HL Deb 08 June 1982 vol 431 cc105-16

3.7 p.m.

Report received.

Clause 1 [Oil Corporation's powers of disposal]:

Lord Bruce of Donington moved Amendment No. 1: Page 2, line 3, at end insert— (" ( ) The Secretary of State shall not give consent to any disposal of shares in an equity oil subsidiary unless a participation agreement has been signed between the Oil Corporation and the relevant subsidiary which secures that there is no reduction in the participation oil rights given to the Oil Corporation under licences granted in the 5th and 6th rounds.").

The noble Lord said: My Lords, this amendment seeks to insert the following words which, with the leave of the House, I shall repeat, because they contain the essence of the argument. The amendment reads: The Secretary of State shall not give consent to any disposal of shares in an equity oil subsidiary unless a participation agreement has been signed between the Oil Corporation and the relevant subsidiary which secures that there is no reduction in the participation oil rights given to the Oil Corporation under licences granted in the 5th and 6th rounds.

I am very hopeful that on this occasion the noble Earl will see fit to accept this amendment. I do not wish to reiterate the various arguments which have been put, in part on Second Reading and in part in Committee, and which can be adduced in support of the amendment, because it seeks to put into the Bill something which the Government have already assured both Houses, and the country, that they intend to do.

This Bill is of a somewhat controversial nature, in that it seeks to privatise national assets and, as I have already indicated to the House by reference to the Oxford dictionary, although there is no such word as "privatise"—it is wholly an invention of the Government; it is a more polite way of putting denationalisation—the verb "private" means to rob. This is exactly what the Bill ultimately does.

Be that as it may, the Government have assured us that the sole purpose of bringing forward the Bill and of privatising the oil-producing interests of BNOC is to stimulate the production of more oil—and in sonic cases possibly more gas—and that by the efficiency of private enterprise (we can almost hear the words of the good old manifesto occurring all over again: "enterprise", "drive", "initiative", "enthusiasm") and the exercise of these particular private qualities, exercisable only by individuals organised as private companies, there will be a miraculous expansion of the oil producing activities and that thereby great benefits will flow. This is the principal argument. I do not think it is tenable. Nevertheless, the Government are entitled to their opinion and they are entitled, I suppose, to hold their majority in support of it. But what they have always said from the beginning in this series of acts of proposed privatisation is that the participation rights of the country will in no way be inhibited and that the control of the nation's oil supplies, through participation, will in no way be weakened. These are the assurances which the Government have repeatedly given. If they intend to implement these assurances, they do not have anything to fear from accepting the wording of the amendment.

The question of participation agreements in the various rounds of licences which have been granted is somewhat complex and it has already been dealt with in detail in Committee. Suffice it to say that in, for example, the third and the fourth rounds of licences the participation of the oil corporation was secured in two ways: by the obligations contained in the licence itself which gave BNOC its full participation rights and also, in equity, by reason of the shareholding in the oil subsidiaries. In the fifth and the sixth rounds this is not so. At the moment the participation rights are secured only by reason of the equity holding. This is the sole way in which they are secured.

If therefore it is the Government's intention to honour their promise and their undertaking that the nation's oil supplies through participation will not be weakened, I want to know—I want it to be spelled out by the noble Earl opposite—how, if participation is to be secured in the fifth and the sixth rounds by equity participation, that interest is going to be maintained when part or whole of that equity interest is disposed of to outside interests under the provisions of the Bill. This is all that the noble Earl has to explain. If he can explain exactly how that is to be done —we shall be willing to listen in very great detail to his reply, which may in part be technical—we may then take a view upon it. At present, however, if the Government intend to do what they have already undertaken to do, there is no reason at all why the Government should not accept the amendment on the Marshalled List. I beg to move.

Lord Lloyd of Kilgerran

My Lords, I rise briefly to support the amendment. We have been told from time to time by the Government that they will protect participation rights, but I am still not clear how such rights are to be protected in relation to the fifth and sixth round licences. I have studied very carefully the papers, both at Second Reading and during the Committee stage. It may be my fault, but I have been unable to discover the means by which the Government propose to protect those rights. I submit that the House is entitled to more information than has already been given.

As the noble Lord, Lord Bruce of Donington, has said, the protection of these licences, which is the substantive object of the amendment, arises from the equity holding. These licences appear to be underpinned by the ownership by BNOC of 51 per cent. of the equity holding. If, therefore, there is to be a sale of the shares, it is not clear to us on these Benches what the position is. May I therefore ask the Government one question: can they at this stage say whether any arrangements, formal or informal, have already been made in respect of these licences when it is intended to sell the shares? As my noble friend Lord Tanlaw indicated during the Committee stage—he is sorry that for other reasons he is quite unable to be here today—we on these Benches are interested in the mechanism which the Government are to use in relation to these participation agreements under the fifth and the sixth rounds if the shares are to be sold.

The Minister of State, Scottish Office (The Earl of Mansfield)

My Lords, I suppose that the amendment has two objectives: first, to ensure that there are proper participation arrangements covering BNOC's present equity interests in the fifth and sixth round licences. There are no participation agreements as such in these rounds because BNOC has equivalent equity interests. So the aim of the noble Lord, Lord Bruce of Donington, an aim which we share, is to ensure that participation policy does not suffer as a result of the transfer of those equity interests to Britoil—because that is what we are talking about. Secondly, the amendment seeks to ensure that these participation arrangements are in place before the sale of shares in Britoil.

In the view of the Government, this amendment is unnecessary. The noble Lord, Lord Bruce of Donington, said that he hoped it was one which the Government could accept, and he gave—I think for the third time during the consideration of the Bill—his definition of the word "privatise". We had a reasonably full debate on amendments which were very similar in effect, if not in drafting, during the Committee stage, but I think I made plain on that occasion that BNOC will be concluding participation arrangements with Britoil which in respect of the fifth and the sixth rounds will leave the public sector, in terms of access to oil, no worse off than it would have been had participation operated for these rounds as it has been operating for earlier rounds.

For the fifth and sixth round licences, depending on the specific provisions applying to each licence, the agreement will secure, in general, access to 51 per cent. of the total output from each licence. This may require BNOC to have the option to take a higher percentage than 51 per cent. of Britoil's oil. This will put BNOC's participation arrangements for the fifth and sixth rounds on the same footing as those for the first to fourth round licences. And all existing participation agreements will of course remain undisturbed with BNOC.

Turning to the second objective, we have considered carefully the need to have participation agreement in place before the flotation of Britoil. This has always been our intention, but to ensure that this is the case we are proposing to amend Clause 2. In fact, Amendment No. 9, to which we shall come, will establish beyond doubt that participation arrangements between Britoil and BNOC can be put in place as part of the scheme transferring the assets and liabilities to Britoil. I can assure noble Lords opposite that the amendment which I shall be moving in relation to Clause 2 will enable participation to be included in the statutory scheme. I can, of course, explain that amendment with rather greater detail when we come to it. I hope that the noble Lord, Lord Bruce of Donington, will see that there is not very much between the two sides of the House so far as the objectives are concerned, and I hope he will see fit to withdraw the amendment.

Lord Lloyd of Kilgerran

My Lords, before the noble Earl sits down, would he be good enough to tell me which amendment he is going to propose which will cover the matter we have raised with this amendment?

The Earl of Mansfield

Amendment No. 9, my Lords.

Lord Bruce of Donington

My Lords, I am most grateful to the noble Earl for having gone into such detail. He will appreciate that we shall have to examine the full impact of Amendment No. 9, which he will be good enough to explain at a later stage, with a view to seeing whether it does in fact cover the point that we have in mind. For the life of me, I still cannot understand why the noble Earl will not accept the amendment, since he has informed us that he intends to do precisely what we want him to do. I gather that that was the purpose of his reply to me this afternoon. The amendment would throughly underpin and clarify the situation—and Acts of Parliament are not always self-explanatory to people outside the legal profession, let alone those within it.

The noble Earl has been most co-operative in his reply. What 1 therefore propose to advise my colleagues is that we should wait to see exactly how the noble Earl explains the operation of Amendment No. 9 in relation to the particular problems that have been posed by our Amendment No. 1, and see whether in our view his explanation measures up or does not. These things are sometimes a matter of detailed technical and legal argument. Legal opinion is by no means unanimous on quite a number of problems. There are legal views for one construction, legal views for another construction, and on accasions, I regret to say, there are legal views for no construction. So, if we are not thoroughly satisfied, we shall have to look at it again and reserve our position for raising the matter on Third Reading. In the meantime, with the leave of the House, I wish to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Bruce of Donington moved Amendment No. 2: Page 2, line 10, at end insert (" and after the laying of an order before Parliament together with an accompanying memorandum setting out the terms on which the disposal is to be made.").

The noble Lord said: My Lords, it will be recalled that the principle purpose of this part of the Bill, and indeed of this clause, is to give the oil corporation powers to dispose of substantial sections of its assets. Under later clauses in the Bill the oil corporation has to do these things on the direction of the Secretary of State. What we are concerned with this afternoon are the terms of disposal. The position as it stands now under subsection (2) of Clause I, just to quote the subsection, is that: The Oil Corporation shall not, and shall secure that each other member of the group does not, dispose of any shares of an equity oil subsidiary except with the consent of the Secretary of State and in accordance with any conditions specified in the instrument signifying his consent; and the Secretary of State shall not give any such consent except with the approval of the Treasury ".

We have given this quite careful consideration and very much query, and I believe the public at large very much query, whether this is enough. We are, after all, considering the disposal of significant assets that have been built up over the years, sometimes, we are reminded, at any rate in part, with taxpayers' money. Therefore, in the interest of prudent housekeeping, good management, good financing, or whatever you may call it, it is rather necessary that the deals which are done are the best that can be done in the circumstances and are seen to be the best that can be done.

We on this side of the House, as I have previously explained with a degree of temperateness to which I am not accustomed, are not in agreement with the whole principle of disposal. But at least, if it is to be done—and the Government have a majority to ensure that the Bill goes through and that therefore it can be done —we should ensure that the deals are the best possible. After the experience of Amersham International, there are very few people who would be in agreement with allowing the Secretary of State and/or the Treasury to be the final arbiter of what is the best deal. Therefore, the amendment seeks that an order should be laid before Parliament, together with an accompanying memorandum setting out the terms on which the disposal is to be made.

It is for consideration whether the Members in another place or the Members of your Lordships' House are in a better position to arrive at an impartial judgment on the worth and validity of a deal as either the Secretary of State or the appropriate Treasury Minister. I would venture to suggest, in a degree of moderation to your Lordships, that there is no monopoly of wisdom within the Treasury and that there is no monopoly of wisdom residing in the bosom or the brain of the Secretary of State—and that, by and large, the collective wisdom of the other place and/or the collective wisdom of your Lordships' House is probably going to arrive at a more rational conclusion as to what constitutes a good deal.

The way in which the Amersham deal was accomplished may no longer be fresh in your Lordships' minds. The Amersham deal was the one in which the nation's interest in the production of isotopes and other products of atomic energy was disposed of to a private body, so that it no longer operated as a nationally-owned industry. In the case of the Amer-sham flotation, not only were the shares floated at a much lower price than materialised on the market —there was considerable over-subscription, and indeed predicted over-subscription—but there were very heavy costs incurred. Total commissions including underwriters, issuing houses and brokers amounted to £1,155,000. A further £135,000 went to professional advisers; £99,000 went to printing and advertising, £437,000 was paid to the receiving banker, and the net cost to the Exchequer was £1,826,000 on that issue, whereas one knows perfectly well that the underwriting expenditure in this case was entirely unnecessary.

The noble Earl, I am sure, is quite well versed in the way that the City works—or rather it was his right honourable friend the Secretary of State who initiated this particular move—and it was in normal conformity with City practice. It is quite normal for shares to be floated on the market in this particular way, for the brokers to take a view as to what the issuing price may be; and according to the element of risk in it—and there always appears to be an element of risk in everything—underwriters are appointed who will undertake to take up the issue to the extent that the public do not subscribe. All this is perfectly normal, and I am not suggesting there was anything sinister behind what the Minister did. In fact it was a blob, it was a colossal error. I do not know what advice was tendered to the Minister by his various advisers. Once again, I am not saying that the advice was given in anything other than good faith. People have to make judgments on these things, and the Minister's ultimate responsibility is to take note of the advice that he receives and then act upon it, and I do not think that the Minister acted in any sinister way so far as Amersham is concerned.

But the question is the formation of the judgment. The principle upon which the Amersham deal took place, and the principle which, I have no doubt, has inspired the mind of the noble Earl at the moment, is adherence to the party's political philosophy that there should be the widest possible diffusion of private ownership. In other words, when the public are invited to subscribe for shares, there should be the utmost public participation. I think that, when the noble Earl thinks about this, as when his right honourable friend thinks about it, a warm glow comes over him as he considers the inestimable benefits that he is spreading widely over the population by allowing people the reasonable possibility at a reasonable price of taking a share in the nation's oil. Well, we can straight away exempt from that category the 3 million of our citizens who are living at or below subsistence level—they have not got any money to invest.

In point of fact, when one analyses—as has been done recently in the columns of The Times and the Financial Times—the individuals who do subscribe for shares of this kind, they are drawn from a very small segment of the population and they are very few in number. In one recent issue, I believe, there were 74,000 individual applications, but after a period of about six weeks that had shrunk to some 24,000. The reason is very clear. When an issue of this kind is made, entries are made on the application documents that may or may not be reproduced in the financial newspapers, in The Times or the Financial Times, and people apply for, shall we say, 1.000 shares, out of which they may be allocated 300. Is it to be supposed for one moment that the applications that go in for the shares available on new issues are from intending permanent investors? Not a bit of it! A good 75 per cent. of them are from what are euphemistically termed "stags"—that is to say, people who subscribe for the issue and then sell their shares to an institutional buyer the moment the share price rises above its issue price to any significant extent. In fact, the normal machinery of public issue means that, unless catastrophe happens—and it rarely does on an issue—the real people who are benefiting are a limited number of temporary investors called "stags" who, for the mere exercise of writing out a counterfoil application in the Financial Times or The Times, or whatever, and posting off a cheque, may, on the assumption that the share price goes above its issue price, which it normally does, receive a cheque in about a month's time, being the balance of the profit they have made. This is called diffusion of ownership. In fact, it is nothing of the kind.

The reason why I raise this point is to bring to the attention of the Government another alternative or another suggestion—that they should put their offers out by tender to institutions. They may complain, of course, that this will tend to place rather larger blocks of shares with institutions than otherwise might be expected to go to ordinary private investors. As I have already indicated, the number of private investors in the United Kingdom is very small indeed, and they are confined to the top 10 per cent. of the country's income group. What does happen is this. When the promised land arrives, if it is ever going to arrive again—and we are assured that it is round the corner—there will be a mini-boomlet on the Stock Exchange, share prices will rise, and, before they rise to the top, the institutions will unload onto unsuspecting investors, who will acquire the shares, and in that way the diffusion of ownership will be accomplished. It is normally accomplished in boom times or approaching boom times rather than when there is a recession. In a recession, the ownership of the shares by individuals tends to go down, because they come under financial pressure. They put their shares on the market in the decline and these are bought up by the institutions, who re-acquire the shares they had sold but at a much lower price.

This is the normal mechanism that has been in operation these many years, as indeed many noble Lords with experience in banking and insurance and the institutions will easily confirm. So there would be no objection, I would think, to going to tender on these issues, because at any rate one would be able to face the institutions with some competitive spirit. Instead of relying on some artificially fixed price, one could rely on the highest tenders, and one therefore might be able to get a much better price for them.

However, I come back to the amendment itself, about the laying of the terms and conditions by order with the accompanying memorandum. There are many ways of putting a valuation on a company and many ways of putting a valuation on a company's assets. There are a variety of ways that can be used and there arc a variety of considerations that have to be borne in mind: the extent of a company's future capital commitments; the nature and extent of its contingent liabilities or the perils to which it may be exposed; the reasonable assurance of its turnover and of its profit margins; and the estimate of its profit both in relation to its turnover and also to the capital it employs in the business. All those are matters which must be taken into account in putting a valuation on shares, and those are not always the conditions that are put into the Minister's mind by just one or two institutions—institutions which, incidentally, may have a direct or indirect interest in the outcome of the transaction itself.

What we would like to see is the other place and ourselves being made aware in advance of the terms of the deal both incorporated in an order and by an accompanying memorandum, because those in another place and those here, where, of course, they disclose a private interest, would have no interest at all in the deal other than the national interest as they saw it. There would obviously be argument as to whether the deal was the best deal or not, and argument that would not necessarily be on party lines—it could be on plain common sense lines. These are matters upon which there can be no one view, and it cannot but be of help to any Government—although a Government of my own political persuasion would not be involved in a series of transactions of this kind—to have these matters more thoroughly ventilated in public and the various considerations determined. It would also be extremely useful to the media. Indeed, the media sometimes fall the victim of their own financial editors whose powers of prediction are not always—although they sometimes are—justified in the event. The media themselves, the financial press, would be extremely interested in the informed arguments that could take place both in another place and in your Lordships' House.

The party opposite—and I would not on this particular issue question their sincerity for one moment —say that they believe in open government. Here is a way of having open government. We have circumstances in which valuable assets are to be disposed of; let it not be done in hole and corner alleys; let it not be done in the corridors of the Treasury; let it not be done in the offices of the Ministers—let it he open so that all can judge.

I sincerely hope that the Minister will agree with these very moderate observations which are intended to be helpful to him, which are intended to be constructive and which have as their aim the preservation of the assets of the nation and getting value for money—a term with which the noble Earl, I am sure, is very familiar—value for money for the taxpayers when they come to get their money back. I beg to move.

3.44 p.m.

The Earl of Mansfield

My Lords, as I think the noble Lord, Lord Bruce of Donington, indicated, what his amendment seeks to do is to introduce another layer of parliamentary procedure before the Secretary of State could give his consent to BNOC disposing of shares in Britoil. I am as anxious as any noble Lord to see a proper level of parliamentary accountability established for the disposal of Britoil, but I really cannot accept that the proposed additional order is necessary, and I think that in the terms expressed in the amendment in fact it would be wrong to accede to such an order.

We debated in Committee an amendment which was pretty similar to this one—Amendment No. 7. I waited with interest, if not with bated breath, to see whether the noble Lord, Lord Bruce of Donington, would produce some new arguments which had not been deployed by his noble friend Lord Bishopston or his noble friend Lord Underhill on the last occasion, and I even waited to see whether he would try to demolish the arguments which I produced when answering that debate. But I fear that I waited in vain. Therefore, what I intend to do is to try to say, a little differently and quite shortly, how the Government view this matter and then to hope that in fact the noble Lord in his usual logical way will come round to the Government's point of view.

We have made it abundantly clear now for a very long time that we intend to transfer BNOC's oil-producing business to Britoil and that our initial aim is to sell 51 per cent. of the shares in the new company. On the matter of the timing, we have said that Britoil will be sold this year unless market conditions in the autumn are such that there is a convincing case for delaying until next year. I made this policy quite clear in my speech on Second Reading, but of course it has been very well known for several months, having been announced I think as far back as October last year. So if Parliament gives approval to the Bill, it will be fully aware of how we intend to implement our policy towards BNOC.

When one has a flotation of this nature there will be a number of decisions as to the exact timing, for instance, of the sale of Britoil, which can only be taken nearer the time. I submit that, against the background of policy approval, it is perfectly reasonable for such decisions to be left to the discretion of the Government. It cannot be right, speaking commercially, to accept this amendment. It is of the nature of any commercial transaction of this kind that much detailed and careful work, particularly of a legal and accounting nature, has to be carried out. A detailed report will be prepared on the oil assets of Britoil by independent petroleum engineers. There will be a prospectus which will have to he published at the time of the offer and that will include an appraisal of the principal assets of the company. This will be carefully considered in the light of the legal responsibilities which all those involved in the offer, not least the Secretary of State and the directors of Britoil, will bear for it.

What happens if this amendment were accepted? I suggest that such a course would be quite wrong because we would be anticipating the prospectus by publishing a memorandum proposed in this amendment which would include the terms on which the disposal has to be made. Indeed, for this information to become available before the shares are sold would be harmful to our objective of obtaining a fair price for the nation—a point which the noble Lord, Lord Bruce of Donington, emphasised—at the time when the shares are sold. It could also have the effect of misleading prospective shareholders and prejudicing the prospects of a successful sale.

I said on the last occasion, and it remains the fact, that the Government's handling of the sale of shares will be subject to the scrutiny of the Comptroller and Auditor-General in common with any other exercise such as this. I made that plain in Committee. We have made our policy abundantly clear and there is but one final point. I wondered whether, in fact, we were setting some precedent which might be undesirable. In 1977 the last Labour Administration sold off some of the Government's stake in BP. The 67 million shares attracted applications for 315 million shares. They opened at an initial premium of 68p rising to 85p on the second day. The difference between the sum realised and the value put on the shares by the market was therefore around £50 million in 1977 money, and the difference is really no indication of proceeds foregone by the taxpayer as a result of the action of the past Government, as is the differential in the case of Amersham International, which the noble Lord quoted. I think that I can sum up the case as regards Amersham International by saying that it is very easy to be wise after the event, and in any flotation such as that, that is the fate that can overcome those who organise the flotation.

Lord Davies of Leek

My Lords, I do not want to delay the House because we want to get the business going quickly, but I do not think that the point has been met at all. With all due respect, the noble Earl is dealing with the attitude towards private enterprise. My point is that we are dealing with oil, which is a completely different commodity, essential to the nation's strength, essential to the nation's defence, and we should know where the sources, the shares, and association go. Transnational firms could take part in these shares and once again break sanctions imposed on a country such as Argentina if there is a long period of activity or hostility against it. None of that has been taken into account. So far the debate has been long. We are taking such an opposite view to that of Canada, to that of West Germany and to that of democratic countries throughout Europe which are interested in oil. I have said enough, but what I say stands and I believe it to he true.

The Earl of Mansfield

My Lords, I assume that the noble Lord was asking me something before I sat down. If I may disregard the Second Reading part of his remarks, this amendment deals with a flotation of shares and whether or not there is to be an extra layer of parliamentary scrutiny before the shares arc eventually floated off. With respect, that is the question to which the House must address itself.

What I have sought to say on two occasions now is that everything that is being done will receive the proper scrutiny, but there comes a time when a Government have made it perfectly plain on matters upon which they intend to act, that one must seek to end scrutiny and the executive must be allowed to get on with the things which it has said it will do.

House adjourned during pleasure, and resumed by THE LORD CHANCELLOR.

The Lord Chancellor (Lord Hailsham of Saint Marylebone)

My Lords, unless someone else says something, I have to put the Question.

Lord Lloyd of Kilgerran

My Lords, I do not want to delay the Statement, which is about to he made, and I thought that after discussions through the usual channels I should be speaking after the Statement. Therefore, I apologise if I am now delaying this Statement, but it is not due to my own wishes. From time to time I have listened to the observations made by the noble Earl the Minister about his objections to this amendment. We on these Benches believe this to be a reasonable amendment. It gives Parliament a chance to consider and, if necessary, introduce some checking and balances. I should have thought that when one is disposing of valuable assets of this kind an amendment of this order should be in the Bill.

The noble Lord, Lord Bruce of Donington, has referred to the Amersham flotation. I shall not take up the time of this House at this stage by referring to the very critical statements made of the action of the Government in the report of the PAC and in other places as to the Government's procedures in this matter. Looking at it from the commercial background to which the Minister referred, I can see no real harm arising, no lengthy delays, and no commercial loss arising if the procedures proposed in this amendment are adopted. It is surely accepted, when dealing with disposal of shares of this kind, that what is needed is greater accountability, and I should have thought that the Government would like to support the adoption of at least the basic theme of this amendment.

Lord Taylor of Gryfe

My Lords, before the noble Lord sits down, and I bow to his knowledge on these matters, does he think that the submission of the Amersham issue to parliamentary debate would have helped the procedure at all? The decision on the value of the shares at issue is a highly sophisticated process. It involves some judgment of the market and is hardly the kind of subject that lends itself to parliamentary debate. Under these circumstances, I, at least, and I suspect those on these Benches, would not support the amendment.

Lord Lloyd of Kilgerran

My Lords, I do not know whether the noble Lord is asking me a question and whether I have the leave of the House to make some observation in reply, but at this stage I shall not be led into the trap of discussing the position in relation to the Amersham matter. I spoke at considerable length when powers were given to the Government to dispose of the Amersham shares, and it would be quite wrong of me to detain the House on an interesting discussion of the sort precipitated by the noble Lord.

Lord Bruce of Donington

My Lords, I would not wish to detain the House from dealing with the next business, which I assume will be the Statement to which reference has already been made this afternoon. However, this is a matter which we regard as being of some importance. We do not take the view of the noble Earl. that the publication of an order, with the memorandum to which we have referred in the amendment, would in any way prejudice the issue of the correct prospectus in due course. Obviously, the prospectus itself goes into a whole series of legal and contractual matters as well as highly sophisticated accounting matters which are required under those particular circumstances. However, I doubt whether any memorandum issued by a Government could be misleading in its effect or have any extreme impact upon the prospectus itself, unless the Government were capable of issuing frivolous memoranda which bore no relation to the matters that were ultimately dealt with in the prospectus or in the accountant's report.

Therefore, I do not see the logic of the noble Earl's argument. But I am anxious not to delay the House. I am most grateful to the Minister for his reply and for the intervention of the noble Lord, Lord Lloyd of Kilgerran. We shall find it necessary to return to the matter on Third Reading. In the meantime, with the leave of the House, I bet., leave to withdraw the amendment.

Amendment, by leave, withdrawn.