§ Lord BeswickMy 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 is the total sum of commissions, fees and other expenses paid by them and by the public corporations concerned in connection with the sale of shares in Cable and Wireless, British Aerospace, National Freight Corporation and Amersham International.
§ The Minister of State, Treasury (Lord Cockfield)My Lords, excluding VAT and stamp duty, the amount payable by the Government was about £12.2 million. The appointment of advisers and payment of fees by the companies themselves are matters for the companies concerned.
§ Lord BeswickMy Lords, I am obliged to the noble Lord for that figure. He will probably recall that when I last asked for payments made, they were around £3 million. Now they are £12 million. Do not the Government have some misgivings—even slight misgivings—about these payments made for services which have not contributed one pennyworth of new wealth to the nation?
§ Lord CockfieldMy Lords, we are now dealing with four companies and not one. It is not surprising, therefore, that the figures for four companies should amount to more than the figures for one taken alone. Individually, the net figure in the case of British Aerospace was £5 million; in the case of Cable and Wireless, it was £5.4 million; in the case of Amersham it was £1.7 million and in the case of National Freight, which, of course, was a sale to the management and staff, the figure was £125,000.
As regards the noble Lord's other question, the position is that these four companies have successfully been transferred to the private sector. We wish them every success in their new role. Among other things, of course, it removes them from the constraints of the PSBR, a subject which no doubt will greatly appeal to the noble Lord.
Lord Bruce of DoningtonMy Lords, is the noble Lord aware that the amount he has mentioned payable to these various concerns is a very large sum? Is he prepared to subject these sums and their payment to the same rigorous audit requirement of value for money as the Government are seeking to impose on local authorities?
§ Lord CockfieldMy Lords, we always look at any payments we make very much from the point of view of value for money and, indeed, in these cases competitive tenders are sought to ensure that that happens. The gross amount realised on these four sales amounted to £500 million, and costs of £12.2 million in relation thereto represent only a little over 2½ per cent.
§ Lord BeswickMy Lords, the noble Lord is, of course, absolutely right, that the amount realised was something like £500 million, but the value of the assets that were sold were probably in the region of £6.5 billion. For the loss of this £1½ billion, they are actually paying £12 million to the finance houses concerned. Does the noble Lord really think that this is a great achievement or a stimulation to industry?
§ Lord CockfieldNo, my Lords, I do not accept either the noble Lord's allegations or his arithmetic.
§ Lord LeatherlandMy Lords, would the noble Lord the Minister agree that in the case of Amersham International the price at which it was floated was probably lower than that which it deserved, inasmuch as when dealings opened an immediate premium of 50p was quoted?
§ Lord CockfieldMy Lords, hindsight is one of the most widespread and valuable of all human attributes. What matters in the present case, of course, is what circumstances were like at the time the price was fixed. The views expressed at that time were as follows. The Investors' Chronicle on 12th February, the day after the price was announced, said that it was "a shade ambitiously priced". The Daily Telegraph on 15th February took the view that the price of the share "is ambitious". The Times, in its usual dispassionate and judicial manner, on 15th February said:
The merchant bankers seem to have weighed up the interests of the future shareholders and the Government pretty well.".
§ Lord LeatherlandMy Lords, will the Minister agree that that probably indicates that you should not believe everything that you read in the papers?
§ Lord CockfieldMy Lords, the noble Lord expresses a view of great wisdom. That is why I quoted to him a selection of newspapers rather than taking one only.
§ Lord O'Brien of LothburyMy Lords, is the noble Lord the Minister aware that I have had considerable experience over many years in fixing prices for issues on the stock market of various kinds, and that it is notoriously extremely difficult to fix a price which is absolutely right on the day? It is just as likely that on the day the price will be wildly wrong one way as the other and, of course, one gets criticised whichever way it is. I am quite sure in this particular instance that those concerned acted in good faith and did their best.
§ Lord CockfieldMy Lords, I am most grateful to the noble Lord for his intervention. Perhaps I may illustrate his point and say that only last week British Aerospace shares changed hands at 170p, while 1467 yesterday they were up to 195p, which illustrates the extent to which shares can fluctuate in price over a very short period of time.
§ Lord BeswickMy Lords, I am not quite sure what lessons the noble Lord draws from that, but while he and I would deprecate hindsight, is it not also to be deprecated if we fail to learn lessons from the past? Are there not some lessons to be learned from the way in which these assets have been disposed of under market value?
§ Lord CockfieldMy Lords, there is one point which the noble Lord makes with which I entirely agree; it is that one must always learn from past experience. What has happened in these three cases is the subject of very careful consideration.