HL Deb 08 July 1959 vol 217 cc848-52

2.47 p.m.

VISCOUNT ALEXANDER OF HILLS-BOROUGH

My Lords, I beg to ask the Question which stands in my name on the Order Paper.

[The Question was as follows:

To ask Her Majesty's Government for a statement to be made in the House of Lords: (a) as to the reasons for the disposal of the business of S. G. Brown & Co. by the Admiralty, giving the circumstances in which the business was acquired by the Admiralty in 1940, the price then paid, the total value of the production of the business under Admiralty ownership, an account of the development of the production in the past 18 years, the present valuation of the business, and the price received or to be received by the Government; (b) as to whether, before the decision was arrived at to sell the business now, any consultation took place with the representatives of the employees, and whether the trade unions concerned are satisfied with the transaction which has been entered into.]

THE FIRST LORD OF THE ADMIRALTY (THE EARL OF SELKIRK)

My Lords, the firm of S. G. Brown came into Admiralty ownership in 1941. Through lack of co-operation by the owners at that time, the Admiralty had first to appoint a controller and subsequently, at the request of the owners, bought the company at a price of £55,750, after an agreed independent valuation. Since that time a new factory has been acquired by the company at a different site and additional capital has been introduced raising the ordinary shares to the nominal value of £500,000, with loan capital of which £220,500 is now outstanding. The annual turn-over of the company has increased to a figure over recent years of upwards of £1½ million. The company has continued to develop over its original field of gyros compasses, telephone equipment and other precision engineering work.

After the war the company was retained as war potential. This is no longer a valid reason for retention, partly because of strategic changes and partly because other firms cover the same field. For the company to prosper additional capital will be needed. There is no sound reason why this charge should fall on Navy Votes, nor is the Admiralty well geared to run a limited liability company on commercial lines. It was therefore decided that it would be wiser to sell the company by direct negotiation after public announcement. Those working at S. G. Brown were informed at the same time as the announcement was made in Parliament.

The sale will be subject to the following considerations: first, the business should be kept as a going concern under efficient management; secondly, the purchaser should give satisfactory assurances about his ability to provide continuity of employment for the present employees, and his intention to develop to the full the facilities available; thirdly, the purchaser must not be under foreign control; fourthly, the sale should not enable the purchaser to establish a monopoly in any particular, field. Subject to these considerations it will be our object to obtain the best possible price and the most satisfactory payment terms. The company's accounts for the year ended March 31, 1959, are, however, not yet available and the price will in the last resort depend on the view which the purchaser takes of the company's potential. I do not think it will help the negotiations if I mention any figure.

VISCOUNT ALEXANDER OF HILLS-BOROUGH

My Lords, I am quite sure that your Lordships will feel that we have had one of the most extraordinary Answers ever given in a British Parliament; and I say that as the Minister who took the firm over in 1941, when in the hour of our country's need the firm was quite incapable of fulfilling, as we proved it could fulfil when we took it over, all the goods required for the Navy's need. Since that date it has very widely expanded; and you have the loan capital mentioned now by the First Lord of the Admiralty which has been supplied with Treasury backing. Now that it is a most valuable business you are just going to rob the profit of the State after eighteen years of development, for the purpose of conforming to a slogan of "Private enterprise first" We shall return to this subject again and again.

THE EARL OF SELKIRK

My Lords, I do not think I need say very much on this matter. There is absolutely no political motive whatever for selling this company. It has been sold for the reasons I have given, which I believe are in the interests of the firm itself, and of the Admiralty, who have no interest in continuing the management of this firm. The price which we shall obtain for it, I am confident, will reflect the development—the important development—and, if I may say so, the efficiency of the firm during recent years.

VISCOUNT ALEXANDER OF HILLS-BOROUGH

My Lords, is it not a fact that we have an interest; that we do in fact, through the Admiralty take-over, own the whole of the share capital; and that Her Majesty's Government now own the whole of the outstanding loan capital of the company? Is that not an interest? And the fact that it is being conducted profitably? Does not the statement already made by the First Lord of the Admiralty make it quite clear that all the products now being made are part of the country's war potential, which is bound to be on an expanding, developing, and increasingly scientific scale? This is utter waste of the national resources.

THE EARL OF SELKIRK

I cannot agree with the last statement that the noble Viscount has made in the present circumstances of the firm. It is perfectly true that we own all the capital. I am confident that it can be well developed, and better developed, in private hands. The potentialities of the company will, I am sure, be fully developed just as well as, if not better than, before.

VISCOUNT ALEXANDER OF HILLS-BOROUGH

Why was that not happening before under private management of the firm? How has it become so unsuccessful—the operation of expanding and increasing the war potential—under Government control and ownership?

THE EARL OF SELKIRK

I am sure the noble Viscount would not expect me to agree that, because one board of management happens to lack co-operation with the Admiralty, or any other firm, it is therefore a reason for taking into Government control every single private concern.

VISCOUNT ALEXANDER OF HILLS-BOROUGH

If that is the case with this valuable Admiralty possession, is that the line the First Lord of the Admiralty is going to recommend the Admiralty to take with every other State-owned project belonging to the Admiralty? What is the difference between this and every other thing, such as a dockyard or an engineering shop or a torpedo shop? When is his argument going to begin, and when is it going to end?

THE EARL OF SELKIRK

This is a completely different thing from a dockyard. A dockyard, as the noble Viscount is very well aware from his own experience, is fully run as part of the Admiralty establishment. This is a joint stock company run on commercial lines, and its success has been very largely due to the directors who have been running it and not, in fact, to the Admiralty.

LORD LATHAM

May I ask the noble Earl when the Admiralty came to the decision to sell out their interest in this company, and what were the reasons for that decision?

THE EARL OF SELKIRK

As soon as the Admiralty had come to a decision, that decision was announced in Parliament. As to the reasons for it, I have explained the reasons in my Answer, which I think are satisfactory from a purely practical angle; our reasons are not based on the political angle at all. They were that this work can be carried on perfectly well—and, indeed, expanded better—by private capital than by public finance; and I personally object to putting money (and I have £250,000 in my Estimates this year) into a private company when I think it should be devoted to purposes proper to Navy Estimates.

VISCOUNT ALEXANDER OF HILLS-BOROUGH

Is it not a fact that there was never any suggestion of doing this kind of thing until a Back-Bench private Member in the Public Accounts Committee in another place in 1959 advocated such a course of action? This is purely carrying out Back-Bench Party policy.

THE EARL OF SELKIRK

This was a decision made by the Admiralty, and nothing said or done by any Back-Bench Member in another place had any influence on their decision.

LORD LATHAM

May I ask whether the Admiralty had the advantage of an independent report as to the advisability of disposing of this interest?

THE EARL OF SELKIRK

I cannot see the advantage of an independent report in this matter. We had all the facts in front of us; and, from my point of view, I am quite clear that I do not want to continue the management of this company and to continue providing money for it.

VISCOUNT ALEXANDER OF HILLS-BOROUGH

I gather the First Lord said that he had notified the organisations of the workers at the time he made the public announcement. Was there any consultation with the trade union leaders about the future of this factory, or has his attention been directed to the resolution passed this year by the Shipbuilding and Engineering Workers' Conference, representing 3 million members, demanding that this factory should not be handed over because the workers are so happy under Admiralty management?

THE EARL OF SELKIRK

The Civil Lord of the Admiralty has already met representatives from the firm, and I am meeting a further delegation in a short time. I do not think that it would have been possible to inform the trade unions before I informed Parliament.

LORD CONESFORD

My Lords, may I ask whether a Starred Question—

THE LORD PRESIDENT OF THE COUNCIL (VISCOUNT HAILSHAM)

My Lords, I really think I ought to ask the House to make up its mind that this is Question Time. The noble Viscount, who has made many statements instead of asking questions, has said again and again that he will return to this matter. He is fully entitled to do so, but I would ask the noble Viscount respectfully—and I would respectfully ask the House to support me in insisting—that if he does so he should do so in a proper way, and not by continued supplementaries