HL Deb 22 January 1981 vol 416 cc487-90
Lord Orr-Ewing

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

The Question was as follows:

To ask Her Majesty's Government what steps they envisage to encourage the return of public sector industries to the private sector.

The Minister of State, Department of Employment (The Earl of Gowrie)

My Lords, during 1980 Royal Assent was given to Bills enabling the Government to dispose of shares in British Aerospace, British Airways and the National Freight Company. Legislation is now before Parliament to enable the British Transport Docks Board, Cable and Wireless and major British Rail subsidiaries to be privatised. The Government have also announced that the forthcoming legislation on the future of the British National Oil Corporation will propose powers to enable the public to have a direct equity stake in BNOC's North Sea business. Currently plans for the return of British Aerospace to the private sector are well advanced. The timing of this sale and other disposals is dependent on a number of factors including market conditions, but the Government's intention is to press ahead at the earliest opportunity.

Lord Orr-Ewing

My Lords, I thank the noble Earl for that very satisfactory Answer and for the assurance that he has given. Is he aware that Britain has the largest trading public sector in the free world, and that in the current year this public sector is borrowing £3.1 billion from the taxpayers of this country? Is it not, therefore, in our interests to reduce the size of the public sector and increase the size of the private sector which is carrying it? Also, can he assure the House that we have no intention of dropping any of the proposals for privatisation which were included in our manifesto and which he has re-announced this afternoon?

The Earl of Gowrie

My Lords, I agree that this is a very large and disproportionate share, due to previous nationalisation policies. We have, as I said, made good ground, because in 1979–80 receipts totalled just under £1 billion as against a target of £1 billion. They were £997 million as against a target of £1,000 million. Given the deepening recession, I think that that was a good earnest of our intentions.

Lord Ponsonby of Shulbrede

My Lords, despite the remarks of the noble Lord, Lord Orr-Ewing, I hope the noble Earl will be able to assure the House that no precipitate steps will be taken to dispose of industries which might be disposed of too early, and therefore not at a proper value. Perhaps the noble Earl can give the House some indication of any steps the Government have in mind for disposing of the shares of British Airways which, if disposed of in the near future, would be sold at very much less than their true value?

The Earl of Gowrie

My Lords, on the specific point of British Airways, the Statement of my noble friend Lord Trefgarne in your Lordships' House on 13th October explained that, in view of the present difficulties in the international civil aviation market, it was clear that it would not be possible to launch a successful flotation in 1981. Privatisation, like nationalisation, must take place against a proper background of the right market conditions. But, on the noble Lord's general point, the vast majority of privatised shares in this arena go into the British capital markets; so I do not think that the national question is very widely affected.

Lord Harvey of Prestbury

My Lords, would my noble friend give some indication to the House about the compensation which was promised in the Conservative election manifesto to the shipbuilding companies, which were confiscated by the previous Government?

The Earl of Gowrie

My Lords, I sympathise with the direction of my noble friend's question, but I would need notice of it. If he cares to put down a Question for Written Answer I will, of course, answer it.

Lord Pargiter

My Lords, has not much of the so-called nationalisation of industry, which was referred to in the Question, been very largely due to the failure of private enterprise itself?

The Earl of Gowrie

My Lords, I really think it is time that we perhaps broke away from the concepts of nationalisation on the one side, and private enterprise on the other. Our objection is that it is totally grotesque for such a large proportion of British activity—including very significant and satisfactory activity—to show up on the public borrowing requirements and obligations of central Government. That is not the way most of our successful competitor economies work. We see no reason why it should continue and its record has not been good.

Lord Boardman

My Lords, can my noble friend comment on the apparent anomaly that when demand is down in the private sector prices normally tend to reduce, whereas in the public sector—certainly, in the nationalised or monopoly public sector—prices almost invariably increase? Is this not some encouragement to him to continue with the private sector taking over these roles?

The Earl of Gowrie

My Lords, with all his experience, my noble friend has put the matter much more succinctly than I did. The difficulty of having so large a proportion of one's activity, economically, in the public sector is that it is very unresponsive to fluctuating conditions and that has been a very great problem for successive Governments.

Lord Avebury

My Lords, from the Tory Party's point of view, is not this de-nationalisation an admirable way of distracting attention from the fact that the Government have dismembered and mutilated most of private industry?

The Earl of Gowrie

No, my Lords.

Lord Kaldor

Would the noble Earl not agree, in contrast to what was asserted by the noble Lord, Lord Orr-Ewing, that Britain has by no means the largest public sector in Western European countries? I can think of two countries—Austria and Italy—whose public sectors are a considerably larger proportion of the total; and that may be true, also, of France. Secondly, would he not agree that the advantages or otherwise of having publicly-owned basic industries cannot be decided on such absolutely facile, or almost facetious, aspects as whether or not their investment is part of the public sector borrowing requirement?

The Earl of Gowrie

My Lords, I do not think the noble Lord, Lord Kaldor, has ever suggested that the current high rates of interest, which we all regret, are in any way facetious. These current high rates of interest are largely due to the necessity of Governments going on to the money markets to borrow, not least because of some of their obligations in this field, thereby crowding out the capacity of private sector industries to borrow at more reasonable rates. It is this kind of imbalance that we wish to redress, not for any doctrinaire reason. I am certainly one who thinks that there should be close co-operation between central Government and the large industries of this country. But I see no reason why central Government should be, as it were, the principal banker of such industries.

Lord Paget of Northampton

My Lords, has not the noble Earl been a little disappointed by the Government's failure to reduce the number of private enterprises which have had to be rescued by public money? Is it not a little ungraceful that they should be still complaining about their lifebelts?

The Earl of Gowrie

My Lords, the obligations or necessities on central Government to see many industries through this recession were dictated well before this Government came into office. I do not think there is anything novel about that. But while I am thoroughly in favour of people in difficulties, where possible, being nannied through a recession, once they are through that is all the more reason to privatise them once more.

Lord Somers

My Lords, could I ask the noble Earl whether, when talking in sums of billions, he is using the English billion or the American billion? The American billion is only £1,000 million.

The Earl of Gowrie

No, my Lords. I am afraid we have given in to the transatlantic custom. When we say £1 billion we mean £1,000 million.

Lord Shinwell

My Lords, is the noble Earl aware that his statement that we ought to escape from the conception of the public sector on the one hand and the private sector on the other is the most intelligent statement that I have heard in this House for a long time? Is he further aware that the worst thing that could happen to this country would be to be too dogmatic about the future organisation of industry?

The Earl of Gowrie

My Lords, a bouquet from the noble Lord, Lord Shinwell, makes my day.

Lord Elwyn-Jones

My Lords, what is to be the fate of the thousands of companies which have gone into liquidation within the last two years? Is there to be any rescue operation? Many of them employed a great deal of labour and were an important part of the economy of the country. Is not this a more profitable field of discussion than a purely ideological discussion of the kind we have had up to now on this question?

The Earl of Gowrie

My Lords, I contest the noble and learned Lord's view that I have been conducting an ideological discussion. Quite apart from the relevance or irrelevance of my own ideology, I do not think that Question Time is the appropriate place for that. All of us very much regret that companies are forced into liquidation, either as a result of recession, or as a result of petro-currency, or as a result of the inevitably tight money squeezes which come upon all Governments after a long inflationary period.

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