Privatisation (Hansard, 10 November 1983)

§ Lord Orr-Ewing
My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

§ The Chancellor of the Duchy of Lancaster (Lord Cockfield)
My Lords, our intention is that British Telecom, Rolls-Royce, British Airways, BGC's former offshore oil interests (Enterprise Oil Ltd.), substantial parts of British Steel, of British Shipbuilders and of British Leyland, and as many as possible of Britain's airports, will become private sector companies. We also aim to introduce substanial private capital into the National Bus Company. The Wytch Farm oilfield sale is expected to be completed this financial year. Other possibilities are under consideration

§ Lord Orr-Ewing
My Lords, will my noble friend understand how pleased we on this side of the House are to hear that this very ambitious programme is contemplated—and noble Lords in other parts of the House as well? Could he note that when these operations are undertaken every effort is made to involve those who are working in the industries concerned? Is it not a fact that the National Freight Corporation, where management and workpeople were all concerned and bought shares, is likely not just to break even, as it did last year, but to make profits of about £5 million this year? Is it not also true that nationalisation does not in fact guarantee the same jobs to the same people? There were very large cuts in the nationalised industries of gas and electricity in the years before this Government came to power.

§ Lord Cockfield
My Lords, I am grateful to my noble friend for his comments. It has been, and will continue to be, the policy of Her Majesty's Government to encourage shareholdings by employees. This 957 is a very valuable feature of privatisation. It is perfectly true, as he says, that the National Freight Corporation is likely to make a good profit of about £5 million this year, while last year it barely broke even. Other companies which have been returned to the private sector have also done very well.

§ Lord Beswick
My Lords, if the private sector is that much more clever at running industry than the public servants, why is it that they are given only the easier and profitable sectors to administer? Why do they not have a go at the more difficult companies within the public sector? May I ask the noble Lord, in respect of British Airways, bearing in mind the report of the Public Accounts Committee on British Aerospace: can he really justify putting £1,000 million of taxpayers' money into British Airways to make it marketable?

§ Lord Cockfield
My Lords, I am grateful to the noble Lord for his suggestion that all the nationalised industries should be privatised whether or not they are currently profitable. We shall certainly bear in mind his wholehearted support in this matter when we come to consider individual projects. So far as British Airways are concerned, the precise nature and form of privatisation has still to be settled. This obviously includes the question of the capitalisation of the company.

§ Lord Beswick
My Lords, with respect, I admire the facility of the noble Lord's answer, but would he please answer the first part of my question and tell me why he does not give the difficult ones to private entrepreneurs?

§ Lord Cockfield
My Lords, I was very clear and specific in my reply. There are a number of the nationalised industries which have gone through very difficult times. Many of them have made large losses; they have been over-manned; they have been a severe drain upon the taxpayer. Many of these things need to be put right, and we have devoted a great deal of effort towards putting them right. When they are put right these industries will, we hope, be privatised, and we shall thus ensure their continued successful operation.

§ Lord Nugent of Guildford
My Lords, is my noble friend aware that any list which contains British Shipbuilders can hardly be said to contain only the easy ones?

§ Lord Cockfield
My Lords, I am grateful to my noble friend for his comment, which I shall, of course, bear in mind.

§ Lord Beswick
My Lords, but is it not the case that to pick out only the profitable—

Noble Lords
Oh!

§ Lord Jacques
My Lords, would the Minister bear in mind two things? First of all, would he bear in mind that some of these undertakings that were nationalised were only nationalised when private ownership failed? Examples of this are British Leyland and Rolls-Royce. Secondly, would the Minister bear in mind that there 958 are other policies—policies far more important than ownership—which are necessary in this country?

§ Lord Cockfield
My Lords, if the noble Lord will cast his mind back he will remember that the reasons for nationalising industries were not by any means confined to the fact that the industries in question were making losses. I would suggest that he reads some of the policy documents of the Labour Party, however horrifying they may be.

Noble Lords
My Lords—

§ Lord Shinwell
My Lords, would the Government consider leaving the nuclear defence complex under the state and diverting the conventional forces to private ownership?

§ Lord Cockfield
My Lords, I must apologise to the noble Lord, Lord Shinwell. There was so much background noise as he began to ask his question that, unfortunately, I lost his introduction to it. I am sure, however, that he has made a valuable point, as he always does.

§ Lord Taylor of Gryfe
My Lords, would the Minister advise the House on the timing of these issues, to ensure that in the carrying out of such an ambitious programme the Government will not overload the market with new issues, in order to ensure that the taxpayer gets the maximum advantage in the presentation of these companies for privatisation?

§ Lord Cockfield
My Lords, the noble Lord, Lord Taylor, has made a very important point, and it is one which we keep in mind all the time. The programming of issues of this sort requires great skill and a proper regard to market conditions at the time. It is our objective, as he himself says, to ensure that the Government receive a fair and proper price.

§ Lord Molloy
My Lords, does the noble Lord agree, when he makes recommendations to noble Lords on this side of the House to cast their minds back to some aspects of nationalisation, that the last time Rolls-Royce was nationalised it was an emergency measure of the Tory Government of the day? Is that not correct? Secondly, is it not also true that many of our great publicly owned industries have excellent relations with sectors of private industry and that together they make very good teams in seeing that the economy of Britain is well maintained? One can hardly mention a publicly owned industry which does not have very close relations with other aspects of industry which are privately owned.

§ Lord Cockfield
My Lords, of course the noble Lord is entirely right in saying that close relations ought to exist between public sector and private sector companies, and very often they work together very well. I do not want to go into the specific history of Rolls-Royce, about which a great deal could be said and which throws no credit on the position and policies of certain prominent Members of the Labour Party who are no longer as prominent as they were then. But there may be circumstances where a company needs rescuing and this was so in the case of 959 Rolls-Royce. The important thing now is to ensure that the part of that company which remains in the public sector—and the noble Lord will remember that part of it was returned to the private sector shortly afterwards—is run properly and efficiently and can therefore appropriately be returned to the private sector.

§ Lord Mishcon
My Lords, will the noble Lord consider placing the considerable irony which he has now put at the disposal of the national interest back again into private interest and privatising it for the general benefit of this House?

§ Lord Cockfield
My Lords, I am always most grateful to the noble Lord for his compliments, and I can assure him that my abilities remain at the service of the Government as long as it is the wish of the Government to employ them.

§ Lord Bishopston
My Lords, will the noble Lord tell the House how many millions of public money have been put into nationalised industries to pay for redundancies and other factors, in order to make them more attractive for piratisation? For instance, can he say whether the increase in gas prices is an attempt to make the industry much more profitable and therefore more attractive to the private sector? Will he give some assurances—for example, in the case of British Telecom—that many of the socially necessary services which do not make a profit, such as the presence of telephone facilities in rural areas, will still continue despite the piratisation of the public sector?

§ Lord Cockfield
My Lords, so far as the first part of the noble Lord's question is concerned, perhaps the most relevant figure to give him is that since 1945, and revalued at current prices, approximately £45,000 million of public money has gone into the nationalised industries, most of which has been lost. This is the kind of thing that we wish to bring to an end. To turn to British Telecom, the noble Lord will no doubt have read the draft licence which has now been published and which deals in detail with the measures which British Telecom are required to abide by for the preservation of services in rural areas.

§ Lord Alport
My Lords, may I ask my noble friend whether he realises that the sarcasm and discourtesy with which he has answered many of the questions put to him this afternoon is not in accordance with the normal traditions of this House?

§ Lord Cockfield
My Lords, I have in fact, in reply to every question, given a strictly factual answer. The fact that certain noble Lords may not like to look the facts straight in the face is not a matter on which I would wish to comment.

§ Lord Underhill
My Lords, does the noble Lord the Minister remember a number of occasions when I and other Members on this side of the House made it quite clear that we believe in a mixed economy? Will the Minister say whether the Government believe in a mixed economy and where they draw the limits of their polemical attack upon public ownership?

§ Lord Cockfield
My Lords, we have never made polemical attacks on public ownership. Our objective is to ensure that these industries are run for the greater benefit of the people who work in them, of consumers and of the general public at large and, in the main, they can be run better, more efficiently and more competitively in the private sector than in the public sector.

§ Lord Diamond
My Lords, will the noble Lord say whether it will continue to be the policy of Her Majesty's Government to draw no distinction between the finance which will be coming into the Treasury from the sale of these assets and the ordinary revenue of the country which is naturally used for consumption purposes, such as public services and so on? Will that continue to be the policy of the Government, and if it does so continue, will not the case be at the end of the Government's period of office that the country will simply be the poorer for the lack of all these national assets?

§ Lord Cockfield
My Lords, so far as the first part of the noble Lord's question is concerned, receipts from the sale of assets are separately identified in the national accounts so that it can be seen exactly what has been received. Regarding the second part of his question, it is not the case that all revenue is spent for current purposes only. On the contrary, a large amount of revenue is spent on capital projects. For example, many billions of pounds a year are spent on the capital programmes of the nationalised industries, and of course there are large capital projects in other areas of Government.

§ Lord Diamond
My Lords, is that not a completely misleading answer? The noble Lord the Minister knows that it has always been the case that, out of the proceeds which the Government collect, a number of items of expenditure have been incurred which could be classified partly as capital and partly as revenue, and it has never been the practice to attempt to distinguish. Is it not the case that there is a great deal of capital loss going on in the form of depreciation which is never recorded in the capital account and which offsets what the Minister has been saying? Am I not right therefore in saying that a clear distinction ought to be drawn when the country is embarking on a totally new policy of selling its birthright? The conclusion will be—but I do not need to finish it.

§ Lord Cockfield
My Lords, I fear that the noble Lord is getting rather emotional and he is mixing up his politics with his accountancy. The first part of his exposition merely confirms what I was saying. So far as the rest of his point is concerned, the Government spend every year a large amount of money on capital account and it is quite wrong to say that the birthright of the nation is being sold.

Lord Morris
My Lords, is my noble friend aware that I am not alone in my view that the appointment of himself to the Government by my right honourable friend the Prime Minister is one of the best examples of her good taste and judgment?

§ Lord Cockfield
My Lords, I am grateful to my noble friend for what he says.

§ Lord Beswick
My Lords, will the Minister be good enough to clarify the remarks which he made earlier, that certain members of the Labour Party were in some way involved in the bankruptcy of Rolls-Royce?

§ Lord Cockfield
My Lords, that was not the point that I had made. The point that I had made was that certain policies which had been followed did in fact lead to a situation in which Rolls-Royce went bankrupt and the noble Lord will find that this is amply evidenced.

§ Lord Elwyn-Jones
My Lords, will the noble Lord be good enough to read again the nature of his answers to the House today, which seem to have shown a progress from irony to sarcasm to positive rudeness to the noble Lord who has just spoken. We admire greatly the noble Lord's intellectual capacity, but let him consider how he is dealing with the House.

§ Lord Cockfield
My Lords, I reject entirely the claims made by the noble Lord—the noble and learned Lord.

A noble Lord
The noble and learned Lord.

§ Lord Cockfield
I said "the noble and learned Lord" before the noble Lord chose to try to correct me. I simply do not accept the criticisms which the noble and learned Lord makes.

§ Lord George-Brown
But, my Lords, the noble Lord never did accept any criticisms. May I ask the Minister to make it quite clear that he advised me about Rolls-Royce when I was the economics Minister. If the thing went wrong it was because I accepted the noble Lord's advice.

§ Lord Cockfield
My Lords, I am happy to say that I have never advised the noble Lord, Lord George-Brown, either on that or, indeed, on any other matter. The only occasion that I remember meeting him in that sort of capacity was when he was a Parliamentary Private Secretary——

§ Lord George-Brown
That is right.

§ Lord Cockfield
—to the late Sir Stafford Cripps.

§ Lord George-Brown
I never was. The noble Lord has even got that wrong.

§ Lord Cockfield
In that event, I withdraw the compliment that I paid to the noble Lord.