§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Kirkhope.]
7.41 pm§ Mr. Clive Betts (Sheffield, Attercliffe)I want to draw the attention of the House to certain events in my constituency on the Tinsley site and to ask questions of the Minister about the role played by RJB (Mining) and other companies with which its chairman, Richard Budge, has been associated. My questions concern the opencasting of the Tinsley site; the failure to provide an airport there; the role played by Sheffield development corporation, British Coal and its officials, and Ministers; and whether Richard Budge is a fit and proper person to run British Coal operations.
I shall not delve into the history of efforts to provide an airport for Sheffield, which is the largest city in Europe not to have an airport. During the 1980s, another survey of potential sites was made. The site at the top of the list, in terms of commercial viability and Civil Aviation Authority air safety, was Tinsley. Interest in the city, from a council and business perspective, was also being developed.
In 1987, British Coal changed that scenario by indicating that it wanted to opencast at Tinsley. Contrary to statements made from time to time, there has from the beginning been a close link between the opencasting at the site and the airport development, with the gains from the former helping to fund the latter being a key to subsequent events. The first sign of British Coal's wish to opencast was a press release, which stated that opencasting on the site would help to finance the proposed Sheffield airport and would not delay the city's wish to have the short take-off and landing airport in operation by 1991. We are now in 1995, and there is not an aeroplane in sight, let alone a runway. Nevertheless, that press release confirms the early link between the opencasting site and the provision of an airport.
I was not against opencasting on the Tinsley site. There are differences of view among Opposition Members about opencasting, and I oppose it when it is proposed for green-field sites and risks destroying the environment. The Tinsley site was extremely polluted, with the cost of ridding it of chemicals and other pollutants from the former steel works estimated at £20 million. It was badly despoiled but an ideal location, being next to the Ml in Sheffield's industrial corridor. It was a prime site for development.
I declare an interest as a Member of Parliament sponsored by the Transport and General Workers Union, which has members employed in the opencast industry. The site would create jobs, but there were local concerns about dust and pollution. The city council, which was then the planning authority, took steps as part of the planning agreement to ensure controls and constraints on times of working. We were also conscious of the fact that, if we turned down British Coal's proposals, its application for opencasting might have been granted on appeal, yielding none of the potential benefits for the locality.
In general, I support the provision of an airport on the Tinsley site. Again, community concerns about noise and flying hours must be taken into account. I am particularly aware of Phillimore school in my constituency, because recently there has been speculation that a requirement 224 fully to insulate the school from aircraft noise might be relaxed. I am not in favour of any such relaxation, but want the original proposals for proper insulation to be implemented.
There was full consultation and opinion surveys. I attended public meetings with colleagues and representatives of British Coal Opencast, and a community liaison group was established. By and large, the opencasting operations did not have a massive impact on the community. However, given the profits made from that site, I am concerned about constituents such as Mrs. Lilley, a pensioner. Dust from the site made it necessary to have cleaned her husband's headstone in the local cemetery. That cost her £100, which she could ill afford— and that bill still has not been paid by Richard Budge, his company or anybody else connected with the opencast operations. That sort of meanness is typical of the way in which the city of Sheffield has been ripped off.
There is real anger that British Coal got coal out of the site and Richard Budge got money out of it, but Sheffield still does not have an airport. Many supposed community benefits have not happened.
At the end of the consultation process in 1989, an initial planning agreement was drawn up, which clearly linked the opencast arrangements and the airport. From the beginning, Tony Palmer, British Coal Opencast's regional director, attended meetings that linked the two. He was associated with the press release that I mentioned. I found him to be a fair and open person with whom to do business. I put that on record because his consultation was very thorough. Sheffield city council was still the planning authority and granted the initial permission, and British Coal then placed a contract with A. F. Budge through its subsidiary, A. F. Budge (Mining), to opencast the site.
There were benefits for the community in return. A £250,000 community fund was established and many local groups have been involved in developing projects. A gipsy site was relocated and given improved facilities, which was welcome and important. Five holes of a local golf course were relocated and a new club house provided. There was also the access road to the edge of the site, to be built at a cost of £1.7 million. That, too, would benefit its future development.
There was also an agreement that once the site had been used for opencast mining, the ground would be compacted in such a way as to be suitable for laying a runway. Has the ground been thus compacted? People who worked on the site claim that the job was never done properly—the earth was just tipped back on to the site, and if anyone tried to lay a runway on it, he would end up with the airport equivalent of a traffic calming measure. Bumps would appear as the ground settled.
On 14 July 1989 a contract was agreed between British Coal Opencast and A. F. Budge (Mining) for 800,000 tonnes of coal to be extracted from the site. The planning gains were to be the other side of the coin; but clearly British Coal and A. F. Budge (Mining) were to make large profits from the site—there is no dispute about that. Indeed, just today I received from a Minister at the Department of the Environment a letter accepting the fact that all those community gains were specifically lodged in the original planning agreement, and formed part of it.
Immediately the initial planning agreement was drawn up, planning responsibility transferred from Sheffield city council to Sheffield development corporation. In the 225 recent "Panorama" programme, which included a great deal of excellent information, one of the issues that was not absolutely clear was the fact that, as events unfolded, the responsibility lay not with Sheffield city council but with Sheffield development corporation.
It is clear from the whole affair that the only gains to the community from the entire process were those stipulated in the planning agreement signed by Sheffield city council, which got the matter right and achieved something for the local community. The rest of the problems appeared once the council had left the scene—I shall return to some of the advice given by councillors in due course.
The development corporation was set up against the advice of the city council. We, like the chamber of commerce, opposed it in principle—the latter believed that it could work with us. Sheffield city council had entered into partnerships and joint working arrangements with the private sector in the mid-1980s, so nothing could be further from the truth than the view that Labour councils cannot sit down and talk to business, or that we are against development and against creating new industries and jobs.
The Government's view, however, was that the regeneration of derelict areas, and in particular of an area of Sheffield which had lost 40,000 jobs following the collapse of the steel and engineering industries, was a matter for development corporations. David Trippier, the Minister at the time, came to see me when I was leader of the council and asked what our response would be to a Sheffield development corporation with £50 million to spend.
I said that I thought that the city council, in conjunction with Government and private industry, working on a tripartite basis, would spend the money better and with more democratic accountability. I added that, if the Government were making it a take-it-or-leave-it offer, we would not wish away a development corporation with £50 million, which could benefit local people. Certainly, we opposed it in principle, but once it was established we would sit down and work with it and try to make it as big a success as possible. That was a difficult decision for the council, but none of what follows can be laid at the door of the city council's refusing to work with the development corporation.
We entered into a unique agreement with the corporation, trying to ensure that as much democratic accountability and openness as possible were brought to bear on the proceedings. We sat down with it to work for the benefit of the people of Sheffield. In all that follows, however, it is important to bear it in mind that this was ultimately a non-accountable body—except perhaps to Ministers, who must surely be responsible for what development corporations do, because no one else can be. Supposedly, furthermore, the body was set up not only because local Labour councillors would not work with business but because business acumen was needed to reach the right development decisions on behalf of local people. One can only smile at that in the light of what ensued.
In May 1990 Sheffield development corporation entered into a new agreement with A. F. Budge for the construction and operation of an airport on the site at Tinsley. It was going to be cross-subsidised by the development of adjacent land, by the company, for a business park. In some ways, that seemed a sensible 226 arrangement. But then, some time later, on 12 March 1991, came an extension to the opencast contract belonging to British Coal and lodged with AFB (Mining). That extension altered the tonnage to be taken from the site, from the 800,000 tonnes that the opencast executive had agreed initially with Sheffield city council, to 1.1 million tonnes.
I have seen communications from Ministers stating that there was no link between the opencast operation and the provision of infrastructure for, and the construction of, the airport. Nevertheless, from the very beginning in 1989, the initial planning agreement linked the two. Now Ministers claim that the extension of the agreement to mine opencast coal on the site was not linked with the further agreement to allow AFB (Mining) to develop the site for an airport. That is a key point in the whole discussion.
I have a letter, dated 15 May, from the office of the chairman of the British Coal Corporation, signed by Mr. Bryn Morris, corporate affairs director, in which he states:
In May 1990, Sheffield Development Corporation entered into an agreement with A. F. Budge (Mining) Ltd for the construction and operation of the airport and the development of adjacent land".So far, we do not disagree.Subsequently, on 12 March 1991 the opencast contract between British Coal and A. F. Budge (Mining) Ltd was altered, with the tonnage to be extracted from the site increased. This was as a consequence of the agreement between A. F. Budge (Mining) Ltd and the SDC with regard to the airport construction, which extended the time available for the operation of the opencast site.So British Coal believes that the agreement to build the infrastructure for the airport and the extension of the opencast contract were linked—that, at any rate, is how its corporate affairs director understands the situation.Ultimately, not the original 800,000 tonnes, nor even the extra 300,000 tonnes, were taken from the site: 1.5 million tonnes of coal were extracted. How was the extraction of the coal assessed? How did 400,000 tonnes more appear, as if by magic, right at the end of the scheme? Who did the calculations; who benefited from them; and what did the community get for the extra coal extracted? It appeared in no agreement, but it just so happens that 1.5 million tonnes was the amount initially requested by British Coal's opencast division back in 1987—a request that Sheffield city council refused to accept in the planning agreement of 1989.
In my mind, and in the minds of local people and of British Coal's opencast division, the airport agreement and the extension of the opencasting agreement were certainly linked, under the same parent company—A. F. Budge (Mining). Will the Minister publish all details of the agreements, so that if there is any dispute about them, the public and Members of the House can see them and come to their own conclusions about the truth of the matter?
On 15 March 1991, three days after the extension of the opencast agreement, another peculiar event took place. The opencast contractor, A. F. Budge (Mining), agreed to take over responsibility for any defects resulting from the improper compacting of the site within five years of the completion of that compacting. In return for taking over and guaranteeing to put right any defects—I should have thought that the contractor should be responsible for defects in any case—British Coal Opencast paid to A. F. Budge (Mining) £1 million. A private contractor 227 received £1 million of public money to put right the defects that resulted from its own failure to compact the site properly.
That of itself begs quite a few questions. Given that AFB (Mining) and its subsidiaries have now gone out of business, is British Coal Opencast still responsible for putting right defects on the site? Who is responsible? Having paid £1 million, is British Coal now left with the responsibility for putting right any defects of compaction? In other words, did it hand over £1 million to a private company for no return, or did it transfer those responsibilities in the deal done with RJB (Mining) as part of its takeover of British Coal's responsibilities in Britain? It would be interesting to hear the Minister's response.
What checks were carried out before the sell-off of all the operations on the viability of the work carried out by RJB (Mining) on the site? Was it compacted properly? I have asked the question and I shall repeat it because it is so important. When British Coal gave £1 million to AFB (Mining) in March 1991 for a guarantee that defects would be put right five years after work on compacting finished, just a year or more before the company became insolvent, what checks did British Coal Opencast make on the viability of the company? It is incredible that a public body should have accepted a guarantee from a private company stretching more than five years ahead, yet within 18 months that private company had gone bankrupt. Were any checks on its financial viability carried out?
In March 1992, the A. F. Budge group was restructured and Richard Budge, through his new company, RJB (Mining), bought out AFB (Mining)'s interests. The opencast contract at Tinsley was novated to that new company, but not the airport agreement. That is the crux of the issue. Why was the airport agreement not transferred to the new company when, clearly, all the way along the key issue was that the profits from the opencasting operation would help fund the airport project? Going back to the initial proposals in 1987, there is no doubt about that.
What is in some ways worse about the issue is that the agreement to guarantee any defects of compacting once they had become apparent after the opencasting had finished was not novated along with the rest of the opencast contract to RJB (Mining); it was kept in the A. F. Budge group and eventually novated to Sheffield airport, which was a subsidiary of the AFB group. Therefore, the responsibilities for carrying out the opencasting went to RJB (Mining), with all the profits, but the responsibility for putting the defects right, if there were any at the end of the contract, were left with a different company, which went into liquidation 18 months later.
Why was that allowed to happen? Given that Government approval must have been necessary for the novation of those two contracts to different companies, why was a split allowed at the time? Already, 1 million tonnes of coal had been taken out and half a million tonnes were to be taken out in the next year.
We know from asking questions that the airport arrangements were approved by Ministers. It is also clear from questions that I have asked that, although Ministers say that they did not approve the split of responsibilities between the two companies, they were clearly aware of 228 it. That split took place in March 1992. An answer that I received today from the Under-Secretary of State for the Environment states:
My Department was notified in December 1991 of the proposed company restructuring which would separate the mining and airport construction interest within the A. F. Budge group. No approval was required from my Department.Why not? The Department had approved the initial airport contracts. Therefore, it must have had interest in whether they would go ahead. Yet it allowed that restructuring to take place and the split of responsibilities, including the novating of the compacting defects arrangement to a different company, apparently without any concern from Ministers that something very wrong was about to happen.Those are all the very arrangements that led to the concerns of and investigations by Coopers and Lybrand into the role of the A. F. Budge directors, including Richard Budge himself, which led to the investigations by the insolvency unit and by the official receiver. Yet, despite the fact that those arrangements subsequently led to all those investigations, at the time Ministers were not concerned. They did not say that it was a matter on which they must take a view because it was so serious. They simply got the information and apparently did nothing with it.
That leads me to a range of questions that have to be answered by Ministers. In the end, we are talking about the spending of public money with no return. Why were the responsibilities allowed to be split in the way that they were—responsibility for the airport and its cost in one company and the benefits of and the profit from opencasting in another company? At that time, could not the problems of the A. F. Budge group have been foreseen? A company that went into liquidation within 18 months would not have given the impression at the time that it was financially sound. What financial checks were done on the companies in question by civil servants? What advice did Ministers get? Why were no cross-guarantees required? Were they even requested from the Budge companies so that one arrangement could support the other in the event of a company failure? What were the contract details? Will Ministers publish them?
At the end of the day, who made the decisions? Was it British Coal Opencast or the Sheffield development corporation? Ministers clearly knew about the arrangements. What advice did they give to the development corporation? If they did not give approval, did they give any advice throughout the whole of this? If they did not give approval, why not? Why did they not take the matter seriously?
What in all this was the role of Richard Budge himself? He was a director of A. F. Budge at the time. He had a 35 per cent. personal stake in the Sheffield airport company. It all looks too convenient, does it not? Somehow he manages to buy out the profitable parts of the business, with all the profits from opencasting, with an extra 300,000 tonnes agreed, which turns into an extra 700,000 tonnes without any particular approval being given, and with the costs of any defect arrangements being transferred to another company, so he is not responsible for them, yet all the responsibilities for providing the airport are left with another company.
Throughout all this, Sheffield city council was not involved because, as I said, from 1989 it ceased to be the planning authority. However, I have seen a brief that Sheffield city council's treasurer's department gave to 229 counsel at the time on the issue, which asks many questions about what was going on at Tinsley, but I simply cannot believe that its staff were the only people with their eyes open asking questions about what was happening.
The brief asks who the opencast mining contract was with—British Coal or R. J. Budge (Mining) Ltd.—because it seems rather confused throughout. What were the main financial provisions of the contract? They were never revealed. Had there been any significant changes in the terms of the original contract? Clearly there had, but it is not clear what they were. Had there been any changes to the parties to the contract or any of the sureties for the performance of the contract? What the sureties were and whether there were any is not clear. Had the contract been satisfactorily performed, operationally and financially? When would it be completed? In what state would the site be left on completion of the contract? That was an important question because of the doubts over compaction.
On the airport contract, the brief asked whether it was with A. F. Budge (Mining) Ltd., now renamed R. J. Budge (Mining) Ltd., with A. F. Budge Ltd. as surety for performance. What were the main financial provisions of the contract? Had there been any significant changes to the terms of the original contract? Why was the contract transferred to Sheffield Airports Ltd. when the R. J. Budge group split off from the A. F. Budge group? Why was the contract not left with RJB (Mining), perhaps retaining the A. F. Budge Ltd. guarantee and obtaining a guarantee from R. J. Budge's new holding company, RJB (Mining) plc? As Sheffield Airports Ltd. was only 65 per cent. owned by A. F. Budge Ltd., was the remaining 35 per cent. owned by Mr. R. J. Budge personally? Were any sureties or guarantees obtained from Mr. R. J. Budge?
How far, if at all, has the contract been fulfilled to date, operationally, financially and so forth? How was the Budge group selected to undertake the opencast mining and the airport contracts? What inquiries were made about the financial status of the Budge group before the contracts were entered into? How were the opencast mining contract and the airport contract linked? Did they stand alone commercially, or were the profits of the opencast mining expected to be ploughed back into the airport construction? Why was it decided to allow the contracts to be split between the two groups of companies?
If the Minister does not take shorthand, I shall be happy to give him that load of questions later; but I do not think that I should have to ask them tonight, or that officers in Sheffield city council should have to ask them. Civil servants should have been briefing Ministers, and Ministers should have considered them and then given advice to Sheffield development corporation. As a result of that advice, responsibility for the provision of the airport and profits from opencasting should not have been split as they were.
§ Mr. Dennis Skinner (Bolsover)Certain factors worsen the position. For instance—in the knowledge that they had not asked all the questions about the crook R. J. Budge, or seemingly had not—the same Government, faced with a bid from the same R. J. Budge to take over all the English pits and 20 other opencast sites, then allowed the man to be a serious bidder. There was no one else in the field, because he had bid for all three regions. 230 The Government allowed Budge to take the sites for £900 million-odd. Then, when he had them—with, as I have said, no other serious bidder in the field—this negligent Government knocked another £100 million of taxpayers' money off the original successful bid to allow their Tory friend the contract. It is a sorry saga, which started with the Sheffield airport site and the opencast sites and has ended with the success of a man who is likely to pour large sums into Tory party coffers for the next general election while telling miners that they must have a wage freeze.
§ Mr. BettsAs my hon. Friend has said, the whole matter prompts questions about the judgment of Ministers and the propriety of the actions of Mr. Richard Budge. Is he really a fit and proper person to control the future of British mining?
The matter did not end there, however. Not deterred by the fact that the responsibility for Sheffield airport had passed from him, Richard Budge saw the potential for such an airport—provided he did not have to fund it with the profits of his opencast operation.
In January 1993, lo and behold, there was a bid for the open partnership fund, for a Sheffield aerocentre project. That bid came from none other than a company headed by Mr. Richard Budge, whose proposals required £2 million of Government funds and another £1 million from Sheffield development corporation—as well as International Development Association grants of more than £2 million, which have subsequently been agreed.
Having had the money from the site and having separated the profit from that generated by the airport project through RJB (Mining), Mr. Budge then saw the possibility of developing the airport project and the business site associated with it at public expense. Again, questions must be asked about how that could be allowed to happen so soon. The Government eventually turned down the airport bid, but IDA grants to the tune of £2 million have been allocated.
A new company called Glenlivet has now become involved in the Sheffield airport project. As far as I am aware, it is not owned by Richard Budge or connected with him in any way—apart from the fact that the man in charge of the operation, Mr. Mike Shields, just happens to be the person who was in charge of Richard Budge's proposal to build the airport a few months earlier. I am not trying to persuade Ministers that Sheffield airport is not a good idea worthy of Government support. What I am questioning is whether the degree of Government support that will now be necessary is greater than it would have been, because some of the profits from the opencast operation should have gone into the airport rather than Richard Budge's pocket.
Indeed, Ministers might now spell out to us the extra cost to public funds of developing the airport—a cost that would not have been necessary had the original agreements been kept in one company, rather than being split. The responsibility for spending that money remains somewhere between Ministers, Sheffield development corporation and British Coal; Ministers might well expand on where they think it lies.
The role of Richard Budge throughout the affair prompts many questions. First, when the airport and opencast responsibilities were split between the two companies, did not Richard Budge—as a director of A. F. Budge—know the state of the company and its various 231 offshoots? As a director, was he not aware that the company was in financial difficulties? Should not Ministers ask those questions? Did Richard Budge not know that the airport deal was worth funding? Did he not have plans to retain an interest in it? Did he simply not want the responsibility of putting in his own money, preferring an opportunity to come back for more Government money rather than using the opencast profits?
Did not Richard Budge also cleverly manipulate the situation so that he would not end up with liability for the compaction defects on the site, but—although he was a contractor on the site—the liability would lie with Sheffield Airport Ltd., a subsidiary of the A. F. Budge group, which went into liquidation? Did Richard Budge reach any understanding with people on the site at Tinsley that the ground would not be compacted properly, so that even if money is now given for an airport more will have to be spent on putting right a site that should have been put right as one of the consequences of the original planning agreement? That certainly needs investigation; perhaps, if the Minister cannot give an answer tonight, he will commit the Government to carrying out such an investigation and reporting back.
How far was all this sorry mess taken into account in the determination of whether Richard Budge was a fit and proper person to take over British Coal operations—and, indeed, whether he was a fit and proper person to be a director of any public company? What was the role of Ministers, who clearly knew all about the actions at Tinsley, in deciding the fate of Richard Budge?
Was not their ultimate decision not to take action against him taken against the advice of Coopers and Lybrand, against the advice of the consultancy unit in the Department of Trade and Industry and against the advice of the official receiver? Perhaps Ministers will spell out who advised them of what at various stages. My hon. Friend the Member for Sherwood (Mr. Tipping)—who will probably want to speak later—has written a letter, a copy of which I have seen, asking Ministers to give the precise timetable; it will be interesting when Ministers respond to that.
Is it true that officials involved in the privatisation of British Coal attended meetings of officials in the insolvency unit while discussion of Richard Budge's future was taking place? Did Ministers themselves attend those meetings before final decisions about Richard Budge's future were made? Why was Richard Budge treated differently from the other directors of A. F. Budge, against whom action is apparently being taken? Richard Budge was a director of the same company; apparently, he took illegal loans. There are still question marks over those issues. He was responsible for the restructuring of the arrangements at Tinsley, which allowed him to walk away from his responsibilities to Sheffield airport and the defects in the compacting agreement.
Why did not Ministers tell the House about all those matters, and the various investigations that were taking place, when they presented their privatisation proposals to the House? Why did they leave themselves no alternative—no other companies in the frame that could be considered for the buy-out of British Coal operations? Did they not effectively put themselves in a completely 232 unviable position? If they had disqualified Richard Budge, they would have had no alternative, and the privatisation proposals would have fallen flat on their face.
I am sorry to go on for so long, but these extremely complicated issues need many answers by Ministers. A few matters are crystal clear. The opencasting and the airport were linked from 1987 when British Coal made its first proposals, and they were clearly linked in the first planning agreement in 1989. The council planning agreement at that time contained an arrangement whereby planning gains for the community took various forms and were linked to the start of an airport. That agreement was extended. It was agreed to take an extra amount of coal from the site and extra work was to be carried out on the airport infrastructure.
At some stage, those responsibilities were split, airport responsibilities remaining with the A. F. Budge group and RJB (Mining) taking on board the profitable operations of opencast mining on the site. There is, of course, no link between those two sets of responsibilities. After the split was carried out, no guarantees or sureties were apparently entered into or even asked for by SDC or by Ministers.
It is also clear that 1.5 million tonnes of coal were extracted from the site—nearly twice the amount allowed in the initial planning agreement. It was 400,000 tonnes more than even the extended agreement that was reached subsequently, and all that extra profit went into the pockets probably of British Coal but also of Richard Budge and his company and there was no return to the community.
The precise nature of the unpublished agreements is unclear. Who knew what and who made the decisions on all these matters as between SDC, British Coal and Ministers? What information was sought and what prior investigations were carried out before contracts were entered into with A. F. Budge and RJB (Mining) or any of the other companies involved? Were there any contingency arrangements? Why were guarantees not required and what will be the extra cost to public funds resulting from the collapse of A. F Budge and the fact that the airport will now have to receive more funding from the public purse?
Why has secrecy surrounded all those matters and why is public money being spent and the public interest being involved without proper openness? Was the ground finally properly compacted, and why was the defects agreement separated from the responsibility for opencasting and novated to Sheffield airport instead of RJB (Mining)? Why were the extra 400,000 tonnes of coal extracted and what benefit did that give to the community? What was the role of Richard Budge in all this? How much profit did he make? How many responsibilities did he leave behind that should properly have been paid for out of that profit? What did he know about the whole arrangement throughout?
It is just too convenient for Richard Budge somehow to make an arrangement under which he walks away with all the money while responsibilities for community provision are left behind by another company of which he is a director and which just happens to go into liquidation a few months later. In view of all that, there must be questions as to whether he is a fit and proper person to run the coal industry, bearing in mind all the other questions that have been raised about his role as a director of A. F. Budge at the time.
233 The history of the matter is a mixture of administrative incompetence, financial ineptitude, negligence and perhaps naivety and lack of accountability. It has all the appearance of sharp practice by the only individual who seemed to know what he was doing in his own interests. That person is Richard Budge, the chairman of RJB (Mining). As the Government, British Coal and SDC appeared to squander public resources or watch while they were being squandered, A. F. Budge collapsed, but Richard Budge walked away with the profits, not from the tonnage as originally agreed but from 1.5 million tones, thereby giving himself an even stronger financial base from which to mount his bid to run British Coal.
In my view and the view of my constituents that has left deep unease and concern about the whole situation but especially about Richard Budge and his company. That unease and concern will be addressed only by a full public inquiry into this whole affair. It has to be brought out into the open and must be the subject of full public scrutiny.
§ Mr. Deputy Speaker (Mr. Geoffrey Lofthouse)Order. I understand that the hon. Member for Wallsend (Mr. Byers) has sought the agreement of the hon. Member for Sheffield, Attercliffe (Mr. Betts) and the Minister to take part in the debate. Any other hon. Member hoping to catch my eye must do likewise.
§ Mr. Stephen Byers (Wallsend)I congratulate my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) on securing this debate. He has understandably concentrated on the effect of RJB (Mining) on the Tinsley site in Sheffield and also raised some wider issues about the role of Richard Budge and the part that RJB (Mining) will play now that it has control of what remains of the English coalfield. I want to address those wider issues.
The House will be aware that on 12 October 1994 RJB (Mining) was named by the Government as the preferred bidder for the remains of the English coalfield. As my hon. Friend the Member for Attercliffe said, the chairman of that company is Mr. Richard Budge. Based on information in my possession, I have to say that there must be serious doubts about whether it was appropriate for the Government, in view of what they knew about the conduct of Richard Budge as a former director of A. F. Budge, to name his company as the preferred bidder.
I understand that Richard Budge was named by Coopers and Lybrand in its report and also in the first report by the official receiver. As I shall later show, there were two reports by the official receiver. The first report named Richard Budge as a person whose conduct was such that an application should be made to the court for him to be disqualified from holding a future directorship in any company. These are serious allegations, which I shall seek to support in my contribution.
We need to be aware that at the time of these events two issues were effectively running in parallel. One was the investigation into the collapse of the A. F. Budge group of companies. In addition, the Government's political imperative was to secure the privatisation of the coal industry. In December 1992, administrative receivers were appointed to the A. F. Budge group of companies and Coopers and Lybrand was appointed to report to the 234 insolvency service, which is part of the Department of Trade and Industry. It was to report on the events surrounding the collapse of A. F. Budge and in particular on the liabilities, responsibilities and conduct of individual directors of the A. F. Budge group.
The Coopers and Lybrand report was submitted to the insolvency service on 28 September 1993. I understand that that report highlights the conduct of, in particular, three former directors of A. F. Budge and questions their fitness to be directors. One of the three named was Mr. Richard Budge. The insolvency service took time to consider the Coopers and Lybrand report and the official receiver reported on 25 July 1994.
I understand that on that date the official receiver recommended that a report be made to the court under the Company Directors Disqualification Act 1986 applying for three former directors of A. F. Budge, one of whom was Mr. Richard Budge, to be disqualified from holding office as directors of any company. That report was not acted upon. Word had begun to circulate in the Department of Trade and Industry and to set alarm bells ringing in the special unit which had been set up to oversee the privatisation of the coal industry. Everything was put on hold until a decision was taken about who the preferred bidder for the coal industry was to be.
Tenders were submitted in September 1994 and, as we know, on 12 October 1994 RJB (Mining) was named as the preferred bidder for the English coalfield. It is of particular interest that no fallback position was announced at the time. It was agreed that RJB (Mining) should be the one and only company to form the substantive part of the preferred bidder. The Government, however, had a problem: what should they do with the official receiver's report of 25 July?
The official receiver was asked to reconsider the position. On 11 November, 14 November and 15 November 1994, he interviewed the three directors named in his original report for disqualification, no doubt to try to find out whether new evidence existed of which he had not been aware before his original report. Mr. Richard Budge was interviewed on the first of those dates. Following those interviews, advice was given by the official receiver to Ministers. On 21 November 1994, the decision was taken to bring disqualification proceedings against just two of those interviewed, and Mr. Richard Budge escaped liability and responsibility. Following that recommendation, on 7 December 1994 a report against the remaining two directors was made to a court for their disqualification as company directors. With one bound, Mr. Richard Budge was free.
Given the Government's commitments to the privatisation of the coal industry, Labour Members will understand why it was so important that some quick solution was found to get Mr. Richard Budge off the hook. In addition to the political imperative, however, he clearly had friends in high places. On no less than seven separate occasions, he met the Minister for Industry and Energy, who is responsible for coal privatisation, to discuss matters relating to that privatisation. Those meetings were all held at important and strategic times: 17 June 1992, 29 June 1992, 1 March 1993, 26 March 1993, 15 April 1993, 15 June 1993 and 7 July 1994. He had access to a Minister that even many Labour Members do not have.
Of course, Mr. Budge has other friends in high places. I am told that people attending Doncaster races on 10 September 1993—I do not know whether you were there, 235 Mr. Deputy Speaker—were surprised to see a helicopter emblazoned with the RJB (Mining) logo land in the centre of the race track. Mr. Richard Budge got out, which was not unexpected, given that it was his helicopter, but who was he accompanied by? He was with Lord Wakeham, at that time Leader of the House of Lords and a member of the Cabinet, who was out for a day at the races.
§ Mr. Paddy Tipping (Sherwood)Does my hon. Friend recall that the noble Lord was called in during the coal crisis, when the Government wanted to close pits, to sort out the problem, and that he chaired a Cabinet committee to resolve the issue? Was he not therefore a man with real influence?
§ Mr. ByersMy hon. Friend makes an important point. Hon. Members should never forget that it was Lord Wakeham who, when he was a Member of this House and Minister with responsibility for energy, awarded a contract to Rothschild to advise the Government on coal industry privatisation. I shall not discuss the fact that he is now a Rothschild director as that would not be appropriate for this debate.
Clearly, therefore, Mr. Richard Budge is a man with friends in high places. He knows how to operate the system on behalf of RJB (Mining). I was interested to learn that in 1993 he took over Clipstone colliery in Nottinghamshire, that he made a deal, that he effectively reopened it after it had been closed for a fairly short time, and that, as the new owner, he entered into an arrangement with North Nottinghamshire training and enterprise council whereby for every miner he re-employed he would receive a grant of £1,000 for retraining purposes.
In total, in 1993–94, he obtained £150,000 for RJB (Mining) from that TEC. What is of particular interest is that the House of Commons Library informs me that in 1993–94, the same year in which Mr. Budge's company received £150,000 from North Nottinghamshire TEC, he was a director of that TEC.
Many questions need to be answered. The Minister will be pleased to learn that I have just two to add to the list submitted by my hon. Friend the Member for Attercliffe. Will the Minister now publish the Coopers and Lybrand report into the conduct of the former directors of A. F. Budge? Secondly, will he publish the official receiver's initial report of 25 July 1994? Refusal to do so will lead all reasonable people to believe that there is a cover-up and that the Government have something to hide.
All the available information points to this being a shameful and shoddy affair. The issue will not go away. Labour Members will continue to pursue it until we receive some straight answers to those important questions.
§ Mr. Paddy Tipping (Sherwood)I congratulate my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) on securing the debate. I should like to put on the record my thanks to the Minister for allowing me to take part and for his helpful attitude to questions since he became a Minister at the Department of Trade and Industry only a few weeks ago. His openness contrasts with the difficulties that we have had in obtaining information.
236 I wish the people who have bought the newly privatised industry no harm. I regret the passing of the coal industry into the private sector, but I wish the new coal owners well because they have a monstrous task before them. You, Mr. Deputy Speaker, will recall perhaps better than anyone that contracts with the generators run until 1998. Some of us are have real concerns about what the coal industry faces after that. In view of that, I wish the people who own the industry, and more particularly the people who work in it, well and a good future.
I want to raise issues that some of my colleagues have not dealt with and to extend the debate. I remind the Minister that on 12 October 1994 Mr. Richard Budge was named as the preferred bidder in a blaze of glory at the Tory party conference. We also know that in November 1994 he made a bid of £914 million for the three English coal regions. We know that because I have a copy of the presentation that he took round the City.
At the end of November 1994 I wrote to the Chairman of the Public Accounts Committee to say that I was extremely concerned about the bid. It was far in excess of anybody else's bid and I suspected that there would be negotiations to knock the bid down. A few days later I was proved right because the deal concluded for the sale of the coal industry in England to Mr. Budge was £815 million. My hon. Friend the Member for Bolsover (Mr. Skinner) has already asked the relevant question, but I want to reinforce it: how is it that, in only a few days, the value of the coal industry fell by £99 million? Clear questions need to be asked and clear answers need to be given.
That is not the end of the matter. We know that the deal that Mr. Budge did with the Department of Trade and Industry through all the brokers was to buy the industry, as miners in Nottinghamshire say, on the never-never. All the other bidders were told that they had to pay cash up front. The deal that was eventually concluded allowed RJB (Mining) to buy the industry over three years with deferred payments. So, as well as the £99 million loss, I calculate that the deferred payments over three years will result in a further loss of £116 million.
Some of my hon. Friends have already pointed out that the preferred bidder was named in October. I find it staggering that the other bidders—a wide range of other people could have bought the English coal industry—were told between October and December to go away and not to keep their financing in place. So, from a very early day, the Government were committed to Mr. Budge. Part of the problem now is that the Government walked down the gangplank with Mr. Budge and, when the going got tough and the sea got stormy, they had no alternative but to jump into the water with him.
These are significant issues and I am delighted that the Public Accounts Committee is looking at these matters. I hope that things will be clarified when the Public Accounts Committee receives the report. My only sadness is that it will be the autumn before we know about this. Many of us were raising concerns about the proposed sale in the autumn of last year and it is bizarre that we can examine the matter only in retrospect. That is one of the reasons why I welcome the debate. I hope that the Minister will be open and honest about the dealings and the relationships with RJB (Mining).
There are other issues that concern me. I have looked carefully at the documents that RJB (Mining) has produced over the years. I was interested to see that in its 237 "Pathfinder" prospectus, which was published in November 1994, it says that the company's chief executive, Mr. Richard Budge, received an annual salary of £235,000. For the year after the purchase of British Coal—the present year—his salary will increase to £290,000 plus a £50,000 acquisition bonus. Put another way, that reflects a salary increase of 45 per cent. The prospectus also shows that the remuneration committee of RJB (Mining) will have a discretionary power to pay a performance-related bonus of up to 100 per cent. at the end of 1995 if the company performs well. In the space of just over a year Mr. Budge's salary could increase to £630,000—an increase of 168 per cent. from November 1994.
What galls the miners in Nottinghamshire, Yorkshire and throughout the country—all those who work for Mr. Budge and RJB (Mining)—is the letter that they received in February. Mr. Budge wrote to the work force saying that there would not be a base rate adjustment in pay until March 1998. He justified that in the letter by saying that, because of the alleged difficult and competitive economic climate, the company could not afford to pay more.
It is staggering that miners throughout England who have worked hard and raised productivity by 150 per cent. in recent years as well as producing coal at half the cost of Germany should be told by their new chief executive, "Times are tough, lads, and you will take a pay freeze until March 1998. However, if things go well for me, my salary will increase to £630,000—an increase of 168 per cent."
RJB (Mining) was purchased by Mr. Budge out of A. F. Budge in a management buy-out in February 1992. It is clear that, even before the buy-out A. F. Budge was facing major financial difficulties. One of the things that concerns me as a taxpayer—I hope that the Minister will pursue this point with the chairman of British Coal—is how in 1991 British Coal could make advance payments of £10.5 million to A. F. Budge for an opencast site at Eastpit near Swansea. That is an unprecedented interest-free loan. It has not been possible at this stage to get to the bottom of the matter with British Coal.
§ Mr. Michael Clapham (Barnsley, West and Penistone)In his research into A. F. Budge, has my hon. Friend come across any contributions to the Conservative party? If so, can he quantify the contributions that have been made over recent years?
§ Mr. TippingI shall come to that in a moment.
We ought to acknowledge that the payment of £10.5 million to A. F. Budge in 1991, according to its then chairman and chief executive, Mr. Tony Budge, kept the company afloat for an extra year. There is no doubt about that. In a sense, A. F. Budge was being looked after by the taxpayer. As my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) has just suggested, we need to examine the relationship between A. F. Budge, Mr. Tony Budge and the Conservative party.
There is no doubt that there are clear links. I understand that, despite his difficulties, Mr. Tony Budge is still the vice-president of the Newark Conservative party. I know from experience that Mr. Tony Budge has raised a great deal of money for the Conservative party through fund-raising events and that he was chairman of an east midlands group of industrialists which also raised money 238 for the Conservative party. Although his company was looked after with £10.5 million, it is clear that he had previously been looking after the Conservatives.
My hon. Friend the Member for Wallsend (Mr. Byers) talked about the process of A. F. Budge going into liquidation and asked a number of specific questions about the timetable of events. When did Ministers receive reports from Coopers and Lybrand and then from the Official Receiver and when were decisions taken to prosecute former directors of A. F. Budge? I find it very difficult to understand why three directors of A. F. Budge—Mr. Tony Budge, his wife, Janet Budge, and a finance director, face court action whereas Mr. Richard Budge does not.
My principal concern relates to the loans that Richard Budge had from the companies with which he has been associated. I have no doubt—indeed, it is documented in the reports that Ministers have received from Coopers and Lybrand—that Mr. Richard Budge had a loan account of £400 million with A. F. Budge.
People like me wanted to know what a loan account is. In simple terms, it means borrowings from a company. One of Mr. Richard Budge's borrowings from A. F. Budge was £12,500 for the hire of a marquee for a family party. In addition, on 30 March 1991, a payment of £10,000 in petty cash was made to him. That is extremely disturbing behaviour, and I believe that Coopers and Lybrand and the liquidators found such payments distressing. As my hon. Friend the Member for Wallsend said, Mr. Richard Budge was criticised in the reports. On a D2 form, it was said that Mr. Richard Budge's behaviour made him unfit to be concerned in the management of a company.
The prospectus issued by RJB Mining in the autumn of last year contains a paragraph which states that Mr. Richard Budge paid back £325,000 to the liquidators, without admitting any liability, in order to pay the loans that he had had with the company. I believe that that payment is in breach of the Companies Acts and that Coopers and Lybrand and the draft report produced by the Insolvency Service took the same view.
There appears to be a record of pathological behaviour because, having bitten once, Mr. Richard Budge bit again. The prospectus also contains the following phrase:
During the financial period ended 31 December 1992, the company entered into credit transactions with R. J. Budge. In so doing, the company did not comply with the provisions of the Companies Act. The maximum aggregate value of these transactions was £70,442".Mr. Richard Budge had a loan account of £400,000 with A. F. Budge. He cleared it at the insistence of the liquidators but, as his own company prospectus makes clear, he went on to have a further loan account with his new company amounting to £70,000 in breach of the Companies Acts.Ministers cannot say that they were unaware of such behaviour as the documents are a matter of public record. Indeed, I would go further and remind the Minister that, in December last year, I wrote to his colleague, the President of the Board of Trade, pointing out a raft of issues that led me to be concerned about the fitness of Mr. Richard Budge to run the deep coal industry.
I wrote to the President of the Board of Trade before the contract to buy the industry was signed on 24 December. I have now written again, asking him to produce a detailed timetable of when reports were 239 received from the liquidators, who was involved in making decisions, what advice Ministers received from their civil servants and whether it is true that the DTI unit involved in selling the coal industry was holding meetings in another part of the building with the Insolvency Service to consider what might happen to Mr. Richard Budge?
My hon. Friend the Member for Sheffield, Attercliffe talked about the ingenious financing that enabled the good to be cherry-picked by Mr. Richard Budge's company and the liabilities to be left elsewhere. Let me draw the Minister's attention to a company called Moira Pottery based in Leicester. It was a loss-making company acquired by A. F. Budge which was interested not in pottery but in the opencast reserves that lay underneath the company's premises. We now know, because the record is at Companies house, that when RJB Mining was bought out of A. F. Budge, Moira Pottery was acquired for £1. It was subsequently valued at £1 million. Accusations are being made that there were attempts to transfer A. F. Budge's prime assets out of the company and into a new company, RJB Mining.
People are extremely concerned about those issues. The time has now come for the Minister and his colleagues who were there before him to come clean. I am delighted that the Public Accounts Committee is looking at the matter. I regret that it will take time to report. Many of us want to see a strong, deep coal industry in this country. The men who work in the industry deserve that. For that industry to succeed, it is important that the whole tale is told and that all the secrets are let out of the cupboard so that the coal industry can go forward, into a new future without skeletons. There are enough skeletons in the history of the coal industry without there being more holding it back.
§ The Parliamentary Under-Secretary of State for Industry and Energy (Mr. Richard Page)May I start by congratulating the hon. Member for Sheffield, Attercliffe (Mr. Betts) on not only his skill in securing this Adjournment debate, but on somehow managing to get it into a time frame in which half an hour has extended to something like two and a half hours? I think that that is only right, however. It is a complicated subject and it is only right that we discuss it and try to clear up some of the misunderstandings and dispel some of the conspiracy theories that seem to be puzzling and worrying Opposition Members.
May I say right at the start that I well understand the concern of the hon. Member for Attercliffe over the failure of the Sheffield city airport project to go ahead. I do not want to damage his political standing in Sheffield. Indeed, the hon. Gentleman and I sat side by side and watched the "Panorama" programme on which he appeared. I thought that he gave a splendid presentation in which he represented, quite justifiably, the concerns of his constituents. Of course the "Panorama" programme had been so edited that it was as jerky as a silent first world war film. But that is by the by.
Before I address the questions raised, I would like to make one or two general points regarding coal privatisation. The Labour party continues to suggest that coal privatisation has been a mistake and a failure. The hon. Member for Bolsover (Mr. Skinner) is not present at 240 the moment. He came into the House, issued one of his usual rants and has since disappeared. I regret to say that he, among others, will not accept the reality that privatisation has been a considerable success. We set out a clear objective to achieve the largest economically viable coal industry in the long term and to ensure value for money for the taxpayer. As the House knows, the sale was successfully concluded in December, and it was far from being the failure predicted by so many Opposition Members.
§ Mr. ClaphamThe Minister must realise that, in 1993, before the coal closure programme was enacted, there were 50 collieries. At the present time, there are some 28 collieries, which were previously part of British Coal, and there are a number of other smaller collieries, which have always been outside the public sector. Those 50 collieries employed 50,000 men. At the present time, around 6,000 men are employed in the industry. In other words, we have seen the loss of 44,000 jobs since 1993. How can he justify that as a success? The other thing that the Minister must remember is that the remaining 28 collieries are high-technology collieries, which were transformed by the public purse. Of course productivity in those collieries is high—purely and simply because of the mining technology which was paid for by the taxpayer.
§ Mr. PageI do not want to get diverted too far down that route. Otherwise, we would have to be here, if we were allowed, until about 12 o'clock. I must delicately point out to the hon. Gentleman that, if he looks at the history of the coal industry, he would find that his party has closed more mines and put more miners out of work than any other. I commend his courage in allowing me to draw attention to that point.
We have, as I say, created a successful industry and in creating that successful industry, we have received proceeds just short of £1 billion, which is a significant boost for public finances. Competition has been increased, with the transfer of former British Coal mines to a number of companies. RJB (Mining) now operates or is developing a total of 20 collieries, as the hon. Member for Barnsley, West and Penistone (Mr. Clapham) said, across central and northern England—more than British Coal operated or was developing at the time of privatisation. Coal Investments is operating or developing half a dozen collieries. Scottish Coal operates another significant deep-mine complex, and there are management and employee buy-out teams at Tower colliery in south Wales and Hatfield in Yorkshire. Between them, those companies have some 29 former British Coal collieries, twice the number that it had been claimed would survive.
In the new private sector, companies are making a success of their business. New customers are being found. British Steel has bought British-mined coal from Tower colliery in place of imports for the first time for many years. Tower colliery is even selling coal to France. New employment opportunities are opening up with the re-opening of collieries that have been on care and maintenance and the new apprenticeship schemes offer by RJB (Mining). Productivity is improving and costs are coming down.
I shall now talk about the case of RBJ (Mining), and I shall start with Sheffield airport, on which the hon. Gentleman legitimately spent so much of his time. As I said earlier, he has been assiduous in pursuing the matter 241 on behalf of his constituents, and I already understand the acute disappointment that he must feel because the Sheffield airport project has not gone ahead.
The hon. Gentleman started by expressing concern about the splitting of the responsibility for providing the infrastructure for an airport at Tinsley, Sheffield, and about the Government's role. I shall outline some of the essential facts, and do my best to answer as many as I can of the questions that have been asked. But at one stage in the debate the questions were coming like machine-gun bullets, and I shall certainly not be able to answer all of those. However, I assure the hon. Gentleman that I shall read the Official Report of the debate afterwards. I hope that Hansard has faithfully recorded all the points that he made, and I shall return to him and let him have the details about all the questions that I do not cover tonight.
In May 1990 A. F. Budge (Mining) Ltd.—which subsequently became RJB (Mining) Ltd.—and A. F. Budge Ltd. contracted with Sheffield development corporation for the construction and running of an airport at Tinsley Park, Sheffield, part of which was then being worked as an opencast coal mine by A. F. Budge (Mining) Ltd. under a contract from British Coal.
Such a disposal of a large area of land for what might be described as an unusual use required the consent of the Secretary of State for the Environment. As the hon. Gentleman will know from the answer given to him on 9 May—he has already referred to it—such approval was given. Subsequently several variations in the terms and time scales provided for in the contract were agreed between the parties.
During 1991 discussions took place to separate the Budge mining operations run by Mr. R. J. Budge from the principal Budge construction and other companies run by his brother, Mr. A. F. Budge. That involved, among other things, the formation of a new company—Sheffield Airport Ltd., a subsidiary of A. F. Budge Ltd., the holding company of the Budge Group of companies. Those discussions were concluded in February 1992, when there was a management buy-out, led by Mr. R. J. Budge, of the coal mining operations.
The terms of the airport contract for Tinsley Park were varied, releasing A. F. Budge (Mining) Ltd. and bringing in Sheffield Airport Ltd., which, with A. F. Budge Ltd. as surety, was to undertake the development—although it was my understanding that the intention remained that A. F. Budge (Contractors) Ltd., another A. F. Budge Group company, would carry out the work.
Let us be clear about three things. First, the restructuring of the A. F. Budge Group and the disposal of the coal mining operations were the subject of detailed consideration and reports by solicitors and accountants acting for the parties. The agreements were crawled over by accountants and solicitors.
Secondly, the variation of the Tinsley Park airport contract, releasing A. F. Budge (Mining) Ltd., was agreed to by the Sheffield development corporation. The hon. Member for Attercliffe asked many questions about who had agreed to this and who had agreed to that. I must remind him that Sheffield development corporation was not an innocent party standing on one side. It was in a position to make many of those inquiries and to find out many of the answers before going ahead.
Thirdly, as the hon. Gentleman will also know from the answer given to him on 9 May, although the Department of the Environment was aware of the variations of the 242 contract, it was not necessary for it to give its approval or otherwise to be involved, as the holding company, A. F. Budge Ltd., continued as surety for the performance of the contract. I am not aware that the administrative receivers or the liquidators for the A. F. Budge Group of companies have sought to challenge the transaction itself.
To complete the history—
§ Mr. BettsThe Minister referred to the fact that the A. F. Budge Group had a surety for Sheffield Airport Ltd. and the provision of the airport. That does not answer the question about the splitting of responsibilities for mining and making a profit and building the airport and incurring expense. The letter from the office of the chairman of British Coal which I read out said that those two matters were linked and that agreements were drawn up.
§ Mr. PageI am unaware of the contents of the letter that the hon. Gentleman received from British Coal, but the information which he has given suggests that these agreements were not linked and that the Sheffield development corporation agreed to the particular splits which took place. A degree of responsibility for this matter must lie with the Sheffield development corporation.
I wish to complete the history of Tinsley Park, which I recognise is most disappointing to the Sheffield development corporation and the people of Sheffield. The administrative receivers were appointed in relation to A. F. Budge Ltd. in December 1992, and subsequently in relation to other A. F. Budge Group companies.
Clearly the A. F. Budge Group was not in a position to undertake any construction on the site. In March 1993, Sheffield Airport Ltd.—which had no other business assets—formally notified the Sheffield development corporation that it was not able to proceed with the development. Discussions took place between the corporation and the administrative receivers to try to find a solution, but none could be found. The site was eventually handed back to the corporation. Sheffield Airport Ltd. was wound up by the courts in October 1993, with the corporation claiming payments under the contract relating to the purchaser of an area of land adjoining Tinsley Park which the A. F. Budge Group intended to develop as a business complex.
I am told that the notified liabilities of that company total some £407,000, although further claims could come under the contract. The minimal assets of £10,000 are likely to be absorbed by the costs of winding up. The hon. Member for Attercliffe has asked for some form of inquiry, but he will know from the answer given to him by the Under-Secretary of State for the Environment on 9 May that that Department has no plans for a public inquiry into the contract relating to the Tinsley Park airport development.
With regard to the A. F. Budge Group, detailed consideration was given to the restructuring which took place in February 1992, including the disposal of the mining operation by that group, the administrative receivers and the official receivers. That consideration was taken into account in their reports to the Insolvency Service under the Company Directors Disqualification Act 1986. It was also taken into consideration in the service's decision in relation to disqualification proceedings.
243 A few points were raised over the compaction of the site at Tinsley Park. The hon. Gentleman is concerned about what happened to the £1 million paid by British Coal for compaction once the mining had finished and the site had been prepared for the construction of the airport. It is my understanding that the payment to A. F. Budge (Mining) Ltd. went into the A. F. Budge Group account, and was used with other group funds, to finance on-going group operations.
The hon. Gentleman asked what checks were carried out on financial liability, but that is a commercial matter for British Coal.
For accounting purposes, A. F. Budge (Mining) Ltd. was thus shown as owing the £1 million by A. F. Budge Ltd. on an inter-company account.
When the A. F. Budge Group was restructured and its mining operations were bought out in February 1992, Sheffield Airport Ltd. took over some of the obligations of A. F. Budge (Mining) Ltd. in relation to the airport development contract. The inter-company account of £1 million shown as due to A. F. Budge (Mining) Ltd. by A. F. Budge Ltd. was transferred to Sheffield Airport Ltd. As far as I am aware, no cash changed hands. I am sure that the administrative receivers of the A. F. Budge Group and the liquidators of Sheffield Airport Ltd. considered any questions raised about the use of those moneys.
One of the questions raised in the debate dealt with the tender price.
§ Mr. BettsI have been listening with interest to what the Minister had to say about compaction. He has not said why the obligations to guarantee putting right the defects in compaction work five years after that work had been completed were novated to Sheffield airport, which seems a strange company to take on that responsibility, and not transferred with the novation of the contracts on opencasting to RJB (Mining), which would have seemed a more logical and legitimate place for them to rest.
§ Mr. PageI cannot say why it went that way. I have had no evidence to suggest that the compacting has not been done correctly. If it has not, in the first instance, it will be a matter for British Coal.
The reduction in the bid by RJB (Mining) was made out to be some sort of back-door deal, but it was not. The tender price was adjusted as envisaged in the information memorandum issued by Rothschilds. The adjustments reflected developments since tenders were submitted in September 1994—or information that was not available to bidders when they submitted their tenders. The adjustments would have been available to any other preferred bidder. As I said, even after those adjustments, RJB's bid was considerably higher than the others.
The hon. Member for Wallsend (Mr. Byers), beguilingly, tried to suggest that, if I could release the reports of the official receivers and Coopers and Lybrand, I would be a decent, open and honest sort of fellow. I am afraid that this is where I am going to be a constant disappointment to the House because those reports are confidential and come under the Company Directors Disqualification Act 1986. If they were not confidential, in future many people would be reluctant to give 244 information in such cases and the truth of the operations of one or two companies would not, therefore, come to hand and the correct decisions might not be made.
§ Mr. TippingWill that report be made available to the National Audit Office, which is acting for the Public Accounts Committee in looking at the sale?
§ Mr. PageThe straight answer is that I do not know. I served for seven years on the Public Accounts Committee and we were most assiduous in trying to get information out of aspects of Government when we thought that we could find out where money had been wasted or spent incorrectly. I am afraid that that is a question that the hon. Gentleman will have to direct to the Comptroller and Auditor General.
The hon. Member for Wallsend tried to work up some sort of conspiracy theory, suggesting that the Government were trying to help one of their friends—all that about secret meetings and Ministers getting involved with people who are involved in the industry. It would have been a peculiar way of doing it and an expensive form of conspiracy if, after one of those conspiratorial meetings, the gentlemen involved paid £200 million plus more than the nearest bidder. The hon. Gentleman also asked me about a timetable and perhaps I can help him a little.
On 9 December 1992, the first A. F. Budge Group company was put into administrative receivership. On 28 September 1993, administrative receivers submitted conduct reports on directors. On 25 July 1994, the official receiver submitted reports of initial investigations, including considerations of administrative receivers' conduct reports. The Treasury solicitors were instructed and counsel was engaged to advise on preparation of the case. Administrative receivers were employed to undertake further inquiries at the direction of the official receiver.
On 12 October, RJB (Mining) was told that it was the preferred bidder. On 21 November, the Insolvency Service decided to instigate proceedings against the three directors, who have already been mentioned, and the decision was endorsed by the Minister. But, as has been made perfectly clear, proceedings were not taken against Mr. Richard Budge and other directors. On 7 December, summonses were served against those three directors and, on 8 February this year, the first hearing of application in the case was outlined to the court. The hearing was then adjourned to a second formal hearing.
§ Mr. TippingIt is helpful to know that timetable. I thought that I heard the Minister say a few seconds ago that counsel was instructed to take the prosecution forward. Was legal advice taken from just one counsel, or was it taken from a variety of sources?
§ Mr. PageI shall write to the hon. Gentleman if I am incorrect, but I believe that more than one source of legal advice was obtained.
§ Mr. ByersThe timetable reflects the sequence of events that I outlined. However, the important point is that we had the report from the official receiver on 25 July. Will the Minister confirm that that report recommended that disqualification proceedings should be taken against Mr. Richard Budge because he was not a fit person? On 245 12 October, he was then declared to be the preferred bidder. He was re-interviewed on 11 November and, lo and behold, on 21 November he was suddenly free and disqualification proceedings were not to be taken against him. That is my interpretation of events. What recommendations did the official receiver make on 25 July concerning Mr. Richard Budge?
§ Mr. PageAs I mentioned earlier, the report is confidential and I cannot reveal its contents. As I was saying, the hon. Gentleman could draw one or two conclusions from the timetable and details that I have given, which any prudent politician would deduce.
§ Mr. BettsMay I help the Minister on that point? He may be trying to tell Opposition Members that if the official receiver's report in July did not recommend that action should be taken against Mr. Richard Budge, there would be no need for further interviews.
§ Mr. PageObviously, the hon. Gentleman can deduce things. That is entirely up to him. It is his privilege. I see nothing peculiar in the various representatives in this matter undertaking a series of interviews with a number of people who have been involved in this matter. In no way does it imply a crime, irresponsible act or shortcoming.
The Department started out with a clear objective to return the British coal mining industry to the private sector to secure the largest economically viable coal industry in the long term while ensuring value for money for taxpayers. That has brought significant improvements. One or two Opposition Members conveniently forget that, since 1979, the coal industry has had stuffed down its throat £19 billion of taxpayers' money. I look forward to the day when it starts to pay some tax back to the people of this country.
§ Question put and agreed to.
§ Adjourned accordingly at twenty-four minutes past Nine o'clock.