§ 3.38 p.m.
The Earl of Gowrie
My Lords, I think it might be for the convenience of the House if at this point I read out a short Statement which has been made in another place by my honourable friend the Minister of State for Industry, on Cable and Wireless. The Statement is as follows:
"On 2nd December, my right honourable friend the Secretary of State for Industry told the House that in the British Telecommunications Bill the Government had included a clause broadening its power to dispose of shares in Cable and Wireless.
"Since then we have been considering, in close consultation with the company, whether and how shares might be sold. Before reaching a final conclusion we consulted, through the Foreign and Commonwealth Office, all the Governments of the 30 or so countries in which Cable and Wireless operates telecommunications services under a Government concession. No objections have been raised to the Government's proposals.
"The Government have now decided to make a public offer for sale of just less than 50 per cent. of its shares, subject to obtaining the necessary powers in the British Telecommunications Bill. We and the company are agreed that when shares are offered for sale special arrangements will be made for employees to acquire shares.
"Cable and Wireless already enjoys a large degree of commercial freedom. The Government intend to refrain from using their rights as a shareholder to intervene in the company's commercial decisions. Cable and Wireless will be freed from the close relationship which exists between the Government and public corporations which must on occasion constrain the company from being wholly responsive to market forces. The part ownership formula we have decided on will follow broadly the precedent set in the case of British Petroleum, leaving the Government with a major shareholding capable of safeguarding overseas Government's interests as necessary.
"The chairman and court of directors of Cable and Wireless are in agreement with this line of action. Cable and Wireless has had a long record of achievement both in private hands and since 1946 as a public sector company. The proposed sale of shares will create a partnership between the public and private sectors. This new arrangement will provide the commercial flexibility and access to the financial markets necessary to exploit the growth and opportunities in the rapidly expanding telecommunications sector".
§ My Lords, that concludes the Statement.
§ Lord Ponsonby of Shulbrede
My Lords, I thank the noble Earl for repeating that Statement, which does not cause us any surprise. I was glad to hear the Statement indicate that the Government wish to retain control of Cable and Wireless and will market something 19 under 50 per cent. of the shares. What gives us great concern, however, is this continual disposal of public assets. Recently we discussed the flotation of British Aerospace, which was floated at 150p per share and immediately after the flotation the shares achieved a premium of some 29p over the issue price, and currently they are standing at some 25p over issue price, producing a profit of about 15 per cent. for individual speculators who subscribed to the shares. I say that deliberately because we know that a great number of individuals subscribed to the shares and later sold them so that some of the institutions could achieve fairly large holdings of the shares.
What concerned us when we were going through the Aerospace Bill, and no doubt will concern us very much when we go through the Telecommunications Bill, is that when the Government come to float public assets off, they fix the price of the flotation in such a way that the country achieves a full price for the flotation so that we are not faced with an instance such as we have just faced, where national assets are being given away. When the Government come to examine this eventually, I therefore hope that they will ensure that the price fixed for the flotation is right so that they cannot be accused, as they can be accused in regard to British Aerospace, of being over-anxious to achieve a good flotation to the national detriment.
§ Lord Rochester
My Lords, we on these Benches join in thanking the noble Earl, Lord Gowrie, for having repeated that Statement. Except in the case of certain basic utilities, of which this is not one, we see no reason why the state should have a specially large interest and we are therefore happy to accept the principle involved in the Statement. We have noted that the directors of Cable and Wireless are in agreement with this line of action and we hope the partnership between the public and private sectors to which the Statement says the proposed sale of shares will give rise will create an element of stability in this field so that there will not be any need for further legislation. The part we most welcome in the Statement is that concerning the special arrangements to be made for employees to acquire shares. Although the terms under which they will acquire the shares are, understandably, not spelt out in the Statement, may I ask if it is intended that those terms will he more favourable than those applicable in the Stock Market generally?
The Earl of Gowrie
My Lords, I am grateful for the way in which my Statement was received by the noble Lord, Lord Rochester, and I am glad that the Liberal Benches and ourselves are in broad agreement on the issue of principle. Obviously I cannot be as grateful for the way in which it was received by the official Opposition Front Bench and there is a substantial divide of opinion between us. We have never seen why British companies operating in the private sector in this country should not be able to operate public assets very efficiently.
I am delighted, and not apologetic at all, at the success of the subscription and over-subscription in the case of British Aerospace. I recommend to all your Lordships, who are after all members of the 20 general public as well as Members of this House, that you quickly dive into your pockets and purchase some of these admirable shares, and I am sure that any of your Lordships who did not do so in the case of British Aerospace are now regretting it.
That substantive difference aside, I welcome the general reception the Statement has had. I do not know the answer to the question asked by the noble Lord, Lord Rochester, as to the precise terms under which these shares are to be offered to employees. I will research that and inform him.
§ Lord Boyd-Carpenter
My Lords, under the new arrangement how will the appointment of the chairman and members of the board be handled?
The Earl of Gowrie
My Lords, the Government are remaining a majority shareholder in this company and as a result there will be no change in the arrangements. The present chairman of Cable and Wireless is this afternoon appearing at a press conference with my honourable friend the Minister of State for Industry endorsing this move.
§ Lord Orr-Ewing
My Lords, is my noble friend aware that many private sector pension funds were invested in British Aerospace and that if there has been a capital profit, that will be very welcome to the many pensioners who will benefit as a result? True, they will not be able to match the fully indexed pension in the public sector, but at least they will make some profit which will help them keep up with the public sector. We in this nation are carrying the largest public sector in the free world and we have a diminishing private sector which has to carry the burden of that public sector. We therefore hope the Minister will carry on the good work of privatising—if I may use that horrible word—further areas of the public sector.
The Earl of Gowrie
My Lords, I can tell my noble friend that we are determined to carry on in this way whenever conditions enable us to do so, and I welcome the support he has given us. It is of course a major delusion to think that the great corporate capital institutions of this country are somehow inimical to the interests of this country; they are thoroughly engaged in those interests and that is why there is nothing sinister and nothing other than of benefit to be found in their purchasing some of our nationalised assets.
§ Lord Shinwell
My Lords, may I ask the Minister to state what is the basic principle which guides the Government in coming to a decision about the disposal of assets which have been operated for some years on the principle of public ownership? Is there any distinction, or is there no distinction at all, or can it be that there is, for example, some political distinction, if I may put it that way? Do the Government consider the political implications of their decision to dispose of some public ownership assets?
What occurs to me is the question: what is the difference between Cable and Wireless and the nationalised coal mining industry? Why hesitate? If the Government want to go forward, having given the matter meticulous consideration, why not proceed, 21 irrespective of public opinion or the opinion that is expressed, or is likely to be expressed in the future, by some of my colleagues on this side of your Lordships' House? What is it that guides the Government? Is there not a case for transferring the coal mining industry to private ownership? Would any noble Lord on the other side of the House, from either the Front Bench or the Back Bench, or any noble Lord on the Cross-Benches rise and ask, why do not the Government take over the coal mining industry, run it efficiently, and set aside any objection which those employed in the industry express? I may be asking a few questions about this; there is a mystery about it all.
If one has a principle and one holds it sincerely, earnestly, fervently, emphatically—I could use many other words; there are many that I have not yet used, but I merely want to know—why leave unaffected the national coal mining industry, with which I had something to do several years ago? Is there some political reason? I merely wondered.
The Earl of Gowrie
My Lords, if the noble Lord, Lord Shinwell, will direct me to people eager to purchase from us the National Coal Board or the coal mining industry, I shall of course with my colleagues consider the request most carefully. I would remind the noble Lord that my honourable friend the present Parliamentary Secretary at the Department of Education, when in opposition, floated the idea of selling the coal industry to those who operated it, and that would seem to me to be an excellent point of general principle. We are of course guided as much by market demand for assets as we are by anything else. We are also guided by the criteria of the degree of commercial freedom that is beneficial to companies in order to expand, and to do so without making calls on the public purse.
§ Lord Blyton
My Lords, is the noble Earl aware that we all know that Tory philosophy is to take away the profitable parts of national assets and leave those parts that are in the doldrums to be carried by the nation? Is he also aware that one of his own Back-Benchers said that private enterprise is carrying the burden? Can he tell me why gas prices are increased by nearly 20 per cent., so that from a protected profit of £600 million, £200 million can go back to the Treasury?
The Earl of Gowrie
My Lords, that is a somewhat political point, but it was not the Tory Party that nationalised all these assets in the first place. We fought long and bitterly against their nationalisation, and we regret that it ever took place.
§ Lord Underhill
My Lords, will the noble Earl agree that the statement he made in reply to my noble friend Lord Shinwell will be read with very great interest in relation to the justification for disposing of shares in what everybody recognises is an efficient and profitable concern? In the light of the decision that the Government will retain a majority shareholding, will the noble Earl speak to his right honourable friend the Minister of Transport and suggest that the same thing might be done in regard to the sale of British Rail subsidiaries?
The Earl of Gowrie
My Lords, I should be very 22 happy to do that. Obviously when thinking about selling anything, one must consider whether there is a buyer. What I should like to get into the noble Lord's head is the point that there is nothing unpatriotic, nothing that involves special interest, or nothing that is in some way malevolent in selling national assets to national corporations.