emphasise his statement that that is an immediate priority on the return of a Labour Government and there is no backsliding or temporisation about that. What could be clearer?
One of the last Labour documents, "Looking to the Future" published in May 1990, says:If the public stake in BT's equity remains at 49 per cent., we shall buy sufficient shares at a fair market price to take that stake to 51 per cent.".514 That statement was made a year ago. In this year's document, the Labour forgot to mention that. Was it a mistakeof the printers? Did it simply get left out at the typesetting stage? At the press conference where it was launched, the Leader of the Opposition was asked about it and forced to admit:there's no change in the policy there".Why was it not mentioned in the document? Was the Labour party ashamed of it? British Telecom is the largest company in Britain, and the Labour party should say whether it is committed to returning it to state ownership.
§ Mr. Banks
I was just passing through the Chamber. I said that the Government are working on it, and was referring to the Minister's statement that British Telecom was the largest company in Britain. If the Government's policies are in place for much longer, British Telecom, like many other companies, will find itself among the small businesses.
§ Mr. Maude
That is a remarkable proposition, because I fancy that the hon. Member for Newcastle upon Tyne, East will, in a few minutes' time, complain bitterly-to the House that British Telecom is too large and becoming larger, and is making too much profit. The hon. Member for Newham, North-West takes a different view: he claims that British Telecom is a failure that will crumble away into nothing. Perhaps, Mr. Deputy Speaker, the House would like to adjourn for a few minutes to allow them to decide the Labour party's approach.
Is the Labour party committed to renationalising and stripping away the shares of the employees and millions of shareholders who have invested their money in British Telecom? If the House does not have a clear answer today, we shall be very disappointed indeed.
What did the Labour party say about British Gas when it was privatised? The then Opposition spokesman said:under a Labour Government will be returned to the public sector".—[Official Report, 25 March 1986; Vol. 94, c. 810.]Is that still true? If not, was it wrong to claim that privatisation was bad and should be reversed? Will it be put right by the Labour party now?
What did the Labour party say about the privatisation of electricity? In 1988, the hon. Member for Copeland (Dr. Cunningham) said, in the debate on the Address:We are implacably opposed to proposals to sell off our nation's electricity"—[Official Report, 28 November 1988; Vol. 142, c. 445.]Is that still so? Is the Labour party still opposed to it? Will it renationalise it?
§ Mr. Maude
Perhaps then, we shall have a different answer. I hope, above all, that we shall have an answer. The Labour party has been dodging those issues for months, and the country demands an answer. The hon. Member for Kingston-upon-Hull, East (Mr. Prescott) gave a partial answer when he said:We shall ensure that the industry is returned to public control if the Secretary of State is successful in privatising it". —[Official Report, 7 March 1988; Vol. 129, c. 66.]515 That statement was made as recently as March 1988 by the then official Labour party spokesman on energy. Is that still Labour party policy?
How would the Labour party renationalise the water industry? That is the only part of its policy about which it has been open and honest. It has said that it will take water back into public control. How would it go about it? In its document, "Meet the Challenge, Make the Change" it said:There would be no question of paying other than a fair market price for any equity or other ownership rights we wish to acquire".What is meant by "a fair market price"? The hon. Member for Dagenham (Mr. Gould) said—[Interruption.] The hon. Member for Newcastle upon Tyne, East should listen to the words of the hon. Member for Dagenham, because the House will expect him to comment on them. He said:A Labour Government would take action to regulate the water industry, which would reduce the profitability of the privatised water companies and therefore would be likely to depress the share price. Investors should take that into account.I agree that investors should take that into account, and I am sure that they will. Is that a description of paying a fair market price?
§ Mr. Tebbit
It is a fairly clear description of a Labour Government's policies. They would do what they have always done. First, they would wreck the business and then they would say that it is wrecked and worthless. The country would then have to wait for a Conservative Government to come back into office and reprivatise the industry to make it successful again.
§ Mr. Maude
My right hon. Friend gets right to the point, as usual. That is exactly what the hon. Member for Dagenham was saying. The Labour party will regulate the industry, reduce its profitability, wreck it and lower the price. Thus, it will steal money from those millions of people who have invested their hard-earned cash in shares in the water businesses.
§ Mr. John Marshall
Does my hon. Friend agree that the position is much worse than that? It will affect not just the millions of individuals who have invested directly in water, British Telecom, electricity and gas, but everyone who has a pension or life insurance with-profits policy will be affected by the confiscation proposals of the Labour party.
§ Mr. Maude
My hon. Friend calls it confiscation; I call it theft. The Labour party will deliberately reduce the value of people's property, in order more easily to take the industry back into state ownership.
A little later, the hon. Member for Dagenham was asked whether that general approach would apply to shareholders in the other utilities, as well as water. He replied:I think that is very probable. I think we shall certainly be consistent in our general approach.I think that the Labour party probably will be too. It will seek to wreck all those industries in the same way.
That leads us to ask where Labour's policy will end. It looks like a partial agenda. As so often happens, the hon. Member for Kingston-upon-Hull, East has given us a glimpse of the hidden agenda—the real Labour agenda. In an interview in May last year, the hon. Gentleman said of the British Airports Authority: 516These are areas which we are going to turn into public utility companies. We are not going to leave them as private sector companies.Is that still Labour party policy? Is that another company that will be taken back into public—state—ownership? The hon. Gentleman was pressed to explain whether that meant that the BAA would be renationalised. The article continued:Prescott avoids a direct answer.It goes on to say that the hon. Member for Kingston upon Hull, East said:I have already told you more than I should. I have said more than I should.As so often, the hon. Member for Kingston upon Hull, East did his country a sterling service. He lifted the curtain and enabled us to see the Labour party's real agenda. What could be clearer than his statement that he had already said more than he should?
I hope that the hon. Member for Newcastle upon Tyne, East will tell us two things in his speech. I hope that he will come clean about Labour's real agenda and lift the curtain even further on Labour's hidden agenda for confiscation and theft. I hope that he will say what the Labour party intends to do, so that the millions of consumers can prepare themselves against the eventuality of a return to shoddy services, union-dominated bureaucracies, and the millions of shareholders can prepare themselves for another chapter of Labour's highway robbery.
I also hope that the hon. Member for Newcastle upon Tyne, East will apologise to the House and country for all the deceptions, deceits and scare stories on privatisation used by the Labour party. I hope that, just for once, he will accept that the Labour party was wrong and we were right, and apologise to the House.
§ Mr. Nicholas Brown (Newcastle upon Tyne, East)
Confiscation, theft and highway robbery are heady charges to be summoned to the House to answer on a Friday morning, but those are the charges that the Financial Secretary puts to me in his slightly hysterical romp through what he thinks are the Labour party's policies.
You, Mr. Deputy Speaker, will know better than anyone here that Fridays are reserved for debates on motions, private business, private Members' motions, private Members' Bills or Government legislation, but today we are discussing none of those. Instead, we are holding a Government-inspired debate on a motion for the Adjournment. The Government have been unable to find anything better to do with parliamentary time than hold a student union-style debate for its own sake, with no real conclusion exceptThat this House do now adjourn".The Financial Secretary then has the nerve to express surprise that my right hon. and hon. Friends have found something better to do than come here and take part in an Oxbridge-style debate.
If the Government have the sort of priorities that we think they have, why are we not discussing legislation to deal with what the Prime Minister believes to be the great issues of the day—pit bull terriers, Hackney council or the English cricket team? Those are the sort of priorities that the Prime Minister has and, surely, we should be discussing legislation on them now, instead of having to stay up until 4 am next Tuesday as I expect that we shall 517 have to do. The Government have found nothing better to do with parliamentary time than hold this debate today and I hope that the electorate will take note of that.
§ Mr. Oppenheim
I am astonished at the hon. Gentleman's attitude. He says that we are discussing a matter of no importance, yet we debate the future of some of the biggest companies in this country—employing tens of thousands, probably hundreds of thousands, of people —and the interests of not only their millions of customers, but their millions of shareholders. He comes to the House and belittles all those interests.
§ Mr. Brown
The hon. Gentleman, I hope not deliberately, misunderstands me. I am saying that the proposition that the House do now adjourn is a matter of no importance. That motion was put in front of us today not by the Opposition or a private Member, but by the Government who are responsible for moving forward the legislative programme. Are they able to do that? No, they are not.
§ Mr. Brown
The hon. Gentleman now intervenes from a sedentary position asking me to give Labour policies. I was about to do that when he intervened to complain about what I said earlier. He cannot have it both ways and I suggest that he sits still for a little while at least, and listens to our modest and reasonable policies.
We have made three specific pledges on renationalisation, which I will read from our policy review document, "Looking to the Future", so that the Financial Secretary can be absolutely clear about what we are saying and what we are not saying. The first of those propositions relates, as the Financial Secretary said, to the water industry. In the policy review document we clearly state that the provision of water is so fundamental that it should be made a priority for a return to the public sector. We go on to say:We shall of course pay a fair market price for any equity or ownership rights which we wish to acquire in the water industry.On the subject of electricity we have made it absolutely clear that we shall take control of the national grid so that the Government may play the necessary strategic role in the industry—including the security of supply. We have confined our pledges to the national grid, not the rest of the industry.
§ Mr. Tebbit
The House will notice the difference between the words used by the hon. Gentleman when speaking about water, which he said would be returned to public-sector ownership—of course he means state ownership—at a fair market price, and those he used when speaking of the national grid, over which he said that a Labour Government would take control. Does that mean that the national grid would be repurchased or would it merely be expropriated without payment? What does he mean?
§ Mr. Brown
I thought that it was too good to be true. I obviously misheard the Financial Secretary. "Fair market price" means exactly that. If the Financial Secretary is asking me to set that price, obviously I cannot because it depends on prevailing market conditions, but we would look to those prevailing market conditions to set the price.
§ Mr. Maude
The hon. Gentleman may like to take this opportunity to help us. I am not asking him to set the price in pounds and pence, but how the price would be arrived at. Does he follow the Dagenham doctrine of over-regulating business and wrecking its profitability so that the price falls, which is what the hon. Member for Dagenham (Mr. Gould) explicitly set out? Is that still Labour party policy?
§ Mr. Brown
I think that the Financial Secretary is misinterpreting what my hon. Friend the Member for Dagenham (Mr. Gould) means. I am absolutely certain that no Labour Member would seek to wreck a public utility—quite the reverse. We believe in publicly owned public utilities and would do nothing to damage them. When we say "market price" we mean precisely that.
§ Mr. Brown
I am much in demand and am enjoying being cross-examined as though I were the Minister, while Ministers are behaving as if they were Opposition Members. I shall give way to the hon. and learned Member for Fife, North-East (Mr. Campbell) and then to the hon. Member for Esher (Mr. Taylor).
§ Mr. Menzies Campbell
I wish to press the hon. Gentleman on the issue of the fair market price. In some forms of compulsory acquisition, the fact that acquisition is proposed must be ignored in the assessment of the value of compensation. If the Labour party were to come to power with a proposal for an acquisition of the sort suggested by the hon. Gentleman, that would inevitably affect the value of shares the day after the change of Government. Would a fair market price include the acquisition as a factor to be taken into account or disregard it? That may be an important consideration in the actual value of the shares at the time of the takeover.
§ Mr. Brown
The best way to answer that is to say that we would not want to pay too much, but we would not pay too little—[Interruption.] I see that Conservative Members feel that that is not as ample a reply as they would like. I understand their disappointment, but it is difficult to respond without knowing the precise circumstances. All I can do is to set out the principles involved. The circumstances will differ with different industries. In a moment I shall discuss British Telecom, the subject of our third pledge, but we already own 49 per cent. of the shares—
§ Mr. Ian Taylor
The hon. Gentleman is very kind. He is one of the reasonable men in his party so I am sure that we all understand that when he says fair he means fair. The problem is that some of his colleagues do not understand what fairness is in the context of the stock market. There have been questions about whether dividends for the water companies and others would be allowed. He must know that if a water company is valued on the stock market as a quasi-utility, the dividend yield is important to shareholders, and if it is questioned, that causes a fall in the share price. Millions of shareholders in the water industry will be listening carefully to the Labour party's policy on that. Although the industry may be safe in the hon. Gentleman's hands, it may not be safe in the hands of his colleagues.
§ Mr. Brown
I thank the hon. Lady for that compliment. The Labour party's approach to these matters does not mean that the whole of an industry has to be taken back into the public sector. We envisage private share ownership sitting alongside a public sector involvement —that is our policy for British Telecom. The policy review document states clearly thatthe public stake in British Telecom's equity remains at 49 per cent. We shall buy sufficient shares at a market price to take that stake to 51 per cent.Hon. Members will notice that we do not say 100 per cent. That is our pledge and it follows logically that there would be private shareholders and public shareholders. It follows, too, that the position would not be very different from that of today.
It will not have escaped the attention of the right hon. Member for Chingford (Mr. Tebbit) that a 49 per cent. stake in any company is a significant stake. It makes the holder a significant shareholder—
§ Sir Michael Marshall
I am sure that Conservative Members appreciate the hon. Gentleman's giving way so much, although I am conscious that we may be helping him to fill out What would otherwise be an uncomfortable morning for him. I accept his reasons for a lack of precision about some of his figures, but he can be precise in one area at least. He mentioned the water industry. He will know of the commitment to capital expenditure of £28 billion on the industry over the next decade. Will he assure us that if a Labour Government are returned they will undertake to meet that commitment? Will he add that to the rest of Labour's expenditure list, which already suggests that heavy public expenditure will be the order of the day?
§ Mr. Brown
The hon. Gentleman must not be graceless when I give way to him. I do not have to give way to my Conservative inquisitors; I could plough on through my speech and really excite everyone but I want to assist them. He makes a good point: he is right that significant investment is required in the water industry, not just for historial reasons but because new environmental standards are rightly higher. I suspect that much, if not all, of the investment programme is unavoidable and will be continued whoever forms the next Government—
§ Mr. Grylls
If British Telecom were more inefficient and served the public worse now than when nationalised, that would be a good argument for taking it back into public ownership. However, as the hon. Gentleman knows perfectly well, that is not so and British Telecom has been transformed in respect of its service to the public—the customers. So why does the hon. Gentleman want to take it back into state ownership? If it were failing the nation I could understand why, but it is not.
§ Mr. Brown
Hang, on; there is a queueing order today. The hon. Member for Epping Forest (Mr. Norris) is next, and after that I should like to make my speech.
We could justify our position on British Telecom solely on the grounds that it is a good investment, but we have a rather more sophisticated justification and I have it in the text of my speech. If the hon. Member for Surrey, North-West (Mr. Grylls) is not satisfied by it, I promise to give way to him again later. It is time for my next intervention.
§ Mr. Norris
I am grateful to the hon. Gentleman for allowing me to intervene, but he was remarkably disingenuous to suggest that the only difference between our party and his on British Telecom is a mere 2 per cent. The hon. Gentleman is trying to con the British people into believing that 49 and 51 per cent. mean the same. Everyone knows that they are profoundly different.
Does the hon. Gentleman accept that nationalisation by the back door, leaving 49 per cent. of the stock stranded and strangled by ownership by the state, is the most dishonest form of nationalisation of all?
§ Mr. Brown
The hon. Gentleman makes too much of this. Shareholders perceive the effect of having one large partner with 49 per cent. of the shares. The hon. Gentleman said that 51 per cent. is a more powerful holding. Of course it is an absolute holding, but 49 per cent. is not that different. I realise that the Government have announced their intention to divest themselves of further shares—
§ Mr. Maude
To help the hon. Gentleman get his figures worked out, may I point out that the Government's holding in British Telecom is now less than 48 per cent., at 47.9 per cent.? At today's share prices, increasing that stake to 51 per cent. would cost £730 million. Is the hon. Gentleman aware of that?
§ Mr. Brown
I was aware of that; I was not aware that the stake is slightly less than 49 per cent., but I am not sure whether that alters the argument much. I apologise to the hon. Member for Hendon, South (Mr. Marshall) for allowing the Financial Secretary to intervene out of turn, but he probably takes precedence.
§ Mr. John Marshall
It is amusing to see that the classless society has not yet pervaded the Labour party. Does the hon. Gentleman intend to take the whole water industry into public ownership? He will be aware that it has never been wholly publicly owned.
§ Mr. Brown
I understand that. My area was served by a private water company regulated by a tough but fair regulatory regime. I do not think that it would be necessary to take 100 per cent. of the water industry back into public ownership to achieve our objectives. That is not our proposal for British Telecom, and it would not necessarily be what we would do in the case of the water authorities.
I should like to come to more intractable problems and reply to a point made by the Financial Secretary in his slightly over-the-top speech. The Tory charge, which the Financial Secretary has made, is that we will not be able to afford these three relatively modest purchases and that if we could afford them we would not be able to afford anything else. There is some strength in that argument.
§ Mrs. Gorman
Does the hon. Gentleman agree that his definition of affording those purchases means that Labour would have to tax the public to enable them to buy back what they do not really want because they are better off with what they have? The hon. Gentleman is talking about hidden taxes.
§ Mr. Brown
The hon. Lady is here a week early. I shall be here next Friday to deliver my very popular speech on Labour's tax policies. I know that it is popular because that will be the third occasion on which the House has invited me to deliver it. If the hon. Lady wishes to cross-examine me on Labour's taxation policies I shall give her the opportunity to do so next Friday. I promise to give way to her the moment she rises in that debate.
Conservatives say that to sell the nation's assets at less than their true value is a bargain, but that to buy them back at the same price would be theft. That argument would certainly be advanced if a Labour Government ever tried to renationalise at anything less than market price. I am sure that that is what the Financial Secretary would say.
§ Mr. Maude
We are interested in what Labour means by market price. Is it the price that would apply in the market without the intervention of a Labour Government, or is it the price according to the Dagenham definition, which is that a Labour Government would take action to regulate the water industry? That would be likely to depress the share price.
§ Mr. Brown
Of course it has. Would anyone argue that the share price should be maintained against the interests of the consumer or the environment? Labour stands for 522 regulation rather than for allowing the interests of shareholders free rein. There is nothing new and, I hope, nothing exceptional about that.
Our quite modest renationalisation pledges will have a cost attached and I suspect—as we approach the next election I think I know—that there will be other even more pressing demands on the public purse. As the hon. Member for Billericay (Mrs. Gorman) will discover next week, our taxation and public expenditure policies are tightly drawn.
§ Mr. Oppenheim
The hon. Gentleman is most generous in giving way. As he is to speak in next Friday's debate, he is obviously the Opposition's Man Friday. Perhaps he should start a ticketing system so that interventions can be regulated. He has said that a future Labour Government will be firm about public expenditure. Over the past few months every Opposition Front-Bench spokesman has told the House that his Department will have spending priority. Spokesmen on health, employment, and overseas aid have said that their Departments will receive priority. The hon. Member for Derby, South (Mrs. Beckett) has said that only pensions and child benefit will be priorities. The hon. Gentleman has said that spending £700 million to buy back British Telecom will be a priority. Which of those policies will take priority? Will one of them be a top priority or an absolute priority, or will they all have priority?
§ Mr. Deputy Speaker (Mr. Harold Walker)
Order. Overlong interventions are made at the expense of hon. Members who are waiting to speak.
§ Mr. Brown
I did not say that the extra 2 per cent. stake in British Telecom would be the sort of priority that the hon. Gentleman seems to imply. I went out of my way to say something different. [Interruption.] Perhaps the hon. Gentleman would stop heckling and allow me to answer his intervention before trying to make his next point.
The precise ranking order of Labour's spending priorities will be determined in government and will have to fit the framework of the overall management of the economy and, in particular, the taxation and public spending policies. We fought that battle inside the Labour party throughout the 1980s, and I and my hon. Friend the Member for Derby, South (Mrs. Beckett) have won it. The hon. Member for Amber Valley (Mr. Oppenheim) finds that hard to stomach. It is right for Opposition Front-Bench spokesmen to set out the goals that they hope to achieve in government. However, they must all be set in the context of the famous phrase "as resources allow".
§ Mrs. Gorman
Would a 2 per cent. stake or the threat of such a stake in these industries have the same effect as a 2 per cent. stake by Hanson in ICI, about which the Labour party have been creating merry hell for the past couple of weeks?
§ Mr. John Marshall
I thank the hon. Gentleman for his great tolerance in giving way on so many occasions. His speech is almost a reply to a series of interventions. He said that spending priorities would be worked out in government. Is he telling the House and the country that at the next general election Labour will not be able to give the British people a list of spending priorities? We are being asked to buy a pig in a poke, and it is a very expensive poke.
§ Mr. Brown
I like the bit about a very expensive poke. It will be part of my job to cut it a bit. The hon. Gentleman misrepresents what I said. Of course we shall put our objectives to the electorate. We have repeatedly said that the exact year-by-year order in which the priorities are redeemed will be a matter for the Government and Cabinet to fight over in the public spending round, which is what happens at the moment. That is all that I am saying. Our pledges are clearly set out in the public domain. To excite the interest of the right hon. Member for Chingford, I tell the House that they have been ruthlessly costed. The right hon. Gentleman is not so excited as I hoped.
We realise that achieving the protection of the consumer and the environment through public ownership may not be immediately obtainable on coming into government. Nevertheless, the environment and the interests of the state, as well as those of the consumer, must be protected. As my hon. Friend the Member for Dagenham has rightly said, we intend to put in place regulatory systems that will oversee the public utilities. We shall ensure that regulatory systems are strengthened so that utilities work in the interests of consumers and of the nation.
We propose to establish a new body—the consumer protection commission—that will cover all major utilities. It will bring together and strengthen the present major regulatory bodies. The commission will be accountable to a Select Committee and it will examine the performance of individual public utilities in public. In other words, there will be parliamentary scrutiny through a new Select Committee structure. If the proposal is implemented, it will reduce the present number of quangos. I think that that will appeal to Conservative Members and that they will welcome such a policy. I see from the faces of the Conservative Members who are in the Chamber that they do not welcome it.
It is not convincing when Conservative Members argue that our plans for the public ownership of public utilities would not be popular. Far from that being true, I think that we have public opinion on our side. I draw a distinction, however, between public utilities and other trading companies. I accept that the position of British Telecom is, to some extent, anomalous in the terms of the debate. That is because it has some of the features of a public utility and many features of a private trading company. I see that there is an intellectual difficulty.
§ Mr. Maude
It may be that the hon. Gentleman is about to deal with the matter that I wish to put to him. If so, I shall await his comments upon it with eagerness. He seems to be saying that for ordinary trading companies there is no case for a return to state ownership. If that is so, why did the Opposition oppose every privatisation, root and branch?
§ Mr. Grylls
Finance is at the centre of the hon. Gentleman's argument, and he has tried to reassure the House about the Labour party's spending plans. If, for example, a Labour Government were to take the water industry back into nationalisation, it would be necessary to add to the cost of acquisition the investment programme of the industry, which is about £28 billion. As soon as 51 per cent. ownership is exceeded—my hon. Friend the Financial Secretary will instantly intervene to tell me that I am wrong, if that is the position—it is my understanding that the industry becomes part of the public sector and, therefore, has to be consolidated in the public sector. All the capital expenditure of the water industry and of British Telecom would become part of the Government's public expenditure. Is the hon. Gentleman saying that all the capital expenditure of British Telecom and of the water industry, and of any other organisation that is nationalised, has already been costed, or is he saying that, because a Labour Government would not be able to afford such a programme, the capital expenditure of the water and telephone industries, for example, will have to be reduced? The hon. Gentleman should be open about these matters.
§ Mr. Deputy Speaker
Order. The hon. Member for Surrey, North-West (Mr. Grylls) should seek to make his speech in the course of the debate and not by means of intervening in the speech of another hon. Member.
§ Mr. Brown
I get the impression, Mr. Deputy Speaker, that you would like me to make some progress with my speech and not to give way so often to those who wish to intervene. I have done my best to respond to the perfectly proper questions that Conservative Members have put to me, and to do so courteously.
The intervention of the hon. Member for Surrey, North-West touched on the important matter of adding to the public sector borrowing requirement through 525 renationalisation. It is a difficult matter for the Opposition. It is my view that we should devise structures in such a way as to enable public utilities to operate as separate centres so that they are not automatically drawn back into the Government's PSBR. That is why I have an affection for partnership arrangements with the private sector. I appreciate, of course, that such arrangements will endure only if private sector shareholders are able to secure a reasonable return on their investments. It follows in logic that the new-style nationalisation, if that is how Conservative Members wish to regard it, is not the same as the old approach. I hope that that goes some way to meeting the inquiry of the hon. Member for Surrey, North-West and demonstrates the thinking that lies behind what is called the new-model Labour party.
§ Mr. Ian Taylor
These are interesting matters and we would like to pursue them, with the hon. Gentleman's help. I am not entirely certain what he meant when he talked about keeping public utilities out of government. Under normal Government practice, a nationalised industry would be subject to external financing limits. Is the hon. Gentleman saying that there would not be EFLs for the companies that he is talking about? That would be critical to the policy that he seeks to pursue. One of the advantages of going into the private sector is gaining access to private capital, which means that the investment programmes for water companies, for example, can go ahead for the benefit of customers for the next decade. If the companies were in the public sector, EFLs would prevent the programmes taking place.
§ Mr. Brown
As I said to the hon. Member for Surrey, North-West, that is an important matter and one that is worthy of a full day's debate. Perhaps I am setting myself up for a third Friday. I very much enjoy the constructive contributions of the hon. Member for Esher to our debates as we consider the Finance Bill in Committee. He is fully entitled to at least a reply in outline, and with his permission I shall provide it by saying that we are trying to find our way to a structure that does not involve all the investment programmes of the public utilities being drawn into the public sector borrowing requirement. That is the strategic objective, and it is not one that will be impossible to realise. It is wrong to suggest that it is completely out of court. The objective involves a relationship with the private sector, and especially with the private money markets, which in the past have not served nationalised industries well. That is why we propose to proceed in the way that I have outlined.
I shall return to the main text of my speech. I wish to draw the attention of Conservative Members to some of the costs that the taxpayer has had to bear in the course of the Government's privatisation exercise. The costs to the taxpayer of privatising the water industry, for example, ran to about —2,173 million, for a total gain of about —882 million. The total cost to the taxpayer of that exercise, due largely to the write-off of debt and the injection of cash, is —1.291 billion. That is a substantial sum. In total, the taxpayer is subsidising the privatisation by —3.3 billion, and that is based only on the known costs. Conservative Members will say that the new structures justify the expenditure, but it is very heavy indeed. The Financial Secretary was quick enough to criticise our proposals for British Telecom, which would incur only a fraction of that, when Labour achieves office.
526 The sale of National Power and PowerGen has also been expensive for the taxpayer. The Government underpriced the shares by 37p. It follows logically that they lost the taxpayer —390 million. By the close of trading on Tuesday 12 March, 100p part-paid shares were trading at 137p—up by over a third in just one day. Under the Conservative party's own criterion, which is that the true value of an industry is what it will fetch on the market, the taxpayer has now lost —2.5 billion from the sale of the electricity industry. I think that that is an extraordinary price for the taxpayer to be asked to pay. Arguments about efficiency and managerial structures of public utilities should be dealt with on their own terms rather than by forgoing these assets—which are the state's assets—and losing taxpayers' money to transfer the utilities at great expense from the public to the private sector.
People's distress at the loss to the taxpayer of the true value of those assets is exacerbated enormously when they consider the profits made immediately the utilities are in private hands. They suspect that those profits have less to do with an efficiency exercise than with job losses and, above all, utility charges.
§ Mr. Brown
We are not yet discussing the investment programme. The Northumbrian water company made a year on year rise in its pre-tax profits of 369.6 per cent. That is a substantial rise in anybody's terms, and it cannot be attributed solely to different managerial expertise in the private sector. I note that no Conservative Member has the cheek to say that it can.
§ Mr. Brown
The Government Whip, the hon. Member for Tatton (Mr. Hamilton), is reclining in a leisurely way in what I take to be his Friday suit. Perhaps he arrived late. I should perhaps explain that my speech is protracted because I have been fantastically generous in giving way to his hon. Friends when they have inquired, rightly and properly, into the policy of Her Majesty's Opposition, soon to be Her Majesty's Government.
The use that the privatised water companies have been making of their profits is quite interesting. South West Water has decided to spend its money not on environmental improvements, but on a bid for the south-west regional television franchise. If successful, it will have a 20 per cent. stake in the new company, West Country Television Ltd. What on earth has that to do with running a public utility and ensuring that the water supply is fit to drink? I suppose that South West Water could advertise that it is so by means of its newly owned television franchise, but that is not the same as putting the money into ensuring the actuality.
Severn Trent Water which, as the Financial Secretary said, covers his area—has just spent —212 million on a waste disposal company. Waste disposal now accounts for 15 per cent. of Severn Trent's activities. It may be legitimate for a water company to diversify into waste disposal. I have less quarrel with that than with Thames Water, which has a stake in the insurance industry. Welsh 527 Water has a stake in street cleaning; the Welsh and Yorkshire regional water companies, Northumbrian Water and Southern Water are involved in information technology; and apparently all the regional water companies are involved in property and leisure development—Welsh Water already owns two hotels. I remember what Conservative Members said when they discovered that British Rail owned hotels. They thought it was terrible and that they should be sold off straight away, but now that the other utilities are privatised, such activities are apparently to be encouraged.
It is suggested that the investment programmes of the great public utilities will take off now that the companies are in private hands, but British Telecom is not setting a good example to the rest. Notoriously, its profits for the year were more than —3 billion.
§ Mr. Brown
The Financial Secretary rightly suggests by his murmurings as he cowers behind the Dispatch Box—either that, or he is falling asleep, I am not sure which—that there has been a public outcry about British Telecom's —3 billion profits. Consumers suspect that that reflected in their billing arrangements, and they are not wrong.
§ Sir Michael Marshall
Will the hon. Gentleman come clean and tell us what he regards as a reasonable return on investment? British Telecom's profits are normal compared with those of any other international company. Is he suggesting that it should have a lower return on investment than other similar international competing industries?
§ Mr. Brown
That is a difficult argument. After all, it is the Labour party that is proposing to buy shares in the organisation. Presumably, the hon. Gentleman would justify that by the return on investment, which he says is satisfactory and correct for an organisation of that size. It is the Financial Secretary who is saying that the returns on the investment are so good that the Conservative party will sell more of the Government's stake in that utility—presumably they will sell them at below their true market value. Is that the Financial Secretary's intention, or will the shares be pitched in at the actual market value? Perhaps he will answer that question—I have been very generous in answering questions.
§ Mr. Norris
I know that the hon. Gentleman was very strict with himself about answering our questions, but he has not answered the question asked by my hon. Friend the Member for Arundel (Sir M. Marshall). In the context of the size of the company and the size of any parallel 528 undertaking anywhere in the world, the profits of British Telecom are comparable and reasonable. More important, does the hon. Gentleman agree that when the profit figure is almost exactly identical to the figure for capital investment in the company the same year, it is an even more reasonable return on investment?
§ Mr. Brown
My real problem is trying to get a word in edgeways.
The Financial Secretary to the Treasury said that the British Government had led the way in privatisation. He compared Great Britain after 13 years of Conservative Government with countries that he regarded as analogous, and those included Sri Lanka, Argentina, Brazil, Mexico, the Philippines, Venezuela and Cuba. He also referred to several grim eastern European dictatorships. While some people in the Labour party might compare those countries to Britain under the right hon. Member for Finchley (Mrs. Thatcher), I would not do that. However, it was interesting that such an analogy occurred to the Financial Secretary. The only nations that he suggested might be a correct analogy to the position of the parliamentary Labour party were North Korea and Albania. Such a proposition must have Mr. Peter Mandelson absolutely weeping into his duvet.
§ Mr. Maude
I will develop my analogy further. What Britain had in common with the eastern European countries at the beginning of the 1980s was an excessively large state sector which had to be reduced by businesses being returned to the private sector. Eastern and central European countries are going through exactly the same process now. The only redoubt of reaction is from the British Labour party and, of course, the North Korean communist party.
§ Mr. Brown
The debate has ranged widely, but it is probably not terribly productive to extend it to reforms in eastern Europe, although I wholeheartedly welcome what has been happening over the past three years in eastern Europe. It must be common ground in the House that the freedoms that we hope that people will enjoy in eastern Europe are freedoms that it is perhaps too easy to take for granted in western Europe.
§ Mrs. Gorman
I am grateful to the hon. Gentleman for giving way and I promise not to interrupt him again because, like everyone else, I am anxious to hear other hon. Members.
Does the hon. Member for Newcastle upon Tyne, East (Mr. Brown) remember the remarkable event last year when the leaders of so many Socialist countries came to 529 this country and stated publicly at the Conservative party conference how much they admired the privatisation policies and what they had done to transform Britain? That was a magical moment. Does the hon. Gentleman recall the old days when the Labour party used to trot out its socialist friends from eastern Europe in an effort to boost the party? I notice that Labour Members nowadays are not really fond of associating themselves closely with those people.
§ Mr. Deputy Speaker
Order. I draw attention to the fact that the House has been sitting since 9.30 am and it is now 11.13 am but, so far, Back Benchers have only been able to intervene.
§ Mr. Brown
I accept that point, Mr. Deputy Speaker. If hon. Members will allow me, I should like to complete my speech with less of the knockabout stuff. However, I must tell the hon. Member for Billericay that, regrettably, I have no friends in eastern Europe, communist or otherwise, disreputable or reconstructed.
The Financial Secretary to the Treasury may cite examples from Sri Lanka, the Philippines, Venezuela, Cuba and other states that he believes are directly comparable to Conservative Britain, but he cannot cite a trading partner of ours in the European Community which is putting its telecommunications network into the private sector. In every case the telecommunications network is owned and controlled by the state. Our EC trading partners are not lining up to follow Britain's example. I believe that the only two EC states whose telecommunications networks are in the private sector are Greece and Spain.
Another issue that has aroused a considerable amount of public interest and comment in respect of the Government's privatisation programme is the way in which the salaries of top executives are adjusted immediately after privatisation—[Interruption.] Conservative Members groan and look uncomfortable at that, and well they might.
After Cable and Wireless moved into the private sector, the chief executive managed a 114 per cent. pay increase. The pay of the chief executive of Jaguar rose by 100 per cent. after privatisation. Similarly, the chief executive of Enterprise Oil received a pay rise of 167 per cent. after privatisation. The lucky man at British Airways received a 126 per cent. increase and the individual at the E1ritish Airports Authority received a modest 110 per cent. increase. In all, the trading company privatisations managed an average increase for the top executives in the first year of 78 per cent. That was not bad going. Of course, the wages of others in the industries did not follow suit.
The position was not quite so marked with the utilities. According to Incomes Data Services, the average pay increase was 62.1 per cent. although there were some stark examples. In 1990, the chairman of Thames Water, Mr. Roy Watts, was awarded a pay rise of more than 168 per cent. when increases for the other top executives of water companies averaged 100 per cent. The chairman of Anglian Water, Bernard Henderson, received a 100 per cent. increase in 1990. I understand that the pay increase for the chairman of British Telecom is to be announced today. The figure has not been brought to me in the Chamber, but at some stage in the debate I hope that it will be possible to draw the attention of the House to it. It is 530 anticipated to be about 14 per cent. this year, but that is on top of the 32 per cent. that he gave himself last year. The suggested pay award for the employees is 8.3 per cent.
The Opposition have rightly made much of the position of the consumer. We believe that the privatised companies, whether they be trading companies or public utilities, are more concerned with the interests of the shareholders than with the interests of consumers or the country in which they operate. That is particularly important in the context of public utilities. However, it is clearly not right for the debate to be conducted along the lines of politicians' assertions with no evidence. In fact, we have some evidence to help us.
The London Business School conducted a survey with the United Research Group. That survey of privatised public utilities showed that customer service and product quality came bottom of the list of priorities that were put to senior managers. Only 27 per cent. of those surveyed mentioned product quality as a priority and only 18 per cent. mentioned customer service as a priority. Although that was merely a survey, it is indicative of attitudes among the newly privatised managements of those great ulitities. British Telecom has found that complaints from the public have been running at more that 30,000 this year. The Office of Telecommunications has stated that the total of complaints for 1990 showed a 21 per cent. increase over representations made in 1989, which itself was more than 34 per cent. higher than the figure in 1988. Gas complaints have been running at just over 21,000 and electricity complaints at more than 10,000. That suggests that the consumer is not satisfied, and one can understand that. The Conservative party is satisfied—indeed, it wants to go further. The Conservative party envisages private coal mines, private railway networks, privatised schools and privatised health care. All of that has its enthusiasts.
I have a pamphlet—I am always trying to improve my knowledge of such matters, and I know that the Conservative party is in favour of self-improvement—entitled, "The NHS—a suitable case for treatment", written by the No Turning Your Back group of Conservative Members. It must be Government policy because many of those people are now Ministers or at least serving in the Whips Office. The pamphlet talks about plans for the private sector, and it states:Particularly important for extending competition and co-operation"—that is, inside the national health service—is that the spur should come not just from within the NHS, but with the private sector as well … As well as tendering for ancillary services, which have so far saved the NHS over —.100 million"—I understand that the figure has risen since then—partnership with the private sector has grown far beyond this.The point that they do not make is that the money that they allege has been saved to the national health service has been saved at the expense of the wages and conditions of employment of the employees—not employees who are well remunerated, but employees who are not very well remunerated at all.
I agree with the next point in the pamphlet, which states:Hospital waiting rooms are being made more like airport lounges".That is true. Just as in an airport lounge, one departs from a hospital lounge without getting medical treatment. The pamphlet goes on:Hospitals have used private facilities to clear their waiting-list backlogs or when their own operating theatres were infected.531Whole treatments, such as dialysis, can be contracted out. Some NHS hospitals bring in a regular income by contracting out paybed facilities to private firms … Even more adventurously, hospital builders such as Tarmac Construction suggest that they could build and operate entire hospitals more efficiently and more cheaply than the public sector.That would speed up operations, would it not? We would see blokes from Tarmac coming in with chainsaws and hammers to sort out the business. [Laughter.] I see that Conservative Members are happy with that; it cheers me up. The document concludes:Innovative partnerships with the private sector will bring more and more benefits as experience is gained.It is a bit tough if one happens to be the patient on whom that experience is being gained. However, the pamphlet goes on:From the government side there must be a financial incentive structure which encourages such experimentation and development.There should also be structural reform of NHS decision-making in order to take advantage of the best of both private and public sectors …The introduction of internal markets within the NHS, as a first step, would get managers used to buying and selling services between themselves, and to both knowing and controlling the costs of everything they do.That idea has taken off in Newcastle. As I pointed out in the public spending debate, the management of the health authority is doing precisely that. It has found that it can make more money selling radiotherapy beds. It first closed 15 of them, but it sold the remaining radiotherapy beds to neighbouring health authorities and generated an income for itself—by not treating people who live in Newcastle, of course. People in Newcastle are not allowed to go into hospitals for radiotherapy treatment as in-patients; they have to be treated as day patients regardless of condition. That strikes me as so outrageous as to be indefensible, even by Conservative Members.
The Freeman hospital in Newcastle is the flagship of the Conservatives' opting-out proposals. Not only was it the first hospital to opt out, but it is the one in which the famous IBM experiment on computerised costings is taking place. The allegation from the Conservative side is that that crypto-privatisation—that change of systems which would enable private and public money to go into the health service—will somehow help patients. One of my constituents, Mrs. Price, who lives in Monkchester road, has a pain in her knee. It is swollen and it is hurting her. Her general practitioner has asked the hospital consultant to look at her. She received a letter from the appointments officer, stating:I acknowledge receipt of a letter from your family doctor requesting an out patient appointment.That is a reasonable enough beginning, but the letter goes on to say:We apologize for the fact that there is a waiting list of up to 30 weeks for a routine out patient appointment?That is what the opted-out system has done for that hospital.
§ Mr. Brown
The hon. Gentleman asks, "What about the rest of the letter?" I shall read the whole letter for him, which will teach him to intervene from a sedentary position. The letter goes on to state: 532Every referral letter is read and prioritised by the Consultant concerned, and a letter will be sent to you approximately four weeks prior to your visit to out patients, with details of the date and time of your appointment.If you are concerned in any way regarding your medical condition, please discuss this with your family doctor who may be able to help or advise.The family doctor has already helped and advised. His suggestion is that she should go to a hospital and be looked at by a specialist consultant. The specialist consultant is saying that she will have to wait in pain for the next 30 weeks. That is just not acceptable.
§ Mr. Brown
The hon. Gentleman, from a sedentary position, rightly points out that that did not happen under Labour. I suppose that he will go on to say that it was a long time ago.
Our objections to the Government's privatisation programmes are, of course, the costs of privatisation, which have been borne by the taxpayer, and the excessive profiteering which protects the interests of the shareholder against those of the consumer and, sometimes, against those of the environment. The issue of boardroom pay has stuck in the throats of just about everyone who has been following the matter, and the number of complaints received by the privatised utilities has increased substantially.
The Government have much to be ashamed of in their privatisation programme and nothing to boast about or to be proud about. It is absolutely clear why the Government are holding the debate on no matter of substance to vote on. With their record on privatisation, they are doing absolutely the only thing that they possibly could—they are practising holding an Opposition Supply day for the time when we become the Government and they have to hold Supply day debates.
§ Mr. Norman Tebbit (Chingford)
I hope that I shall be briefer than some other speakers. I shall not attempt to follow either my hon. Friend the Financial Secretary to the Treasury or the hon. Member for Newcastle upon Tyne, East (Mr. Brown) through all the byways down which the hon. Gentleman in particular has taken us. In particular, I will not speculate on what goes on under Mr. Peter Mandelson's duvet: I give an absolute commitment on that.
Let me at once declare my interests in the debate. First, I am a taxpayer. Secondly, I am a consumer of the services of both the former nationalised and still nationalised businesses. Thirdly, I am a shareholder in Thames Water and British Telecom. Fourthly, I am a non-executive director of the latter company. Fifthly, just for the record, I hold the curious office of honorary adviser to the chairman of British Aerospace. I was also, for six of the eight years during which I served as a Minister in the Government of my right hon. Friend the Member for Finchley (Mrs. Thatcher) a sponsoring Minister of nationalised industries. For 17 years, I worked for a nationalised industry. On the whole, therefore, I claim some right to know a thing or two about nationalised and denationalised industries.
I should like to emphasise at once one or two things that my hon. Friend the Financial Secretary said. He is right. He referred to Christian Democrat Germany, not least what was once called East Germany, or cynically 533 known as the People's Democratic Socialist Republic of Germany. That was the one which was never democratic, although it was certainly socialist. The process of denationalisation is now under way there in Germany, in Mitterrand's socialist France, in Hawke's Labour Australia, in the more advanced countries of black Africa, under the Nationalist South African Government of President de Klerk, in South America and throughout eastern Europe. It is also happening in New Zealand where, in an advanced step, the national telephone company has been denationalised. Many other countries are now looking at the success of the denationalisation of our telephone company, and will be following suit.
Only the most backward reactionary socialists and hard-line Communists, referred to by the BBC's disinformation unit as "conservatives", believe any longer in state ownership and centralised economic planning—only them and, as we have heard again today, the modern British Labour party. Opposition Members call it "social ownership". It is more like an economic social disease—a business and commercial pox. These days, there must be more advocates of state ownership in the British Labour party than in the Albanian Government. As my hon. Friend the Financial Secretary said, the Labour party would now be hard-pressed to find soulmates anywhere —even in Cuba. Apparently not even Cuba believes in state ownership any longer. The British Labour party would have to go to North Korea to find anyone who would join it in its belief that centralised state planning and nationalisation are the way forward.
I shall restrict my remarks to only two or three of the many areas that could be debated this morning. First, I shall make some general observations on the issues and some observations derived from my experience as the sponsoring Minister for some state industries. Secondly, I shall make specific remarks about some of the nationalised industries, especially British Telecom, and about one organisation that has not yet been mentioned, the former freight division of the British Waterways Board.
Calls for Government spending are always in excess of what any Chancellor feels could be prudently or even imprudently financed. There are few businesses in which there are not more ways of spending money than there are of financing that expenditure. We are all familiar with the annual round of discussions between the Treasury and other Departments, which leads, sometimes through the so-called Star Chamber, to the public expenditure White Paper, which is the means by which the seemingly irreconcilable are eventually reconciled.
Incidentally, I should like to answer the point made by the hon. Member for Newcastle upon Tyne, East about the subject of debates for the Adjournment. I remember a Labour Government who debated the public expenditure White Paper on a motion for the Adjournment because they could not get a majority, since the Labour party was split over the cuts in hospital, school and social spending, that were imposed on the Labour Government by the International Monetary Fund—as a result not least of the follies of nationalisation that were committed by the last Labour Government. The hon. Gentleman should therefore be careful when he criticises the use of motions for the Adjournment.
As Ministers strive for the approval of their spending plans, the outcome is decided on all sorts of less than logical factors, not least of which is the political weight and influence or even the sheer tenacity of the Secretary of 534 State concerned. It is hard enough deciding between whether there should be more expenditure on defence, or on education, the police, the health service, welfare or the other services, all of which fall fairly and squarely within the responsibility of the Government. As the finance director of any conglomerate will testify, it is hard enough to arbitrate on the financial needs of businesses that have little in common except ownership. However, if all that lot is put together in the public expenditure round, it is impossible to find any criteria on which one can arbitrate fairly between the demands of those inescapable Government responsibilities to which I have referred and the needs of commercial businesses.
In addition, if the business is nationalised, the Government are not only the financier and appointer of its management, but the regulator. The sheer impossibility of being fair when the Government are both the regulator and the financier, giving rise to the clearest possible conflicts of interest, stands out for all to see. The role of regulator may require the Government to impose extra costs on industries. However, in the role of financier, the Treasury may say that those costs cannot be afforded without closing another hospital, which is what the previous Labour Government did.
Inevitably, one also runs into the role of Ministers as politicians. We have heard this from a would-be Minister this morning, when the hon. Member for Newcastle upon Tyne, East was busy trying to buy votes by pretending that Government control, even though it would result in cutting the capital expenditure programmes, would bring lower prices and improved quality to the consumer.
§ Mr. Tebbit
The hon. Gentleman shakes his head. He may be willing to argue this, but he will not be able to find any historical argument to buttress his case. What I have described has been the problem of nationalised industries over the years. Things would be even more difficult for a Labour Government because, as we all know, Labour politicians are always in thrall to the bosses of the big unions which, historically, have had large memberships in the nationalised industries.
Let me tell the House from my experience—perhaps not all my hon. Friends in the Government will be pleased to hear this—how the needs of nationalised industries are decided under any Government. In order not to personalise the matter let us take as an example what I shall call the nationalised British Widgets Corporation. The senior managers of that business would meet the senior officials at, say, the Department of Trade and Industry. The managers would already have produced a draft corporate plan. The senior officials at the DTI would then second-guess the senior managers. After much to-ing and fro-ing, a modified corporate plan would be agreed by the Widget board, which would bring it before the Secretary of State. The Secretary of State would then third-guess it and send his senior officials to their Treasury opposite numbers, who would then fourth-guess them. A compromise would be reached, which the Secretary of State would then fifth-guess, before going to see the Chief Secretary, who would sixth-guess him.
By this time, the financial year of the British Widgets Corporation would be half over, but the corporation would still not have an approved corporate plan. Indeed, it would know that, even when the corporate plan was 535 approved, it would be a mess because the corporation had committed itself—or been unable to commit itself—to the necessary programme of investment. The bargaining would continue, with the Chief Secretary trying to arbitrate between the needs of the British Widgets Corporation and those of the national health service. The Secretary of State for Trade and Industry would be wondering whether to force cuts in another capital programme that had already been agreed for another industry, so that he could avoid a crisis at the British Widget Corporation.
That is what actually happens, year in, year out, as a consequence of the state ownership of industry. If all that was not enough, it is possible that, at about the same time if there were such a Minister, the Secretary of State for England would crash in to tell the Prime Minister and the Cabinet that, if anyone tried to close the loss-making Widget plant in England, he would resign to join the English Nationalist party. That is the way in which these industries are treated and managed. One could not run the proverbial alcoholic reception in a brewery in that way, let alone an industry, but it is an inescapable feature of the state ownership and political control of business.
I lived with that for six years. I had to fight like a tiger against my colleagues in the Treasury to ensure that what was then British Leyland—it is Rover Group now—could proceed with the K engine, which is now the heart of its most successful model. I had to decide that case on the basis of the management's estimates of the market. It was an act of great courage, because most of the time those estimates were wrong. Fortunately, on this occasion, they were right. I had to persuade the Treasury to let me authorise expenditure on the car which became the Jaguar XJ6, and without which the group would not have a product line at all by now. Again, happily, I was right rather than wrong. I had to fight for the 524 Rolls-Royce engine, and again, I was right.
I am sure that other products on which I lost the battle might have been even better investments. As a politician, I had to make those choices and persuade other politicians that they were right. I was not the right man to do that, and nor was any other politician. If I got some of the decisions right, it was as much by luck as by good judgment. On products ranging from groundnuts to that expensive motor car in Ulster, my predecessors over the years got many decisions wrong, and that would happen again.
A while ago, we discussed some aspects of British Telecom. The process to which I have referred led the Post Office, which used to run our telephones, to ration telephones and neglect the capital investment which was so desperately needed to operate a decent telephone system. We all know what a party line is. Of course, not everyone in the House sticks to it. Sometimes it is hard to find one. People make up their own. I suspect that we have heard a bit of that this morning from the hon. Member for Newcastle-upon-Tyne, East. From time to time, I thought that his was a better party line than that used by his leader and some of his right hon. and hon. Friends.
§ Mr. Nicholas Brown
I am enjoying the right hon. Gentleman's speech very much. Does he accept that, if one of us is to make up Labour party policy, it is better that I do it than that he does it?
§ Mr. Tebbit
I am an independent sort of fellow now. If I were offered a consultancy, I might be able to do the hon. Gentleman's party some good. I did my party some good from time to time, as he may remember. If he wants some advice on a strictly commercial basis, I will give it to him. I could even do so in private, although I might leak from time to time.
I was talking about party lines. Do we remember what a party line was? It was an arrangement used when British Telecom was nationalised, by which two subscribers had to share one line because the business could not provide lines for all the people who wanted them. That is what customer service was about in nationalised industries.
When British Telecom was denationalised, one call in 25 failed to get through. Now, less than 0.5 per cent. of calls are not immediately successful. When British Telecom was denationalised, there were 20 million lines; the figure is now 26 million. There were 8,000 miles of optic fibre cables in existence then; there are now 800,000 miles. There was then but one digital switching unit; now the whole main network has digital switching, and 73 per cent. of all British Telecom lines are served by modern digital local exchanges.
British Telecom has created a mobile phone cellular network with more than half a million customers. It covers an area in which 97 per cent. of the population live. I hope that my hon. Friend the Financial Secretary will assure my right hon. Friend the Chancellor of the Exchequer that it covers every known restaurant in central London.
Itemised billing is now available to 19 million of our customers. All the achievements that I have listed spring largely from an investment programme of —14.5 billion since 1984, without any contribution from the taxpayer or any hassle with the Treasury. British Telecom has not competed for funds with hospitals, schools, defence or anything else in the Government programme. That investment programme currently runs at just less than —3 billion a year.
Last year alone, the Treasury received from British Telecom —1.4 billion in corporation tax and dividends. If that were not enough, let me rub the nose of the hon. Member for Newcastle-upon-Tyne, East in it a little. He talked about the costs of privatisation. When British Telecom was privatised, the market valued it at about —8 billion. The Government's half share is worth about that figure today.
§ Mr. Tebbit
The hon. Gentleman says that that is because of the profits. I say that it is as a result of the investment that has been made, which has led to profits and better service. If the hon. Gentleman ever became a Minister in a Labour Government in the near future, one tip that I would give him—this is free consultancy—would be not to engage in the folly of buying 2 per cent. of British Telecom shares but to sell what he would have and finance some of the extravagant programmes of his colleagues out of it. That would be a far better way to proceed.
§ Mr. Tebbit
I would give the same advice to my hon. Friend. Sell the shares and finance hospitals, which are the responsibility of the Government. Hospitals and schools, 537 not telecoms, are the responsibility of the Government. We can manage British Telecom fine without any call on the taxpayer.
Prices have fallen regularly in real terms throughout British Telecom's privatised life. I started by limiting its price rises to the retail prices index minus three. The current regime requires price rises of the retail prices index minus six and a half. Find me a nationalised industry that performs like that even under a Conservative Government. To find one under a Labour Government is an even harder search.
Today, British Telecom compensates customers if it fails to respond adequately to the demands for installations or for repair of lines. British Telecom gives —13 million a year in cash and in kind to charities and community organisations. This year, it will pay an extra —600,000 to Save the Children alone. Find me a nationalised industry that has similar resources and uses them in that way.
I willingly defend the increases in salary of senior managers in British Telecom. I do so for the following reasons. One of my failures as Secretary of State and as a Minister was to secure adequate salaries for the top management of nationalised industries. One of the reasons why nationalised industries do not have the quality of management that they should have is not only that managers are not prepared to be interfered with all the time by politicians when those managers are trying to do their job but that they see no reason why they should sacrifice the standard of living they would have if they worked in the private sector, either in Britain or abroad. These people are intensely mobile.
§ Mr. Brown
Perhaps I had better make my intervention quickly before the bombshell goes off. I understand the right hon. Gentleman's first point about salary ranges in nationalised industries, but his second point is surely bogus. He is saying that somehow a different and higher calibre of management appears in the privatised public utilities and trading companies as a result of the salary changes. Surely it is the same people who are in management, and they receive dramatically enhanced salaries. The managers whom the right hon. Gentleman criticises in the public sector become brilliant managers in the private sector and deserve the extra money.
§ Mr. Tebbit
There would have been no way in which I could have persuaded Lord King, then Sir John King, and his chief executive, Sir Colin Marshall, to join British Airways without an absolutely firm assurance that the company would be denationalised. The same is true of many senior managers of our privatised companies today.
To continue my point about salaries, a little while ago British Telecom was searching for a very senior executive just below board level to head up the function of planning for our future development. We scoured not only this country and Europe, but the United States to find the right man. We found him, but we had to pay him a salary that was out of line with the average of many of our executives in order to secure him to work for British Telecom. We did so to give the sort of service to our telephone customers 538 that those in America have enjoyed for many years because their telephone companies are in the private sector. That is part of the consequence of the absurd structure of nationalisation that we had in the past.
§ Mr. Tebbit
I hope that my hon. Friends will forgive me if I do not give way, as I do not want to speak for much longer. I hope that they will participate later.
§ Mr. Tebbit
Perhaps the Opposition cannot see it. If they reintroduced a system under which we could not get the quality of management, either at home or from abroad, necessary for our nationalised industries and public utilities, we would head straight back to the appalling standards with which we had to put up from those industries in the past.
During the debate on the Bill to nationalise British Telecom, all sorts of amazing allegations were made. It was claimed that public call boxes would be virtually phased out. However, my hon. Friend the Minister has already said that that is far from true—there are many more now, and they are serviceable, too. In those days, there was no special programme to help British Telecom's disabled customers. Today the company is spending more than —3 million a year through its Action for the Disabled Customer. That is the type of change one gets from a company that seeks to serve its customers instead of taking them for granted and rationing telephones to them.
It is true that British Telecom has committed one of the great sins in the Labour party's book. Our work force has fallen from 236,000 to 226,000. It is clear that that number will continue to fall. The Labour party believes that that is a terrible sin and that the payroll should be kept padded. That is exactly what happened—
§ Mr. Tebbit
If that is not the Labour party's view, why has it criticised British Telecom for reducing its work force? Why does it always raise the spectre of denationalisation leading to job cuts? [Interruption.] It is no good for the hon. Member for Newcastle upon Tyne, East and the hon. Member for Brent, South gabbling away to each other; we know about the criticisms from the Labour party. It has criticised British Telecom for reducing its work force, while improving the quality of the product, reducing the price, increasing profits and improving capital investment. Such is the burden of the case against British Telecom put by the Opposition.
§ Mr. Tebbit
No, as represented by Opposition Members. It is important to note that British Telecom has also preserved a research and development programme of more than —200 million a year as well.
We still do not know what the Labour party would do to British Telecom if it had the chance, or what it would do to Mercury. The hon. Member for Newcastle upon Tyne, East has proposed that the Government shareholding should be bought back up to 51 per cent. We did not hear what comes next. Does the hon. Gentleman imagine that the shareholders manage the company? Perhaps some 539 Opposition Members are naive enough to imagine that that is the case, but the company is managed by the board. Would the board receive instructions from the shareholders as to what it should do? Would errant directors be fired by the shareholders if they did not do what they were told? The hon. Member for Newcastle upon Tyne, East should tell us.
§ Mr. Tebbit
I would take that stoically.
Let us consider the serious point that the hon. Gentleman is trying to evade. Would there be any interference from the majority shareholder in the management of the company? Answer comes there none. What would be the effect upon the interests of the minority of shareholders of any such activity by the majority shareholder? There may be plenty of legal precedents that would restrain such interference were it judged to be against the interests of other shareholders.
If what we have been told today represents the thought-out programme of the Labour party, it is clear that it is incompetent nonsense, springing from sheer ignorance and prejudice. If there is some other agenda, we have not been told of it.
I worked for British Airways for 17 years when it was a nationalised industry. I know what it was like. Dear God, it was a dreadful period. Now, we have the world's finest airline. That was not true when it was nationalised, and it could not have happened were it still nationalised. The nationalised days were the days when the company was not allowed to order the aeroplanes it needed. It was not even allowed to choose the aircraft it wanted, but it was expected to run an airline. No wonder it was rated somewhere down on a level with some of the east European airlines in passenger estimation. It was treated as though it was an east European airline by an east European-style Government. [Interruption.] Do the Opposition seriously suggest that British Airways is not a better airline than it was when it was nationalised?
§ Mr. Tebbit
Have I gone over the top by suggesting that British Airways could not be effectively managed when it was nationalised? If that is what the hon. Gentleman calls "over the top", he ain't heard nothing yet.
Let us consider the conflict of interests between the regulator and the regulated if they are in the same ownership. What about South West Water? Before it was privatised, it twice polluted the water supply of thousands of its customers.
§ Mr. Tebbit
The hon. Gentleman is quite right that it will not, and I will tell him why. When it did so in the past, any fine that was levied was paid by the taxpayer, and that is why those fines were never adequate. The Financial Secretary to the Treasury know that that was a daft idea because, if one fined the water authority, it would just bust its external financing limit and the taxpayer would have to pay it anyway. Today, if South West Water were fined, it 540 would come straight out of the bottom line, because it would hit the shareholders' profits. That is why, as the hon. Gentleman has said, it will not do it again.
There is no possibility that a Government can properly regulate and, at the same time, own a business. That is one of the chief reasons why changes had to be made.
Not all denationalised businesses are big ones. A few days ago, I received a letter from my constituent, Mr. Leggett. He runs a successful transport business, which is now part of a Leeds-based company known as Pointbid plc. A few years ago that company bought British Waterways freight division. The relevant section of that letter states:In June, 1988, British Waterways Board sold the major part of their loss-making Freight Division to the private sector. Pointbid plc—part of the Leggett Freightways Group —was established to run those former British Waterways board assets as a going concern; within a year of its purchase it was turned into a profitable company. Due to our depot locations largely being alongside, in the main, major inland waterways, we have become increasingly aware of the environmental, energy and cost benefits in barging commodities as opposed to road transport. Recently, for example, we diverted some of our ship cargoes from the Humber ports away from the usual road transport routing to barge; each ship cargo so diverted has taken from the road system over 300 road vehicle journeys!Why was that not done when it was in national ownership? What restraint prevented the British Waterways Board from using the same get-up-and-go initiative that my constituent's company used?
§ Mr. Norris
My right hon. Friend will know that Mr. Leggett's partner, Graham Linney, is a constituent of mine and a co-operator in that successful company. My right hon. Friend will probably go on to relate that, in addition to the environmental benefits that have accrued from the change of management, the letter from which he quoted says that, in the first year of operation by private owners, that division of British Waterways has, for the first time, made a profit.
§ Mr. Tebbit
One is almost embarrassed by the number of examples one could cite of the success of denationalised industries. Against that fact, we have only the carping and idiotic criticism of Labour Members to the effect that there is something wicked about making profits, even when the consumer is being far better served. [Interruption.] Does the hon. Member for Kirkcaldy (Dr. Moonie) wish to intervene? He would be well advised not to do so, because he has neither the knowledge nor the intellectual capacity to join in the debate. In any event, he has not been here to listen to it. He has probably been dragged in to add weight to the number of Labour Members present.
What difference would be made by the Labour party's proposals for British Telecom? What is it about BT that Labour Members hate? Do they want to stop us giving money to charity, to restrict the amount of aid given to our disabled customers or to end the system of compensation to customers who do not get the service they should have? Do they want to go back to a formula of RPI-plus as it used to be, as opposed to RPI minus 6.5 per cent? Do they want to cut the capital investment programme, or are they satisfied with what is being done by the management of BT?
Do Labour Members think that they are better able to make the judgments that the directors and board of BT now make? Do they want to substitute the judgment of politicians and officials for those of people who have 541 responsibility for running the business? Or do they just want to fool around, wasting public money, taking a shareholding stake to raise the holding of the state to 51 per cent. and then make no other change? The embarrassed silence on the Opposition Benches is sufficient answer for those here and outside to judge.
§ 12.2 pm
§ Mr. Menzies Campbell (Fife, North-East)
The Minister began by charging the Opposition with dogma, a serious charge, the assumption being that at least since 1945, Labour Members have consistently clung to the concept of nationalisation as a remedy for the economic ills of the United Kingdom economy.
The Minister will recall that from time to time there were cracks in that dogmatic approach. The story is told —apocryphally, it is alleged—of the time when the then Prime Minister, now Lord Wilson, was at a Cabinet meeting during the 1964–70 period when there was a discussion about the need to extend public ownership. He is alleged to have said, "It will take a lot to persuade the British people that we can manage Marks and Spencer as efficiently as we have managed the Co-operative movement."
Any historical analysis of the issues that we are debating must take account of the fact that between 1951 and 1964 and between 1970 and 1974, Conservative Governments were not noted for their desire to change the basis of ownership of what were public utilities. One must derive from that the conclusion that while there may have been contemporary justification for the nature of a particular form of ownership, when there is a radical change in the nature of that ownership, what occurs may be an irreversible change in the circumstances of the industry, making the possibility of turning the clock back virtually impossible. I suspect that that judgment can be made with more certainty in the sort of period of great technological advance that we in this country have enjoyed in the last 10 to 15 years.
At issue in the 1990s should be not the question of the nature of the ownership but the nature of the service to the consumer. There is little doubt that any attempt to reverse the privatisations that have taken place would be diversionary in the achievement of the economic objectives of those companies, that it would take a great deal of time and that it would cost a lot of money. From a historical perspective, one need only examine the fate of the British road haulage industry since 1945 to see how damaging a continued change in ownership can be.
It should be the duty of government to establish and implement a preference for the breaking up of monopolies, be they national state or national private ones. I see no justification for the renationalising of any companies that have been privatised since the Conservatives came to power in 1979. That is not to say that I agree entirely with everything said by the right hon. Member for Chingford (Mr. Tebbit), with his characteristically robust approach. He cited the United States as an example, and that is interesting in connection with telecommunications because the nature of competition there between the existing companies is more acute than it is in this country. One must wonder whether telecommunications in Britain would have been better served by the creation not of one 542 extremely large company such as BT but by the creation of a number of smaller companies with a greater capacity to compete one with the other.
§ Mr. Tebbit
British Telecom is smaller than the companies in the United States, so the hon. and learned Gentleman is wrong on that point. Competition in America is not, in general, between companies offering services to the same people. It is competition such as exists here in our water authorities, with companies offering services to people in different parts of the country. He may be aware that BT has a 20 per cent. holding in an American telecommunications company and is hopeful of engendering more competition in the United States to benefit the consumers there in the way we are benefiting them here.
§ Mr. Campbell
In size, we are comparing two substantially different markets—the United Kingdom with a market of about 55 million people and the United States market of about 250 million. I appreciate the right hon. Gentleman's point about the regional nature of the competition, and on that footing there might have been an argument for a Scottish Telecom rather than a United Kingdom-wide one. But that does not detract from the principle that if we are concerned about the creation of an efficient system at the most effective cost to the consumer, a degree of competition is of great importance.
As the right hon. Gentleman referred to the airlines, I cite him—I accept that it is anecdotal—the experience of those of us who fly regularly between Edinburgh and London. In the days when British Airways had a virtual monopoly on that route, the standards of service on the aircraft were less than one would have desired. As soon as British Midland was introduced to that route and the Glasgow route, the standard of service improved dramatically. That shows that genuine competition is of great value to the consumer. Few of those who travel regularly between Scotland and London would view with equanimity the idea that there should be less than two carriers on those routes.
Last year, I chose to replace my mobile telephone. I went back to British Telecom, from whom I bought my previous instrument and who dealt with me extremely well on the previous occasion. I went to the British Telecom shop in Princes street in Edinburgh and was received with great civility and efficiency. In due course, the instrument was provided and I asked for a car kit—a device that allows one to talk without committing a road traffic offence. Although the equipment was first class, by the time British Telecom had finished fitting it, much of the interior of my car was hanging off. The bracket on which the mobile telephone should fit would not stay upright but kept falling over. I complained to the chairman of the company, the fire service was sent for and the problem was remedied. I pronounced the fact that I was entirely satisfied. Like all proper consumers, I had declined to pay my cheque, so I then paid it. I received a polite letter acknowledging it and expressing the hope that everything would be perfectly all right in the future. Three weeks later, I received a demand from a debt collecting agency in Wolverhampton, telling me that if I did not pay British Telecom, a summons would be issued for the outstanding amount. Again, British Telecom apologised about that. There may therefore be scope for arguing that British Telecom could do better in some areas.
543 May I argue in favour of competition? A state enterprise such as the National Coal Board, which some people believe abuses its monopoly power by virtue of the fact that the ownership of coal and, therefore, the right to allow the winning of the resource, rests with the National Coal Board. Some people believe—I am one of them—that it would make sense to take that right away from the National Coal Board, either to rest with the appropriate Secretary of State and the Government, or to be given to some other institution. Other operators could then be issued with licences to operate. Such an element of competition could be embraced by the Government and could introduce competitive activity, which would benefit the consumer.
In moving away from state-owned enterprise, proper account should be taken of the need to encourage employee share ownership and employee buy-outs and to ensure that, as part of the newly privatised arrangements, a company is obliged to inform employees to permit them to participate, as far as possible, in the way a company is organised, or at least to consult them about how a company is to conduct itself.
It was inevitable that this debate has concentrated on the Labour party's policies. With due deference to the hon. Member for Newcastle upon Tyne, East (Mr. Brown), he gave the impression of someone who had turned up at the Old Bailey on a quiet Friday hoping to have an early lunch, only to find himself landed with a dock brief in which he had little confidence. His enthusiasm for giving way was as much an endeavour to be courteous to those who sought to intervene as an attempt to deflect attention from the substance of his speech.
§ Mr. Campbell
I shall give way when I have developed the point. To say that the most radical proposal that the Labour party has on competition is to take British Telecom into what is described, but not properly defined, as "social ownership", hardly seems like a manifesto for a radical Government of the 1990s. The hon. Gentleman failed to give the precise amount that would be paid by way of compensation or to explain the principle that lies behind market value. Market value may mean any number of things. Is it market value as between a willing buyer and a willing seller, or is it on the assumption that there is no proposal to acquire compulsorily? Alternatively, is it on the assumption that there is a proposal to acquire compulsorily? We are entitled to hear the hon. Gentleman explain more fully that matter of principle.
§ Mr. Brown
If the hon. and learned Gentleman is happy with the phrase, "a willing buyer and a willing seller," I am happy with the phrase as a description of our approach to those matters, However, the hon. and learned Gentleman is a little unfair to me when he says that I gave way to Conservative Members as a device. Conservative Members, particularly those who have served in Committees, will know that I always give way, as a matter of practice.
§ Mr. Campbell
I do not wish to be unfair to the hon. Gentleman if his sole motivation was courtesy—it would be churlish of me not to accept his explanation—but he 544 cannot be allowed to use that to slide away from the question about a willing buyer and a willing seller. What is the nature of the market in which they operate? The hon. Gentleman may be aware that, in the compulsory acquisition of heritable property there is a principle called the "Pointe Gourde"—it is English law, for those who are not familiar with it—which requires, in the assessment for compensation, that no account be taken of the fact that compulsory purchase is being proposed. The mere publication of an intention to acquire compulsorily immediately has a depressing effect on value. That is an important issue and I hoped that the hon. Gentleman would have dealt with it before he came to the House and that the Labour party will do so before it goes to the country. It should say whether it intends to acquire British Telecom or part of the shareholding at market value.
§ Mr. Campbell
It was not necessary for the hon. Gentleman to offer that mitigation. That was obviously the case and no one would throw such an accusation against him. Perhaps I will offer the hon. Gentleman my services as a consultant, paid or even unpaid, because he has still not dealt with the important question of which kind of market price will be paid by a willing buyer. If he cannot do so today, he and his colleagues must do so before they take their manifesto before the people of the United Kingdom, whenever a general election is called.
§ Mr. John Marshall
Does the hon. and learned Gentleman agree that a further point that was not dealt with in the speech of the hon. Member for Newcastle upon Tyne, East (Mr. Brown) was the question of Mercury and how the renationalisation of British Telecom will increase competition. Will it not decrease competition in the telephone industry?
§ Mr. Campbell
I have no doubt that we shall hear about the proposals for Mercury. It would be curious if Mercury, with no element of public control, were competing with British Telecom, with an element of public control. One does not need to be an expert in such matters to divine that in those circumstances there could be a considerable distortion of the market.
Many questions were put to the hon. Member for Newcastle upon Tyne, East, and I shall add some more. Let us suppose that a case was established to show that an undertaking currently in public ownership would be better managed and give a better service to the consumer if it were privatised. Would the Labour party be willing to privatise that undertaking or is its resistance to privatisation one of dogma rather than utility, as the Minister said?
Many of the services about which we are talking are referred to in the United States as utilities. At the risk of stretching the language, surely the issue is to determine what the utility would be to the consumer. If we were able to establish to the intellectual satisfaction of the hon. Member for Newcastle upon Tyne, East, if not his emotional satisfaction, that the privatisation of a specific 545 institution would enable it to give a better service to the consumer, would he be willing to accept that and, if it were within his power, try to bring it about?
My criticisms of the Government's position lie in the fact that it does not seem that all the privatisations carried out have resulted in the degree of competition necessary to produce the most efficient use of resources. In spite of what the Minister said today, I am left with a strong belief that, in many cases, we have turned state monopolies into private ones, which cannot be in the interests of the people of the United Kingdom. That is why I continue with my questioning of the success of the Government's programme. However, I am firmly of the view that there is no justification in 1991, nor will there be in 1992, if it takes until then for the issues to be decided, for any movement back from the privatisations that have taken place.
§ Mr. Tebbit
If it is any comfort to the hon. and learned Gentleman, when I was in government my view was that if it was possible to arrange competition rather than regulation, competition would be better. I am still happier to assure the hon. and learned Gentleman that the board of British Telecom would far prefer the company to be in fair competition than to be regulated. I hope that the process of moving away from regulation to better competition will continue because I am sure that that would be in the interests of the companies and the consumers.
§ Mr. Campbell
I have no doubt that hon. Members and people outside the House will have heard what the right hon. Gentleman said. I suspect that it may be within the gift of the Government to give the right hon. Gentleman the opportunity that he and other members of the board of British Telecom would relish and I hope that the Minister will respond to that.
§ Sir Michael Marshall (Arundel)
It is a pleasure to follow the hon. and learned Member for Fife, North-East (Mr. Campbell) and I find myself very much at one with his reflections on the inevitability of privatisation and the totally bizarre view shown in the Labour party proposals put forward by the hon. Member for Newcastle upon Tyne, East (Mr. Brown).
It is important for us to have a chance to test some of the Labour party's ideas. I compliment the hon. Member for Newcastle upon Tyne, East on his courtesy, which we all appreciated. It is understood that he is a kindly man. It is therefore painful for me to have to say that he has made himself a hostage to fortune, but he has done us a service by demonstrating how threadbare the Labour party's case is. That was shown even within his argument, which was merely a damage limitation operation.
I am glad that I had the opportunity to hear my hon. Friend the Financial Secretary, who is also a kindly man. I thought that he might well have taken the full opportunity to trace the history of nationalisation, which one must do if one is to understand the problems and possible threats to the future that it may cause.
As one would expect, my right hon. Friend the Member for Chingford (Mr. Tebbit) with his knowledge of the subject, made an excellent speech highlighting many aspects. I speak from a more modest position. I had two and a half years at the Department of Trade and Industry, part of the time with my right hon. Friend. It is a source 546 of great personal pride that I had some responsibility for denationalisation of British Aerospace and Cable and Wireless, and at the beginning of the process to denationalise British Telecom. I declare an interest in the first two companies and I shall seek to comment on them.
The hon. Member for Newcastle upon Tyne, East demonstrated that he was not prepared to give us any of the Labour party's ideas on hurdle rates of return on investment. He said that a Labour Government would pick up £28 billion investment for the water industry during the next decade, which is an interesting addition to what we already know. As the hon. and learned Member for Fife, North-East said, the hon. Member for Newcastle upon Tyne, East has not addressed his mind to the fair market value argument.
We were shown a range of uncertainties, but that is part of Labour party history. Everyone who has read the late Lord Shinwell's memoirs will know of the magic moment at the dawn of socialism in 1945 when he went to Transport house and said, "I have responsibility for the coal industry, please give me the plan for the denationalisation of coal", and he was asked, "What plan, mate?" That was the starting point of the great move in the coal industry.
I am a refugee from the steel industry, and had 20 years in the steel and heavy engineering industries. I was nationalised, denationalised and nationalised again, and it was not a pretty experience. I found it insupportable to have to put up with the economic and industrial illiteracy with which I was assailed by Labour Governments who sought to tell us how to do things. When I came to the House, I saw in the Beswick report, the Varley-Kaufman initiative, which a Select Committee roundly condemned and, at every twist and turn, how when a Labour Government seeks state control of industry in this country, they get it dreadfully wrong.
I have some sympathy with the Labour Government's problems because the system is peculiarly designed to make it difficult for Ministers to interfere in industry in our country. My right hon. Friend the Member for Chingford highlighted that when he spoke of the sixth, seventh and eighth overviews. He, too, was being kind and should have added ninth and 10th overviews—the Prime Ministers of various colours who often feel that they have the final say. Our system makes it extremely difficult for Ministers to intervene, even with the best will in the world.
Although I accept the honesty with which the hon. Member for Newcastle upon Tyne, East put forward his views, he failed to address the realities of life when he spoke of the wonderful way in which he would sidestep the Treasury so that, at one bound, he would be free. He said that he would harness private capital and get out of external financing limits. I know that we should not refer to individuals in a particular part of the House, but if the hon. Gentleman had looked in one direction he would have seen the alarmed faces of some of those sitting here, with whom he might have to work in future.
If the hon. Gentleman thinks that he can break down the Treasury ethos he is a brave man.
§ Mr. Gerald Bermingham (St. Helens, South)
Does the hon. Gentleman agree that the problem with nationalisation, denationalisation and state ownership of and investment in industry has been the dead hand of the Treasury, which can never decide on anything until it is far too late to make a sensible decision?
§ Sir Michael Marshall
I would not necessarily disagree, but I hope that the hon. Gentleman will agree that if those who manage industry have to route their affairs not only through Whitehall but through Westminster, where they are subject to scrutiny by the House, and if the attendant media problems also come into play, that is a recipe for rendering it impossible to manage a business effectively. Labour adopted the worst of all worlds by taking over internationally competitive manufacturing industries. It is one thing to interfere with an industry with a certain dominance in the domestic market, but steel, aerospace and British Airways are industries which need to be extraordinarily quick off the mark to survive, and nationalising them did great damage.
I appreciate that the hon. Member for Newcastle upon Tyne, East was trying to deal with some of the arguments about Labour's proposals for British Telecom. It is an internationally competitive industry, however, which must produce services for the vast infrastructure of Britain's industry and service sector. If it does not perform that service properly, British competitiveness suffers. BT faces competition from Mercury—I have already declared my interest in Cable and Wireless. Labour is once again falling into the trap of eyeing industries that may have a high profile and may be profitable, while ignoring the damage that nationalising them might do to the underpinning of British industry and our service industries.
I want briefly to go over my experiences in the steel industry. The time in question was not a happy one, but it showed how it was possible for distortions of the market to work over the years in ways that I hope will never recur. This debate allows us to put down markers to ensure that if there is a change of Government the new Government will not, as the hon. and learned Member for Fife, North-East said, reverse privatisation against the natural trend. Governments of all complexions were involved in political intervention in the steel industry. One of the cruellest problems for Conservative Governments was that caused by having to make a success of socialist-controlled industries.
One of the classic mistakes made in the steel industry was the decision to allocate strip mill facilities to Scotland and Wales—a decision taken by a Conservative Government for political reasons, as was the norm. That process is rounding off now with the tragic closure of Ravenscraig and the story has been repeated often in closures in the north-west, the midlands and the north-east. The build-up during profitable times of the private sector steel industry had a relationship with companies which allowed a certain geographical spread, but all that was thrown into the melting pot once political considerations involving location in Scotland and elsewhere entered the equation. It was all part of the same unhappy experience.
There was also a distortion of competition with the private sector. The Conservative Government in 1979 had to pump £700 million into the British Steel Corporation, which was still running at massive losses—£1.8 billion, as I recall. All that additional funding was in part at the expense of the private sector of the steel industry. There was a thriving private sector on a small scale, but my old home town of Sheffield was virtually wiped out. Little of the industry is left there, because the taxpayers and Government of the day had to bale out British Steel—and that subsidised competition in turn destroyed much of the private sector.
548 I am glad to say that things are much better today, and British Steel is running well. Clause 4 still exists, however, and that is why it is necessary to put down markers today to ensure that we never go down that route again.
I have also declared my interest in British Aerospace which, was nationalised for such a short time that there was fortunately no opportunity to do a great deal of damage. I want to concentrate on some of the benefits of privatisation that I have observed at first hand. We should not underestimate the real value of employee shareholding. Hon. Members will recall that trade unions marched in protest at Kingston and other British Aerospace plants when this idea was first mooted—yet when it came to it, the vast majority of employees took their free shares, naturally enough; but even more significantly, in 1979–80, 40 per cent. of employees bought additional shares with their own money. Today attitudes towards partnership and the commitment of shopfloor, management and boardroom have radically altered at plants throughout the country.
It was worrying to hear the hon. Member for Newcastle upon Tyne, East speak about what Labour would do with the water industry. He criticised attempts at diversification. It is prudent to encourage companies to diversify because it can help them to survive some of the swings and troughs of the market. It can also help them in the European imperative, which has not been mentioned in the debate. Cross-ownership between companies in this country and those in other parts of Europe is increasing and in that context many of Labour's arguments are sterile.
In speaking of telecommunications, the hon. Member for Newcastle upon Tyne, East prayed in aid the argument that it was a state activity in other European countries. There are different governmental relationships in that industry, but I say to the hon. Gentleman, "Watch this space". There will be radical changes during the move to privatisation which is already happening in many countries, such as Japan where British industry has been brought in. Nothing is static. I am worried about the old-fashioned Labour concept of state ownership.
Diversification by British Aerospace into the motor industry has kept Rover in this country and has been a key element in maintaining cash flow, counterbalancing the long-term nature of the civil aircraft business. We have recently seen the need for defence expenditure to be variable. All of that suggests that any industry that has an opportunity to diversify is wise to do so.
The privatisation of Cable and Wireless was significant in that it produced Mercury. I am sure that my right hon. Friend the Member for Chingford agrees that while British Telecom still massively dominates the market, the principle of competition has been an enormous strength to BT management in carrying out necessary change. It altered BT's relationship with the trade unions and, as my right hon. Friend knows, in some areas the competition is very real. In the City of London, BT has about 60 per cent. and Mercury has about 40 per cent. of the market. Those companies are at the cutting edge of British activity in the service sector.
Competition occurs in areas where there are arguments about price. My right hon. Friend might argue about how that works in practice, but at least the consumer has a choice. That choice extends to Government Departments which have access to both BT and Mercury, and that is beneficial for overseas and long-distance calls. One of the 549 few remaining bastions where no such choice exists is in the House. Some hon. Members have spoken about that matter and I hope that we shall return to it. Competition has helped BT, Cable and Wireless, and Mercury.
In a revealing passage, the hon. Member for Newcastle upon Tyne, East lapsed into the politics of envy when he talked about top salaries. He gave the unfortunate example of a 140 per cent. increase in pay for the incoming chairman and chief executive of Cable and Wireless, Lord Sharp of Grimsdyke. That increase came about following the strenuous efforts of Lord Glenamara, whom we recall in this House when he was Ted Short, and who simply could not pay his senior executives the going rate; there was massive discontent and people were leaving the company. After privatisation, matters had to be put right. We must be prepared to pay top people the going rate. One of the most outstanding leaders of the newly-privatised telecommunications industry is Lord Sharp of Grimsdyke, who is now retired and in another place. His appointment was a great success, but we must accept the logic of the price tag.
I do not wish to continue with case histories. I hope that I have said enough in comparing the past with what I hope will happen in future. I think that certain lessons have been learnt from the past, but I do not suggest that everything has been perfect. That will never be. One of my worries rests on the time scale of any developments. If private monopolies are created, the role of the regulator becomes all the more important. In Oftel, Sir Bryan Carsberg has presented us with a splendid example. We still have to find ways to ensure that other regulators will be effective, and that will take time. It will take time for us to gain experience, and the public will have to be prepared to live with us until we see how things have worked out in practice.
Much of the criticism of the hon. Member for Newcastle upon Tyne, East about competition does not stand up to examination. There is competition, for example, between one form of energy and another. It is interesting that one of the areas that the hon. Gentleman and his party are picking on for renationalisation is the generating sector of the electricity industry, where there is competition. We did not have a chance to probe the hon. Gentleman on that. It would be interesting to know how far—
§ Mr. Nicholas Brown
We are not picking on the generating sector of the electricity. We are focusing on the national grid, which is something separate and different.
§ Sir Michael Marshall
I understand that.
However, anything that begins to divorce the privatised sector from the public sector will, to my mind, bring back all the worries about that interrelationship. If the divorce takes place, we return to the old decision-making chain, which involves the Treasury chain. The hon. Gentleman will not give me much comfort by picking out one part of the process.
I think that I have made my point about capital investment. The argument about prices and profits must be considered more seriously and should not be left to media hype. We know that journalists try from day to day to fill their columns, and that some of them are inclined to make jazzy noises. In a serious debate, however, those who sit on the Opposition Front Bench, and especially the hon. Member for Newcastle upon Tyne, East, who is a shadow 550 Treasury spokesman, must reflect that there has to be some relationship between prices, profitability and investment. There must be some reasonable understanding across the Floor of the House of what is a proper return on capital in capital-intensive industries. The hon. Gentleman is too intelligent not to understand the point and so he decided wisely to skate over that bit of the thin ice.
We cannot ignore all the underlying principles of Labour party policy. Clause 4 is still in place, which bears on control of the means of production and exchange. We know that if a Labour Government were formed who inherited the Labour party's present shopping list, there would be the inevitable argument about whether they would move down the road of clause 4.
Uncertainty is destructive of industry, of competitive international industry and, above all, of the needs of companies—including management and the work force —and of consumers. The Labour party has introduced the element of uncertainty into our debate, against what I believe is a general trend.
We have had a chance to get the flavour of some of the real problems that would be created if a Labour Government were ever able and unwise enough to carry forward the Labour party's present ideas. I hope that those of us who had to suffer the appalling period of external intervention by people who knew little of the businesses in which some of us worked will never forget what ensued. Businesses would be helpless in the hands of a structure that will never succeed in our country.
§ Mr. David Evans (Welwyn Hatfield)
I do not think that anyone could sensibly deny that there are certain services that only the Government can provide. Defence is an example. The recent conflict in the Falklands and the even more recent conflict in the Gulf showed the world the great strengths of my right hon. Friends the Members for Finchley (Mrs. Thatcher), who was Prime Minister, and for Huntingdon (Mr. Major), who is now Prime Minister, and their Cabinet colleagues. They provided firm leadership and reassurance and, most importantly, implemented the co-ordinated employment of huge resources of military hardware and manpower.
One shudders to think what would have happened had the Labour party been in power at that time. I believe that the Argies would still be in the Falkland Islands and Kuwait would still be occupied by Hussein's forces. We had strong leadership, which took decisive action. That is the contrast between that lot opposite and the Conservative party.
I admit that the Labour party has given this country great service from time to time. For example, four years of socialist rule at the end of the 1970s displayed, to a greater extent than ever before, the gross inefficiencies of nationalisation. Who can forget the beer and sandwiches at No. 10 every week? They are a legend. Deals were made between union leaders and the Prime Minister of the time. The International Monetary Fund—the receiver, although it is now referred to as "the administrator"—arrived on the shores of this land to tell the Labour party how to run an economy. What did we get? Cuts, cuts, cuts.
551 The Labour party's fundamental arguments for nationalisation are always political and economic. As long ago as 1933, Herbert Morrison said of nationalised industries:the quality of service will tend to advance and the price charged will tend to fall".Nearly 60 years later, the Labour party still has not realised that he was talking rubbish, and it is still talking rubbish. It is as simple as that. Far from prices falling, between 1971 and 1982 prices in nationalised industries increased by 380 per cent., and in the retail sector prices rose by 310 per cent.
Nationalised industries, as we all know, were a colossal drain on the public purse. In 1979, £50 million a week was being lost. The steel industry was losing £3 million. I recently visited British Steel with Lord Hesketh. It is now the finest maker of steel in the world. I asked the managing director what the Government could do to help the industry. He said, "You can do one thing: keep out of our business," I pass that message to the hon. Member for Newcastle upon Tyne, East (Mr. Brown): the best thing that we can do for the industry is to keep out of its business.
The crippling rates of taxation imposed by the previous Labour Government, far from providing funds for a prosperous and efficient national health service, were being used to prop up state monopolies. They did not provide more money for education or health. In 1979–80, the industrial state sector consumed more than a third of the national health service budget. It was clear to the man in the street—although not to the Labour party—that those organisations were not geared to international competition, consumer services or productivity. They were the overstaffed fiefdoms of militant trade unionists. That is what we were faced with, so the economic argument falls.
What of the political argument? We were told that public ownership would be accountable ownership. However, nationalised industry became unaccountable. When Ministers were questioned in the House, they declined to answer on matters that they considered commercial. The poor consumer got nowhere, market forces did not operate, and nor did political forces. The result was that so-called public services served no one.
All the tripe about industries that are owned by the public being taken away from the public is nonsense. They constitute a drag on the public purse and the poor consumer has no say in the matter and no means of redress. The state dips its fingers into his pockets to shore up an inefficient and unaccountable utility. Between 1956 and 1972, the five major nationalised industries lost £1.25 billion. There was only one year in that period when those five industries recorded an overall profit. There is no economic or political case for maintaining or, even more stupidly, resurrecting those state monopolies. It is laughable that the hon. Member for Newcastle upon Tyne, East should say that he wants public ownership to be extended to provide quality services. It is a good job that he is not in charge of the Humber bridge: if he was, there would be cars from there to Acton.
The hon. Member for Newcastle upon Tyne, East and his Labour colleagues cannot grasp the fact that privatisation forces economic efficiency and, more 552 importantly, results in consumer accountability. Public services do not need the warm and sweaty embrace of the state; they need the cold wind of market forces.
Until my right hon. Friend the Member for Finchley entered No. 10 Downing street, the United Kingdom was paying through the nose for Mickey Mouse experiments in economic management. I thank God that the state-owned sector has been reduced by no less than 60 per cent. since the Conservative party came to power. In all, 44 major businesses have been privatised. Their fortunes, as a result, have been rejuvenated.
In 1978–79, the nationalised industries that have since been privatised received Government subsidies of £19 billion. In 1989–90, those same companies back in the private sector contributed £1,500 million to the Exchequer in corporation tax. That money will be spent on hospitals, schools and the individuals in our community who are most in need of care.
Privatisation also provides funds for other social projects that are vital for our quality of life. Today the environment is quite rightly at the top of the Conservative party's political agenda. Last year's environmental White Paper "Our Common Inheritance" lists a number of challenging, but expensive, targets for industry.
The most crucial of our natural resources is water. Since privatisation, the water industry has invested huge sums in its infrastructure. A record £28 billion will be spent over the next decade cleaning water and providing better facilities. Without setting the industry free, such investment would not have taken place. Perhaps the Opposition, who want to snatch the water industry back into the state's clutches, will tell me where they would get the money. It will not come out of a tap; it will come from the taxpayer.
It is astonishing that the Labour party wants us to return to the mess of the 1970s. The Labour party does not want to free us; it wants to regulate us. A new quango is proposed on virtually every page of Labour's new policy document. Why should British Telecom, the gas and water industries return to the 1970s?
The Conservative party wants to free citizens. We do not want to create a bureaucratic black hole into which complaints disappear never to be seen again. Bureaucrats are not the answer. This country was not made great by bureaucratic pen pushers; it was made great by entrepeneurs operating in market conditions. Privatisation has put the "Great" back into Great Britain.
If you will excuse my phraseology, Mr. Deputy Speaker, Labour's approach to the economy can be likened to a lady of the night. On the surface there is fine dressing. It looks new and may even appear glamorous. However, on closer inspection, what is underneath is worn out and wrinkled. The Labour party still wears the old clothes of clause 4. That is closest to Labour Members' hearts. The procession of policy documents from Walworth road, where the last Marxists are to be found, is only cosmetic. Believe me, they cannot hide the fact that the Opposition, unlike Conservative Members, have not learnt the lessons of the 1970s. Therefore, like the lady of the night, they seek to con the punter. I do not think that the British people will be conned by that lot opposite.
§ Mr. Bill Michie (Sheffield, Heeley)
I wish a clarification from the hon. Member for Welwyn Hatfield (Mr. Evans) that when he talked about the Mickey Mouse experiment, he was making a general point and not making a personal reference to me.
I suppose that, in a sense, I was part of the experiment with nationalisation, because I, too, worked in the private and nationalised sectors of the British Steel Corporation and United Steel. Therefore, I have had considerable experience. However, unlike right hon. and hon. Members who also worked in the nationalised industry, I was not a high flier. Obviously, I worked on the shop floor and in research. There was considerable trauma in going from the private to the public sector. I will not allow hon. Members to mislead the House—[interruption.] Does the Tory Whip, the hon. Member for Sheffield, Hallam (Mr. Patnick) wish to speak? Obviously not.
There are criticisms of nationalised industries. Everyone would admit that. There are faults and failures in many industries, whether private or public. I do not want anyone to be misled. The nationalisation of the steel industry, which I know something about, was a necessity. It is not true to claim that we had a buoyant, viable steel and mining industry before nationalisation.
§ Sir Michael Marshall
I am listening to the hon. Gentleman with great interest. Like him, I am an ex-United Steel man and, by extension, a BSC man. The hon. Gentleman must be careful about what he is saying. The profit record of the steel industry at the time of nationalisation in 1967 was made during a long post-war boom. We can argue about whether we were riding with the tide, but the problem is that if one threatens to nationalise a company, investment dries up. That is the nature of things. One cannot justify putting forward more money when one does not know what compensation one will receive. That was one of our big problems with nationalisation. I have much fellow feeling with the hon. Gentleman, but I hope that he will play it straight on that point.
§ Mr. Michie
I am grateful to the hon. Gentleman. I understand what he is saying. Of all private steel companies at that time, United Steel was making a profit. Also, by coincidence, it was investing more than others in research in the private steel industry. I think that there was about £9 million profit in the year before nationalisation. In those days, that was quite a lot of money. I do not think that that can be said for general steels which were obviously going through problems, particularly investment, which nationalisation helped to some extent.
We saw some of the mistakes that were made on nationalisation. Although I am still very much a supporter of public ownership in certain crucial industries, I am not happy with the practice of state capitalism, which is precisely what nationalised industries were. Although the Government appear to be hostile towards taxpayers having shares in crucial industries, they do not seem to have the same hostility towards crucial industries being literally controlled by foreign investment.
The obvious case that comes to mind and which was redressed slowly but surely concerns Kuwait and the shares in British Petroleum. We must bear in mind that there are interests in this nation that we should look after without being too dogmatic one way or the other.
554 On the demise of the steel industry in Sheffield, the hon. Member for Arundel (Sir M. Marshall) referred to the east end of Sheffield, which he knows as well as I do. I accept that it has been devastated. Similar devastation of industries and areas occurred in the private-sector system —also as a result of the lack of investment and—I have a bee in my bonnet about this—because the Government allowed Europe to dictate the steel and engineering closures that should be made in this nation. I believe that the British suffered an unfair proportion of such cuts as a result of the edict from Europe and that our Government should have resisted that more fully.
It was not only the nationalised industries that were falling apart—those in the private sector were closing at the same rate, if not faster. Many who know my area know that it used to have large, proud steel and engineering firms, but they no longer exist. They have been bulldozed and, in their place, we have the retail sector which is the theme of the day. A strong manufacturing base is, however, a darn sight better than a whole load of leisure centres and supermarkets. We should not get this out of proportion and say that the failure of our steel and engineering companies was due to nationalisation, because the failure would have been equal if not greater had they remained in the private sector.
Conservative Members have said that the first "smell" of a future Labour Government intervening in industry—I use the word "intervene" advisedly rather than the words "take over" or "renationalise"—will have an immediate effect on share prices and will rock the market, causing all sorts of problems. Out of sheer fascination I read most of the financial pages in the Sunday newspapers instead of the normal news which I find pretty boring. The financial pages, however, are interesting with share prices rising and falling all the time at any little smell or rumour, never mind one of a Labour Government taking over.
Even now the share price of fairly large industries can drop because someone like Lord Hanson decides to buy 2 per cent. of a company. Is that a hostile bid or not? Should ICI defend it or not? If it does, it is admitting that it is weak; but if it does not defend the bid, it will be in even greater trouble and the share price will drop. What does Lord Hanson do then? He not only says, "I am not interested," but, "I am not interested, so it must be no good." The share price then drops and in come the predators.
We should not worry about a few share prices dropping because a Labour Government may intervene in industry. Every week the interventions of the power bosses and financial houses cause more problems for the share price than could any future Labour Government. It is a red herring for Conservative Members to use that argument.
People make a fortune buying and selling shares—not to enhance the company because most of the time the company is of no interest to them, but to break it up and strip its assets which is how the financial houses get fatter and richer while the workers in the industries finish up on the dole. Unemployment is the biggest scandal today—
§ Mr. Skinner
I was here first thing.
My hon. Friend the Member for Sheffield, Heeley (Mr. Michie) is absolutely right about asset stripping. My 555 constituency contains the 100-year-old firm of Reeve-Burgess, which has been taken over by Plaxton, which is headed by David Matthews. Reeve-Burgess was a winning manufacturing firm, with sky-high productivity and profits of £60,000 in May which looked like being repeated this month, yet 180 jobs are going down the road in July because Plaxton has decided to strip its assets and transfer the work to Scarborough. In addition to facing the Government's inflationary policies and massive unemployment, we have to listen to Conservative Members talking like that.
§ Mr. Michie
I could not agree more with my hon. Friend. The loss of a firm is bad enough, but those 180 jobs will never be replaced. The employees end up on the dole, with the taxpayer paying. Strangely enough, the Tories do not seem to moan about profits from asset-stripping which affects people's jobs and livelihoods and makes them a burden on the state. We hear nothing from Conservative Members about the private sector in that regard, except the occasional proud boast that those marvellous big private companies give more to charities than the nationalised industries used to give. I much appreciate the kind hearts that lead the large industries to give to charity. If we had a much more socialist economy and a more caring society, we would not need so much money to be given to private charities. But, of course, the Conservative Government do not recognise that.
Both large and small successful firms can be taken over by predators. That affects jobs and the value of shares. How will the Government protect essential industries, such as the water industry, from such predatory takeovers in future? I accept that regulations may be used, but I shall deal with that point later.
My hon. Friend the Member for Bolsover (Mr. Skinner) is right about small firms. I worked in small private companies before I joined United Steel, as it was known before the steel industry was nationalised. Those small firms had family concerns and some accountability to the work force, but most of them have disappeared—not because they were inefficient, had production problems or lacked orders, but because predators bought and sold shares above their heads. The people who thought that they owned the factory woke up one morning and found that they no longer owned or controlled it. Within weeks or sometimes months those companies disappeared.
The classic example of what I described is a company called Tyzack Sons and Turner Heeley, for which I worked as an apprentice. There was nothing wrong with the company. It still had orders for exports. Hostility between companies forced people to buy shares and then the company simply to obtain the trademark. Not only does that company no longer trade, but the whole site has been bulldozed to save rates, taxes and so on. What good is that to the work force or, indeed, the country?
The Government favour such a predatory attitude in our essential industries. That is wholly unacceptable. The marketplace should have no say in our crucial industries or economic planning because at the end of the day if it does, it means that foreign companies and financial houses dictate the odds when the elected Government of the day should make the decisions. There is no accountability to the nation or to the consumer.
556 We are being held to ransom by private monopolies which are there for all to see. There is no real competition in water prices, despite the claims that are made. In telecommunications there is no real competition with British Telecom. More or less the same monopoly persists, but it operates all for profit and not for anything else. Conservative Members have said that British Telecom is much more efficient and up to date than a few years ago when it was nationalised. With hand on heart I agree that that is the case. British Telecom had been neglected over the years. There was some mismanagement, but I remind right hon. and hon. Gentlemen that the telephone companies that were nationalised in the first place were a byword for quality. They set standards in cable and everything else in the electrical and electronic industries. All the standards were set down by the nationalised industry years ago and the system worked correctly then. The reason why the industry went a little wrong later was neglect on the part of management. It was not the fault or the philosophy of public ownership.
Although this is on a smaller scale, there is a prime example of how the Government are irresponsible in allowing some of our crucial industries to go directly into the private sector. Over the years we all must have received complaints from people seeking to buy or sell a house that the estate agents forced their clients into bidding up blind. People do not know the customer or the price and they are screwed by the estate agents. Many hon. Members, including me, took the matter up many years ago. I finally received a telephone message from the Minister responsible who said that he was sorry for the delay but that he could not get agreement from the estate agents on a code of practice. Estate agents were screwing consumers and the taxpayers, yet the powerful Government could not persuade them to agree to a code of practice.
That was only estate agents. If the Government cannot control estate agents, despite some statutory instruments that will protect customers to some extent, what hope do they have of controlling financial powers, such as international and multinational companies? They have no hope whatever. It is irresponsible to follow the dogma that no public intervention in crucial industries should take place. If the Government have trouble with small companies, there is no way in which they will be able to deal with the big multinationals.
I want to make one point plain: although we may have differences over private and nationalised industries, it would be totally irresponsible of the Government, because of dogma, to allow the nation's crucial industries to be at the mercy of the fat cats of the City. That is not good for the nation and I do not believe that the nation will allow it.
§ 1.9 pm
§ Mr. Steve Norris (Epping Forest)
This has been an interesting debate, not least because of the speech made by the hon. Member for Newcastle upon Tyne, East (Mr. Brown). He is, as we have all remarked, kind and generous, and he is obviously bright. During his hour-long ramble, one thing became overwhelmingly clear to me: he is too bright to believe the nonsense that detains the Labour party in its time warp on the question of ownership. However, he is perhaps not bright enough—God knows, no one in the Labour party is—to see a way out. He should take the one great intellectual bound 557 which, with one leap, would set him free. He should accept some of the simple truths about state and private ownership that are clear not only to a narrow minority on the far right of the political spectrum in Britain, but, as my right hon. Friend the Member for Chingford (Mr. Tebbit) and my hon. Friend the Financial Secretary to the Treasury made clear, are lessons that are becoming clear throughout the world.
I shall not detain the House with what is surely common ground, but let us consider some of the lessons that we in the centre and on the centre right of politics might learn about ownership either by the state or by private individuals. The debate should not be a philosophical ramble about the ownership of shares. It should be about ordinary people and how they receive the services offered by state-owned enterprises or those liberated into private ownership. It is ordinary people who matter.
Ultimately, the issue is about how well the trains run, whether they arrive on time, whether they are clean, and whether one can buy a hot cup of tea at a reasonable price or a decent sandwich that does not taste like cardboard. To me, it does not matter whether the service is provided by a Labour Government or a Conservative Government, by a state-run enterprise or by a private company. I want basic standards of service. Any intelligent person does not consider the dogma of whether a service should be owned by the state or by a private individual or a combination of the two. He wants to consider the combination that delivers quality of service to individuals.
While seeking the answers, we should not make the mistake of assuming that the arguments in favour of private ownership are so clear that they do not need to be restated. One thing that is clear is that in the days immediately after the second world war, when the Labour Government set themselves on the path to nationalisation, they had a great justification for doing so. I believe that one of the things that Conservative Members are not sufficiently able to accept is that there were great deficiencies in the old management styles which were the norm in the 1940s. There was a sense of them and us, and of managers or owners—or at least, those who were directors being disengaged from the business and not being involved with those whom they employed in a co-operative effort to ensure better quality and standards. They were paternalistic.
I remember a wonderful description of that sadly peculiarly British feature of the relations between the board and the shop floor. It was in the first book ever published in this country that considered the theory and practice of management called "Up the Organisation'', by Peter Townsend. He had a marvellous way of subdividing the book in headings from A to Z and I shall never forget the first sentence of chapter B, which said "B is for the board of directors. It is useful to have someone on the board of directors who knows where the factory is." One could sense that that was a reflection of a spirit in British industry of directors who dined in their own dining rooms, who wore suits while the workers wore overalls, and who no doubt studied business plans and met regularly with their bankers but had little practical involvement in the management of their companies. Not only was that a cynical abdication of their responsibility, but, more important, when a vacuum was created at the top of those businesses, the trade unions said, "Thank you" and quickly filled them.
558 I will give examples of that, the first from the motor industry, which I know well from personal experience. Only recently, companies such as the old British Leyland—the British Motor Corporation and now the Rover Group—accepted that it was a good idea for draughtsmen, who are referred to as professionals in the industry, to visit the shop floor to see how the designs that they put on the drawing board could be manufactured.
That was the single greatest lesson the Japanese taught the British. When one sees it applied in factories such as that which I used to have the honour to represent, in Oxford, East, at Cowley, one appreciates the way in which British workers can—surprise, surprise—produce goods of just the same quality as their Japanese counterparts, because it is not a function of how intelligent or willing they are but of how organisation and management can make a business sparkle.
My first warning to the Government is that we should not assume that there is any automatic merit in the word "private" and that somehow, because something is private, it must work. That is not true and there are many cases to show that where management abdicated its responsibility and allowed a vacuum to be created, it was quickly and willingly filled by the trade unions.
The process of nationalisation, understandably enthused over by the Labour Government after the war, simply replaced bad with worse. Nationalisation carries with it inherent technical faults. That should by now be common cause between us and no longer be regarded as even worthy of debate.
There is the technical fault of reliance in nationalised industries on funding determined essentially by the size of the public sector borrowing requirement. My right hon. Friend the Member for Chingford (Mr. Tebbit) brilliantly exposed that. It is a sorrow that he will not be with us in the next Parliament, and that is the best possible justification for postponing the date of the next general election for as long as possible. That would enable us have a few more speeches like his, brilliantly witty and hitting the point absolutely.
That reliance on public capital has, under successive Governments of both complexions, resulted in chronic capital underfunding. That underfunding and underinvestment in nationalised industries across the whole spectrum have in turn led, in effect, to a subsidy of running costs rather than to the provision of capital for investment. That, in turn, has led to a whole culture of further reliance, following another abdication of responsibility, this time not even to a definable source of authority but into the limbo of the civil service, and that has been to the detriment of all the nationalised industries.
Another technical inherent flaw in nationalisation is the sense in which civil servants—who are employed by Government to regulate the affairs of Government and who are sympathetic to the specific and discrete concerns of Government—are inherently unsympathetic to the needs of individual businesses. My right hon. Friend the Member for Chingford gave an amusing account of the processes of meetings, disagreements and second-guessing that is commonplace wherever there is that interface between the civil service and industry.
Intelligent Governments recognise that it is not a question of personal antipathy and ideology—that it is not a question of liking or disliking—but that it is a structural impossibility to have two groups of intelligent people, both 559 of whom have separate priorities, and imagine that they can come together and work as one with the single priority of making sure that the business operates properly.
The third structural and inherent flaw in the concept of nationalisation is the total absence of incentives—not only monetary but even of encouragement by a management that is dedicated to making a discrete business work. The death knell of socialism is the fact that the technical and structural defects in the underlying principle of socialism —nationalism—mean that it simply does not work in practice. It is dreadfully sad to have to recognise that we live in a world in which financial incentives must play a part. However, given that it is so clear that people must be given a stake in the enterprises in which they work, so that they work a little harder for themselves and their families, we should recognise that that concept is now the reality of the world. Those of us who accept that and build on it to make a better basis for British industrial management are those who have come to terms with reality.
§ Mr. Norris
Before I give way to the hon. Member for Bolsover (Mr. Skinner), who is a regular attender, may I point out for the benefit of those who will read our proceedings in Hansard that he joined us only a few moments ago and therefore missed the pleasure of hearing the hour-long speech of the hon. Member for Newcastle upon Tyne, East and the significant contribution of my hon. Friend the Minister. The hon. Gentleman no doubt has something interesting to offer.
§ Mr. Skinner
Does the hon. Gentleman believe that the national health service should be privatised?
§ Mr. Norris
Of course not, and neither do my right hon. Friends the Prime Minister or the Secretary of State for Health. I believe that the health service should remain free at the point of delivery to those who need it. However, I do not believe that a pound of the money that is expended on the national health service should be wasted by the chronic overmanning and inefficiency inherent when it was run more by the National Union of Public Employees and the Confederation of Health Service Employees than by efficient managers who want the best out of the service. I am disappointed that the hon. Gentleman is so locked into the neolithic idea of delivering services that he makes that greatest of all errors. He imagines that only a cleaner employed by the Government can clean properly. The dreadful irony is exactly the reverse—only a cleaner employed by a company which cares enough about its work, because its contract may not be renewed, will do the job properly.
§ Mr. Norris
I cannot allow a further intervention because it would be extremely discourteous to my hon. Friends, who have been here throughout the morning, and because Opposition Members, too, wish to speak—[Interruption.] Did I hear my hon. Friend the Member for Amber Valley (Mr. Oppenheim) refer to the embarrassment of some Derbyshire Members over the Bookbinder affair? I am sorry that my right hon. Friend the Member 560 for Chingford is not here at the moment as I know that he has a passing interest in the matter. It may be more instructive for the hon. Gentleman to consider that.
The greatest lesson of the nationalisation debate is not the fact that, in 1979, publicly owned businesses were costing the taxpayer £50 million a week, which the taxpayer no longer has to find, although that was dramatic enough. Neither is it the fact that the proceeds of denationalisation have raised £33,000 million, which can be spent on much more needed public services, including health. It is not even the fact that so many more people now participate in the ownership of those companies and therefore have an interest in the quality of service offered. When we consider the long list of nationalised industries that have been privatised, such as British Telecom, British Airways, British Steel, British Aerospace and Cable and Wireless, we see that the losses, underinvestment, intelligent and practical management starvation, have given way to success so that those companies now lead the world in their own sectors in investment, innovation and their desire to expand into new markets, often overseas.
I shall make my final point briefly as hon. Members, particularly my hon. Friends, have been extraordinarily indulgent in allowing me to speak for so long.
We should relate this philosophical debate to the service offered to ordinary people. Anyone who imagines that the service level provided in a cafeteria in socialist Russia is better than here, or is or was better in any of the central European countries where the state regulated standards and provided facilities and services, has obviously never been to those countries. The wonderful American philosophy, "Have a nice day"—vulgar and even, on occasions, mildly offensive though it may be to us reserved Brits—expresses one of the greatest and most important truths of nationalisation and denationalisation. When one has to care whether the customer will return because, if one does not, one's business and ultimately one's job might be on the line, the service offered tends to be more generous, efficient and better regulated. That is the key to this debate and on that basis I earnestly pray that, to the list of nationalisation, denationalisation and renationalisation—the Government have embarked on a further process of denationalisation—we shall never have to add the word re-renationalisation.
§ Mr. Harry Cohen (Leyton)
The hon. Member for Epping Forest (Mr. Norris) gave us, as usual, a lively and entertaining speech. He said that financial incentives were always necessary—some of us would dispute that. My hon. Friend the Member for Bolsover (Mr. Skinner) referred to that in relation to the health service—a public service. But the Tories have a funny idea about financial incentives. They give the rich more tax cuts and more money, while making the poor poorer. That is their idea of financial incentive, but it does not work.
The hon. Member for Epping Forest talked about the 1940s and the idea of the owners being against the workers and detached from them—the "them and us" mentality. What has changed? We only have to look at those huge pay rises to which my hon. Friend the Member for Newcastle upon Tyne, East (Mr. Brown) referred to see that the owners take the attitude, "Do what we say, not 561 what we do." That concept is inherent in the private ownership system that the hon. Member for Epping Forest was defending.
The title of this debate is interesting. The Government dare not include the word "privatisation" in the title because people know that privatisation equals a rip-off and public squalor, and they are right. The Government put the emphasis on nationalisation which, at its best, is public ownership. We all know that there have been problems with that in practice, but the aim of nationalisation is public ownership, which is achieved when nationalisation works. Its objective is to secure for the workers the fruits of their labours. They do not get them now, and they certainly did not get them in the past, when there was massive exploitation of working people, with huge profits for a few and low pay, long and arduous hours and conditions of work and poverty and unemployment for the many.
The purpose of nationalisation was to do something about that system and to take industry into public ownership. The theory was that we could not control what we did not own. At its best, public ownership is perceived to be necessary—for instance, to secure worthwhile jobs and to protect whole industries.
My colleagues from the north-east regularly mention shipbuilding, which has been destroyed in this country. We are now at the mercy of ships built by other nations, yet we are supposedly a maritime nation. The Government wiped out that industry with their dogma.
It is perfectly sensible to plan. We all plan for the future, both for the short term and for our old age. Planning is recognised as a virtue in private life, but somehow it is believed that capitalist nations should not plan the running of their economies—they must be left to market forces.
Of course there have been problems with nationalisation in the past, and Conservative Members have made hay with them. In the well known phrase, "Nationalisation plus Lord Robens doesn't equal socialism," as the left used to describe putting one man in control. Such nationalisation failed; the compensation given to the previous owners loaded a huge debt on the new ones.
The corporate model failed, as did the Stalinist model, because it was too centralised. Herbert Morrison based the running of such enterprises on the big private corporations, so, like those corporations, they lacked a democratic element.
The Stalinist model as seen in the Soviet Union also failed, but we must remember that, with its programme of nationalisation, the Soviet Union achieved huge growth to emerge from its feudal status of the early years—so much so that its economic growth rate still places it in the top 10 European countries. However, its system failed for three main reasons, the first of which was the huge arms race on which it embarked to try to keep pace with the United States. All that useless production meant that the money was not available for economic development.
In the main—this is another, perhaps good, reason for failure—the Soviet Union was not imperialist—[Interruption.] I concede that there were exceptions such as Czechoslovakia and Hungary, but the Soviet Union was nothing like as imperialist as the west, which exploited third-world resources by taking them over lock, stock and barrel without paying for them, thereby imposing debts on the third world which are still being paid off.
The third reason for the failure of the Stalinist model was the bureaucratic elite centred on the control of one 562 man—Stalin—and the central committee. But that merely mirrored what happens in the west—a few people control these organisations. At any rate, these factors led to enervation on the part of the workers and the failure of the model.
Neither model let in the workers or the consumers; it did not let in the public or any elements of democracy. That is what must change in our industry. Privatisation will certainly not bring about that change. It is, as Harold Macmillan said, like selling off the family silver. I remember a councillor shouting across the council chamber that privatisation was like eating the seedcorn and that we would reap the consequences in the future.
Thames Water has announced profits of about £220 million, and that is all to the good. The company has been built up by the high bills charged to the public in the past. Those profits will be siphoned off to a few shareholders. When Thames Water announced its profits, it also announced another price rise of 15 per cent., which is well above inflation. That shows how privatisation works.
The public transport system outside London has been deregulated and privatised, and that dreadful prospect looms for London. There are 16 per cent. fewer buses and a worse service is being provided, certainly at off-peak times and in unprofitable areas. When the Government end all public service provision, especially in transport, the travel card and the old-age pensioners' card will disappear because matters will be referred to the Monopolies and Mergers Commission, which will say that such benefits are a restriction of trade. Unprofitable routes will be closed and people will have to pay higher fares and accept lower standards. Those things are already happening outside London.
My third example relates to the national health service. The formation of NHS trusts is the first of a two-stage process of privatising the national health service. The so-called provider, the trust, can require the GP and the district health authority to buy service contracts. Eventually, the trusts will lead to people having to pay for the health service.
Cleaners in the health service received low pay and did a terrific job, but when the Government privatised that service, the contractors put those cleaners out of work and employed people on even lower pay. The result has been dirtier hospitals. Those are three examples of how privatisation is bad. It leads to the sort of asset stripping of which Harold Macmillan spoke. The public services cannot be left to the market, because the market is interested only in profit. The result is much more public squalor and severe damage to the environment. The Government have run down the public services in preparation for privatisation, and such a policy shifts the burden to people and makes them pay more.
§ Mr. Skinner
My hon. Friend says that public services cannot work if they are privatised. He also spoke about the national health service and the fact that a Tory said that he did not believe in privatisation and financial incentives in the NHS. Another Tory Member said that she was in favour of privatising it. My hon. Friend would do well to emphasise that, if the Tories are returned to power, the majority of Tory Members who believe in privatising the health service would win the day and would also privatise social security benefits. That is what they would be up to if they got a chance. Thank God they will not get it.
§ Mr. Cohen
My hon. Friend makes an effective point. Privatisation of the NHS would result in more and more people paying for their treatment.
The market is chaotic and unplanned. It is also harsh and grossly unfair and, as we see, that causes many companies to go bust. The result is vast wealth for fewer and fewer people, and mostly undeserving people at that. For others—the majority—there is rising unemployment and poverty. The process contributes to environmental devastation if it is allowed to continue unchecked.
In reality, we are talking about class and the preservation of inherited wealth. Most of the ancestors of the members of the powerful class elite were robber barons. They either obtained their wealth by robbing or they engaged in a huge programme of exploitation, including the exploitation of workers. Most wealth is passed on from one generation to another, and those who control that wealth now have done nothing to earn it.
I accept that there are a few self-made people who have created great wealth in a lifetime, but I would be critical of half of those who come within that category. Many of them are speculators, especially in finance capital. They are making money out of money. Only a few have gained their wealth from production that benefits the country.
Privatisation furthers the unmerited class elite. Some of those who have the money to buy out the nation's assets sell them on to foreign capitalists so that they can enjoy the high life here. The system must not continue if we are to maintain living standards. It must not be maintained because of its impact on the world environment.
§ Mr. Skinner
My hon. Friend has talked about shareholders. It is an interesting fact that 15 years ago, private individuals owned 30 per cent. of all shares. Despite all the privatisation measures and the so-called spread of wealth through share ownership, private individuals now own only 20 per cent. of shares. The Government have certainly spread some wealth.
§ Mr. Cohen
My hon. Friend has made the point well. Most of those who bought shares in privatised industries could see that the Government were engaged in a great rip-off. They said to themselves, justifiably, "Why shouldn't we get some of it?" They bought shares and then took their profit. The shares went back to the large corporations. Privatisation has not led to the spread of wealth.
The competitive system must not be maintained, because of the threat that it presents to the world's environment. It leads to pollution and threatens other countries. There is competition on a huge scale between countries when there is a recession, and that can lead to war. When third-world countries say, "We shall not put up with this any longer," that sometimes leads to war in the long term. That is where the private market system will take us. There is every danger that it will take nations into war.
Against that background, it is reasonable for the public to take control and to take some of the profits that are made, so that the moneys can be reinvested to create jobs. We must plan for the future, change direction and invest in worthwhile production. Control is a political concept. It must not rest with one man or a central committee.
§ Mr. Skinner
My hon. Friend initially failed to mention women, but he recovered in time. We have just had nearly 12 years of a woman Prime Minister. Some Tory Members are so disgusted with the present Prime Minister's failure to run the show that they are forming a group to bring back the right hon. Member for Finchley (Mrs. Thatcher) as Prime Minister—as happened with De Gaulle. They are arguing about what to call the group. I think that the right hon. Member for Chingford (Mr. Tebbit) is in the group, as well as Alan Walters, Pinochet and De Klerk. They are having a row about the name. One faction wants to call it "the rottweilers", and another faction says that it should be called "Save Her In Time".
§ Mr. Cohen
I do not know about rottweilers, but if the Tory party gets back into power, the country will certainly go to the dogs.
We need decentralisation and democratisation at a much lower level to provide greater accountability, with only a strategic overview at the centre. Small businesses would be virtually unfettered; certainly less fettered than they are now. They would probably pay less tax, too. Such a model would mean the break-up of most of the large corporations, especially the monopolies, which run much of our industry at present.
The finance capital should also be democratised. The banks should be taken into public ownership and be subject to public control. A Labour Government would need to do that to prevent betrayal by the people who run those banks, who would export capital to undermine a Labour Government. They have done that before and a Labour Government would have to place the banks under public control to prevent that from happening again.
§ Mr. Tebbit
Among his examples of privatisation, will the hon. Gentleman be referring to the way in which Hackney borough council's housing stock seems to have been privatised? It could be called an "employee steal-out". The practice seems to be prevalent in Labour-controlled authorities. Does the hon. Gentleman have a Stalinist way of preventing that from happening in the future?
§ Mr. Cohen
That is an engaging point, but I am disappointed because I was referring to the banks and I thought that the right hon. Gentleman was going to ask abut the privatisation of banks. The Midland bank had such bad debts that it should have gone broke, but it was baled out by the Government, and the taxpayer had to pay huge amounts. Whenever financial institutions have had atrocious results because of bad deals and huge debts, the Government have helped them out.
§ Mr. Skinner
Is my hon. Friend aware that, in the past three years, more than £4,000 million of taxpayers' money has gone to the top four clearing banks—Midland, Lloyds, National Westminster and Barclays? They were up to their necks in debt—mainly overseas debt—and rather than write off the debts of third-world countries, the Government wrote off the debts of their friends in the banks, yet they have the cheek to talk about intervention in the public sector.
§ Mr. Cohen
The Government do not have the courage of their convictions; they are not prepared to apply their views on privatisation to the banks. Several of those banks would have gone broke, and the Government know that. It would have been better to bring them into public control, because public money has baled them out.
Big business should be democratised so that the workers and the consumers are more involved. Democracy is distorted when vast sums are available to finance the Conservative party. The Tories also virtually control the media in this country.
The big corporations must be decentralised and democratised in the interests of democracy. There are dreadful problems with the markets: that is clear from the level of unemployment in eastern Europe and in this country. I believe that public ownership and public control will always have a role to play in democratic socialism.
§ Mr. Michael Grylls (Surrey, North-West)
From the point of view of the Labour party, this debate has fallen apart in the past few minutes. Until a few moments ago this was a suave debate with the respectable and respected hon. Member for Newcastle upon Tyne, East (Mr. Brown) responding on behalf of the Opposition. It seemed that other Opposition Members had been advised to stay away so as to downgrade the debate, but it seems that the cat has got out of the bag and that strategy has fallen apart.
The hon. Member for Leyton (Mr. Cohen) has just announced a new tenet of Labour party policy. He said that the banks should be nationalised. No doubt everyone with a bank account will have noted that statement. The hon. Member for Bolsover (Mr. Skinner) has just entered the debate rather late in the day, but he is more representative of the real Labour party.
I have a horrific scenario to describe. Let us suppose that there was a Labour Government. Would the Labour Government Benches be empty if the House was discussing nationalisation? They would not. They would be full of Labour Members egging the Labour Government on to nationalise more, to intervene more, and to create what we have already been told Labour would create—a national investment bank into which to pump taxpayers' money to invest in various companies, most of which are making losses. The hon. Member for Bolsover will recall how, under a Labour Government, the National Enterprise Board threw money away. Money was taken from successful industries and thrown away through idiotic investments. Today we have seen the real face of the Labour party. A Labour Government would be egged on towards more interference and nationalisation.
I wish to reinforce the point about interference. If a Government—whether Labour or Conservative—owned an industry, they would be tempted to intervene. That is not my imagination—it is the reality. I have great respect for my hon. Friend the Financial Secretary to the Treasury, but if he were a Minister in charge of a nationalised industry, even he—one of the most robust Members of the House—would be tempted to intervene.
For example, if British Steel had a plant in a constituency in which there was to be a by-election the outcome of which was uncertain, a Minister might be leaned on and told not to make a fuss just before that by-election. Similarly, if a general election were imminent, 566 he might be told to keep things quiet and under wraps. Such things have happened under Labour and Conservative Governments.
That practice is not restricted to Ministers. Sir Ian MacGregor ran British Steel and British Coal. He used to say that decisions were taken in the boardrooms of those concerns, but as soon as they were taken they were leaked via civil servants to the Ministry. Politicians would then contact Sir Ian MacGregor and question his actions. A business cannot be run if people are plugged in at all levels trying to second-guess every decision. As my right hon. Friend the Member for Chingford (Mr. Tebbit) said, politicians are not the right people to make such decisions.
The great lesson and rationale for privatising industry is to remove it from state control and from the interference of politicians and civil servants. History shows that we have been bad business owners. We interfered and we neglected investment. Bearing in mind the investment in British Telecom, the water industry or British Steel, who can honestly believe that such investment would be allowed if there were a greater demand, which for political reasons there would be, for investment in schools and hospitals? Schools and hospitals are of deep concern to politicians because they affect votes. They would come first and investment in those industries would come second. We were thoroughly bad owners for two reasons: interference and the neglect of investment.
The investment successes of those industries, which the Labour party cannot realistically deny unless it wants to close its mind to them, have put them on their feet. The British Telecom service, which has been improved, is very exciting and relevant to the customer. What also excites me enormously is that new markets have been opened. Opportunities for new companies have been made. Those companies would never have been able to come into the market before privatisation and certainly not before the monopolies position was broken up. There have been massive opportunities for new businesses. Most of those businesses were very small and they have been able to enter a market that was previously closed to them. One of the great lessons is that we must not go back down the nationalisation route, but if the Labour party were ever in power again, that is precisely what would happen.
My right hon. Friend the Member for Chingford said with great pride that he had worked for British Airways for 17 years. Having seen it become the most successful and profitable airline in the world, we really must not say, "It is rather embarrassing that it is making so much profit." We should be proud that it is profitable. If companies are profitable, they will be able to afford to make investments to make sure that they remain profitable and serve the public in the most effective way possible. One almost sees the old Adam coming back into the political world. Having privatised companies and allowed them to become successful, we must not succumb to the temptation to attack them for that very success. Politicians can all too easily do that, and I beg hon. Members not to do so.
§ Mr. Grylls
My hon. Friend the Member for Billericay (Mrs. Gorman) is getting agitated. I wish to speak only briefly.
The sad thing is that if those industries were taken back into control, whether or not a percentage point above or below 51 per cent., and if a Government started to 567 interfere, high-flying and successful managers who have been attracted into those industries would fly out the window and go to work in an industry that would not be interfered with by government. That would be the stupidest thing that any Government could do. In earlier decades, we did not have many successful businesses, but we can now tick off a whole list. Reference has been made to the 44 that have been privatised, including British Steel, British Airways and British Telecom. Those three companies, together with Cable and Wireless and Amersham International are world-leading companies.
§ Mr. Grylls
As my hon. Friend rightly reminds me, we must include British Aerospace. Those companies are the most successful in the world. Let us take pride in them. The most effective thing to do is to try not to undermine them. That is the danger of a Labour Government, because that is the route that they would take. Our greatest service must be to ensure that we remain in government and keep sanity in our policies so that successful industries can continue to be successful and go from success to success for the good of those who work in them as well as for the good of the consumers whom they serve.
§ Mrs. Teresa Gorman (Billericay)
The hon. Member for Leyton (Mr. Cohen) is a hard act to follow, because he was prepared to admit only that there were some minor difficulties with the nationalised industries when they were run by the Labour Government. He said that the problems that were experienced by the socialist economies of eastern Europe were due to the little matter of the cult of Stalinism. If he is prepared to say that, he will believe anything. It is astonishing that some Labour Members still hold views that would more appropriately have been heard in the House in the 1940s.
One of the interesting things about our Friday debates is that only hon. Members who are really interested bother to turn up. It is remarkable that the Labour Benches have been practically empty today. As three hon. Members representing Essex are present—myself, my right hon. Friend the Member for Chingford (Mr. Tebbit) and my hon. Friend the Member for Epping Forest (Mr. Norris)—at times there have been more Essex Conservative Members present than Labour Members in total.
It is surprising that those who believe the same as the hon. Member for Leyton do not beat a path to the wonderful socialist economies of eastern Europe where they could live under such a wonderful regime. I can think of only three people who went there—Burgess, Maclean and Philby—all of whom were socialists in their own way and, as I understand it, mostly regretted it once they got there. Apart from them, I have not heard of any socialists beating a path to the socialist economies, although we hear every day about the great pressure of socialists who are trying to escape from their socialist economies to live and work in this country where we have the benefits of free enterprise and a mixed economy. We have managed to make most of our major nationalised industries successful again by taking them out of the public sector and putting them back into the hands of private management.
568 Labour's performance today has been remarkable. The Labour party is busy doing an Oxfam, taking our old clothes and belatedly adopting most of our old policies, such as selling off council houses. However, Opposition Members have not put in a showing today such as would let the British public know how strongly they feel about economic matters. Perhaps they are all in Liverpool, Walton trying to persuade the true face of the Labour party not to show itself at the coming by-election. The real reason for their absence, however, is probably that the Labour party sees itself as the representative of organised labour and of the work force in industry. It is entirely in the pay of trade unions. I do not know what Labour Members believe in their heart of hearts, but I am not sure that the hon. Member for Newcastle upon Tyne, East (Mr. Brown) really believed in what he was talking about. At one stage, I thought that we might get a convert—most of the best converts to capitalism come from the left—and that he was about to admit that he was trying to defend an absolutely hopeless case.
The Labour party does not understand how business works, because few Labour Members have tried to run a business or to understand how businesses get information. A business's profits are one of its most important sources of information. A business that is not making a profit does not know what its customers want. If it is making a loss, it knows that what it is doing is not profitable and is not what the public want. That information was denied to the public all the time that the state ran our major industries because when they made massive losses, the taxpayer was squeezed to make good those losses. Through its profitability, therefore, Britain's smallish private sector had constantly to prop up the awful nationalised industries that were brought in after the war and which were making massive losses. It is to the great credit of private management and its profits that Britain could maintain that ramshackle system for so long.
The great British public, whom we are here to represent, do not give a stuff about who is running an industry. They care about the service that they get from the industry and the choice, variety and value for money offered to them. That is the interface between Joe Public and those who provide the goods and services.
The hon. Member for Bolsover (Mr. Skinner) had a little crack at me by suggesting that I was the only Conservative Member who was prepared to admit that the private sector has a great deal to offer the public welfare industries. That is true. I am solid on that. I do not believe that public services, such as the health service, must be run by public boards. They can be much more effective through the introduction of elements of subcontracting and competition. That is precisely what the Government are doing in not only health but education. I hope that in the not-too-distant future we shall apply those principles to other aspects of the welfare services, because wherever they have applied they have been marvellously successful.
The benefits of taking industries back into the private sector are so manifold that it is almost impossible to have time to talk about them all. Throughout my time as a schoolteacher and later in business, we suffered the misery of schools having to close because we had no heat because one of the nationalised producers of oil, gas, coal or electricity was on strike. Sometimes schools had to be closed because there was no public transport as a result of strikes.
569 The legacy of nationalisation, under which industries were run in the interests of trade unionism, was that the public received no service whatever. I remember the great shortages. We had a shortage of toilet rolls as a result of strikes in the docks. No toilet rolls could be imported. People would sneak over to the continent with lorries and bring them back full of toilet rolls.
We had to queue for cars. One would put one's name down and three years later the nationalised car industry British Leyland allocated one a car if one was lucky, by which time the car was so valuable that no one did not buy it. Most people then sold it at 300 per cent. profit. Most people ran miserable worn-out cars, just as people do in eastern Europe today. That is what passed in those days for competition in the car industry. That is what people put up with as a result of the nationalised state car industry. It is almost impossible to believe what circumstances were in our lifetime.
One benefit of denationalisation has been an absence of queues and of shortages of basic products, commodities and services for which people in eastern Europe still queue but which in Britain we take for granted as being in abundance. Sometimes we even criticise the private sector because we have too much variety rather than too little.
We now have far more jobs. The industries that we have taken out of nationalisation were previously full of feather-bedded jobs and overmanning. They have now provided more than 1 million new, real jobs in a competitive market where people have a great prospect of increasing their job opportunities. Previously people were simply standing still because the state was keeping them in a job that did not really exist.
We now have lower taxes than previously because we do not have to bale out industries with the billions of pounds which we paid out in subsidies, not yearly but weekly. The change in attitude to those industries means that we, the British taxpayers, pay far less tax to central Government. We now have more shareholders in Britain than ever before.
§ Mrs. Gorman
We have less interference. We have the incentive of better management. The hon. Member for Bolsover intervenes from a sedentary position. He knows perfectly well that the great majority of shares in our denationalised industries are now held by pension funds in which everyone of us who has a private pension to look forward to when we retire is a shareholder.
§ Mrs. Gorman
I will not give way to the hon. Gentleman. I have been waiting all morning to make my speech.
The best thing that we now have in the denationalised industries has been mentioned a great deal this morning. It is choice. British Telecom has been referred to time and again, but there are many other examples. The benefits are absolutely undoubted. I doubt whether even the hon. Member for Leyton could deny those benefits. We must maintain the momentum of those choices that we have introduced.
We may have privatised 44 companies, but there are many more to go. We need to put the Post Office into the private sector and have more competition in the provision 570 of its services. We need to introduce new private companies to deliver letters. Why not? We know that such a service would work, so let us provide one.
Every spring, people queue up at the Passport Office and the state keeps them waiting three or four months for their passports. Honeymooners are now unable to holiday abroad because they are unable to receive a passport on time. We could do away with all those problems by privatisation.
We need a lot more privatisation in local government. We should not forget when we speak of the remnants of socialism in eastern Europe that they also exist in Liverpool. Toxteth is as good an example of the eastern European experience as anything that one could wish to see on the other side of what used to be called the iron curtain.
We need more privatisation in the prison service. The Government have begun that experiment and I am pleased. Given the problems that we have experienced with social workers, we could do with a bit of privatisation there and the introduction of more outside consultants. In education, schools are increasingly under the management of parents and boards of governors. For my money, that is as good as privatisation, because parents and governors will have a say on how things are run and the Government will not be dictating from the centre.
We need much more private money and private enterprise in housing. In my experience as a councillor in the inner city, housing in the state sector is almost universally disliked. People want public-sector housing to be transferred to the private sector. We should transfer responsibility for housing from the state sector. Whether that is achieved through private landlord management, as under the opt-out scheme offered to council estates, or however, we should have more private sector involvement.
Most of all, I put it to my hon. Friend the Financial Secretary to the Treasury that we should apply the doctrines and philosophy of privatisation to the money markets. If there are problems in this country—I do not deny that there are—they relate to money management and interest rates. Part of the reason for that is that we do not yet apply the denationalisation principle to the money markets. I suggest to the Government—I do not believe that all the errors have been made by the Opposition, although they are responsible for 99 per cent. of them—that we have yet to apply our vote-winning philosophy to that sector through the privatisation and denationalisation of banks, especially the central banks.
The countries with the greatest amount of privatisation and decentralisation and the most independent banking structure have the greatest stability in terms of inflation, the creation of jobs and interest rates. My only criticism of the Government is that they are not moving fast enough on denationalisation.
If the Labour party's performance today is a guide, heaven help this country if it embarks on a renationalisation programme. As my hon. Friend the Member for Surrey, North-West (Mr. Grylls) said, behind those on the Labour Benches would be the trade union paymasters. They would force the Labour party to return power to those who, in the past, showed themselves absolutely unworthy of it and totally indifferent to the real needs and desires of consumers.
§ Mr. Oppenheim
On a point of order, Mr. Deputy Speaker. You will be well aware that the hon. Member for Bolsover (Mr. Skinner) characteristically poses as a great parliamentarian and a diligent attender of debates. Is it therefore in order for me to point out that he has not been here for the bulk of the debate? He strolled in at about I o'clock after a long lie-in this morning and a cup of coffee in the Tea Room. Now he is seeking to speak. Do you think that that shows diligence, Mr. Deputy Speaker?
§ Mr. Deputy Speaker (Sir Paul Dean)
I hope that the hon. Member for Bolsover (Mr. Skinner), with his usual sense of fairness, will allow time for another contribution before the end of the debate.
§ Mr. Skinner
I was here as early as any other hon. Member. The right hon. Member for Chingford (Mr. Tebbit) made his speech and waltzed off, but I have not heard Tory Members complaining about his attitude. Several others have waltzed in, spoken and cleared off. Frankly, I see no difference between my having a chance to speak and certain Privy Councillors coming in, saying their bit and slinging their hook.
From the contributions of Conservative Members today, one might have the impression that Labour was at the bottom of the poll and the Tories at the top. This is a Government day, so the Tories could choose any subject for debate. Yet they chose a subject which the public at large could do without having discussed when there are scores of things that we ought to be discussing. Labour Members would be here in force had the Government not selected for debate a subject which, considering all the problems that the nation faces, is inconsequential in the extreme. Every Business Question Time the Leader of the House is asked by perhaps 20 Members on each side to try to find time to discuss certain items in the coming week, and he invariably replies, in effect, "Sorry, we don't have the time."
Anyone would imagine, after the words of praise that the Tories have heaped on the concept of privatisation, that it had led them to a glorious end. The Daily Telegraph, a Tory newspaper, having conducted a poll, reveals in this morning's issue that Labour is eight points ahead of the Tories, who have 33.5 per cent. support and that the Liberals have 21 per cent., the Liberals no doubt picking up votes in some strong Tory areas. Translated into general election results, Labour would have a majority of 80 or 90.4 As I say, one would imagine, listening to Tory Members, that privatisation had brought about a change in the political scene beneficial to them. After 12 years, the people are fed up with privatisation. Many of those who bought shares have sold them, so the 30 per cent. or so of shares in privatised companies that were held by private individuals is now down to about 20 per cent. The shares have gone abroad, into pension funds, or been bought by other institutions.
What has happened to the great capital-owning democracy we used to hear about? The Tories have privatised the relatively easy bits and now have to deal with the difficult parts. That was made clear when they finally succeeded in privatising the rain—the water 572 industry—when the public realised that the Tories had gone too far. The people did not like the idea of water being privatised, and they were right, as their quarterly or half-yearly bills are proving.
The executives of the water boards have been given large salary increases, but the workers who create the wealth of the nation have had a paltry rise. The public are therefore asking what privatisation has been about, and in view of the huge profits made by British Gas and British Telecom, people are bound to conclude that the privatisation exercise was not for the general public, but for a few people closely wedded to the Tory party.
§ Mr. Nicholas Brown
I am pleased to see the right hon. Member for Chingford (Mr. Tebbit) in his place in view of his references to British Telecom. British Telecom's annual report is published today. What does my hon. Friend think of the fact that its publication has been delayed until three o'clock so that its contents cannot form part of our debate? That is hardly a gesture of confidence.
§ Mr. Skinner
I imagine that my hon. Friend is absolutely right. The Government have been on the blower to one of their friends in British Telecom to say that they have asked for an embarrassing debate and have shot themselves in the foot and to ask for the report to be held back until the debate is finished. That is almost certainly true.
This debate has shown that the Government have run out of privatisation ideas, with a few exceptions. They have now reached the difficult bits. The hon. Member for Billericay (Mrs. Gorman), who has just left the Chamber —I do not make a fuss about that, but I say it because Tory Members have had a crack at me—favours privatising many more industries, including the national health service. Many Conservative Members want that, but the last thing that they want to do is to tell the public before a general election.
§ Mr. Oppenheim
The hon. Gentleman is obviously proud of the public sector. Is he proud of the fact that the public sector, in the form of Derbyshire county council, has given his brother a well-paid job as a minder for Japanese business men when his brother was sacked by Derbyshire county council, under an earlier regime, for fiddling work sheets? Is the hon. Gentleman proud of such a public sector?
§ Mr. Skinner
I am in favour of public bodies such as local authorities throughout the country. I expect all Tory Members to be in favour of local authorities, as they have not privatised them yet and I have not heard them talk about doing so. As for the Japanese plant, which the hon. Gentleman supports and I do not—[Interruption.] Did the hon. Member for Amber Valley (Mr. Oppenheim), who is trying to intervene from a sedentary position, support the Toyota plant coming to Derby?
§ Mr. Skinner
Right. I did not, and I have nothing to do with that. It is not my business who gets jobs there. The hon. Gentleman likes the Japanese and the fact that they have brought their plant to Derbyshire. That is his business and not a headache for me.
The debate has degenerated into an argument between Tory Members who want to privatise the health service, the social security benefits payment system and now, it 573 seems, local authorities as well. They do not intend to discuss that before the next general election. If they will not disclose their intentions, perhaps they will say why they have not yet privatised the armed forces. If providing financial incentives is the only way to make things work, why are the Tories not yet talking about privatising the Royal Air Force, the Army, the Navy and the police force? Are those privatisations on the next agenda? Are Tory Members not prepared to tell us?
Privatisation has been a failure. After 12 years of privatisation and monetarism, Britain's manufacturing economy has gone through the floor. In every region there are examples of manufacturing industry being closed every week. I should have thought that after 12 years of monetarism and privatisation far more people would be in work, but more than 2 million people are now out of work, according to the official figures—and it is more likely that if the women, and the half a million young lads and lasses on slave labour schemes were added to the register, the figure would be some 3 million. Here we are with a Government who have practised privatisation and monetarism for 12 years and, according to their figures there are 2 million people out of work—in fact, there are probably about 3 million people actually without a job —and the numbers are rising every week.
§ Mr. Skinner
We know that the Government are very handy at massaging the figures. We also know that included among the numbers to which the Minister referred are many people in part-time occupations. There are also plenty of Members of Parliament in part-time occupations—they have moonlighting jobs. While we are on that subject, there are 19 ex-Cabinet Ministers with 59 directorships between them and 250 Tory Members have consultancies, advisorships or directorships. After the next general election, when Labour has won, all the ex-Tory Members will be looking for jobs in all the private companies, and those still with a job will be looking for more directorships. Instead of rabbiting on, the Minister should go through the list of companies in the Confederation of British Industry to see what jobs he can get as a director when he loses his job after the next general election, because that is bound to follow as sure as night follows day.
The Minister might have a row with the right hon. Member for Chingford, who is one of the 19 ex-Cabinet Ministers holding 59 directorships between them. The right hon. Member probably has six already—the Minister should go and ask his right hon. Friend the Member for Chingford to give him one because he has been gobbling them up like the other ex-Cabinet Ministers who have taken on jobs.
§ Mr. Tebbit
It would probably be possible for my hon. Friend the Minister to get a job with Derbyshire county council if he wanted another job at some time. As the hon. Member for Bolsover (Mr. Skinner) knows, there is a printing department in Derbyshire county council which is 574 sometimes grossly overloaded with work. Although it costs the chargepayers of Derbyshire much money, the council has to contract out work from its printing department to the private sector, which costs £50,000 or £100,000 or so. Would not the hon. Member for Bolsover agree that that is a damn fool idea?
§ Mr. Skinner
The right hon. Member for Chingford knows how to print money because he was the Minister responsible for the privatisation of British Telecom. He then became an ex-Cabinet Minister, and one of his first jobs was a non-executive directorship with British Telecom. As a result, he knows how to print money. He is the last person who should talk about Derbyshire county council.
§ Mr. Oppenheim
On a point of order, Mr. Deputy Speaker. Is it in order to say that the hon. Member for Bolsover (Mr. Skinner) probably wishes he was out collecting money for Councillor Bookbinder's legal fund rather than being in the House?
§ Mr. Skinner
The right hon. Member for Chingford knows how to print money and is the last person who should talk about anyone else, including those at Derbyshire county council. If the auditor had been allowed to give evidence in the libel case in which the right hon. Gentleman has just participated, there is just a possibility—I put it no higher than that—that he might have lost and the other fellow might have won.
§ Mr. Tebbit
I should have liked the district auditor to give evidence—I should have liked Councillor Bookbinder to give evidence, but unfortunately he would not do so. For the very same reason, there is a junior member of the Labour party's Front Bench team here today. The party's leadership is afraid to put in a senior member, but it can always back down from what a junior member says. The hon. Member for Newcastle upon Tyne, East (Mr. Brown) has been good under cross-examination—better than Councillor Bookbinder would have been, I expect.
The hon. Member for Bolsover was right—I do know a thing or two about printing money. At British Telecom, we have effectively been doing so for our customers for the past four years—they have enjoyed reductions in the cost of their telephone bills every year since the company was denationalised. What is more, they have had better value for money and better service. The list is endless. Improvements in the service—
§ Mr. Skinner
I have one thing to say to the right hon. Gentleman, who is a non-executive director of British Telecom. He is earning a big fat fee. BT's profits have gone through the roof. What has he been doing lately while British Telecom's executives and bosses have been awarding themselves massive pay rises? Why has he not been doing a job in the public interest? Why has he not been telling the people around the boardroom table—
§ Mr. Skinner
Not a bad finish.
It being half-past Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.