§ 2.49 p.m.
§ Lord BeswickMy Lords, I beg leave to ask the Question standing in my name on the Order Paper.
§ The Question was as follows:
§ To ask Her Majesty's Government what proposals have been put to them by British Airways for the reduction of outstanding loans, and what has been the reply.
§ Lord Brabazon of TaraMy Lords, on 12th December last year my noble friend Lord Lucas announced the Government's aim that British Airways should as far as possible improve its balance sheet through its own efforts. Since then, the airline has endeavoured to meet the Government's objective with considerable success; it has made no recent proposals to the Government for the reduction of outstanding loans.
§ Lord BeswickMy Lords, am I to gather from that that the Government are not now considering the request which was made for money to write off the loan outstanding in the United States? May I ask the noble Lord this question? Last week his noble friend Lord Trefgarne said that the policy statement announced last month puts British Airways on the same footing as any other private sector airline. Is there any other airline in the private sector which has asked for Government money to write off its debts?
§ Lord Brabazon of TaraMy Lords, I know of no other airline in the private sector in this country which has asked for money to write off its debts.
§ Lord UnderhillMy Lords, can the Minister tell the House what is the Government's total investment in British Airways? Will he give a firm guarantee that the taxpayer will receive all that back on flotation? Is he telling the House that there is no possibility whatever of any write-off of any of the debts owed by British Airways before flotation?
§ Lord Brabazon of TaraThe only money that the Government have given to British Airways in the last 10 years has been £340 million of public dividend capital. This has been an investment, not a subsidy, and British Airways has paid the Government £70 million of dividends over the years. In 1980 Parliament sanctioned the write-off of £160 million, being the inrecoverable costs of Concorde, but the remaining £180 million now forms the equity capital of British Airways which the Government still own and which they plan to sell at a profit on flotation next year.
Regarding the possible capital restructure, as I said it has not been decided, if any capital reconstruction is necessary, how it would be achieved, nor how it might be.
§ Lord BeswickMy Lords, I thank the noble Lord for the way in which he is endeavouring to answer these questions. But in answer to the last supplementary he said that it has "not yet been decided". Does that mean that there is still a possibility that money will be given to British Airways in order to facilitate its sale?
§ Lord Brabazon of TaraMy Lords, British Airways' half yearly accounts are due to be published towards the end of November. After that time it will be decided whether it is necessary to take action regarding the restructuring of British Airways' debts. I cannot at present say whether or not this will be necessary.
Lord Bruce of DoningtonMy Lords, the answer which the noble Lord has seen fit to give is rather ambiguous, is it not? Is he aware that any reconstruction of British Airways which involves the write off in any way of money contributed by the taxpayer to that company will be regarded as just another effort to dress up the privatisation of British Airways at the taxpayer's expense for the benefit of the Government's rentier friends?
§ Lord Brabazon of TaraMy Lords, should it be necessary to have any reconstruction of British Airways' debt, that reconstruction would obviously be 348 reflected in the price achieved in the market by the privatisation of the company. Therefore it would come back to the Government in one form or another.
§ Lord Peyton of YeovilMy Lords, will my noble friend agree that these cracks about rentier friends are old-fashioned, turgid, very ancient and not even funny, even though the noble Lord, Lord Bruce of Donington, does not have a very high standard of jokes? May I ask my noble friend whether he does not agree that, following the rather confusing questions he has been asked, there is some danger that the main point of his reply may be overlooked; namely, that it is the Government's intention to sell British Airways at a profit and that the £178 million of capital is equity capital which will be sold then?
§ Lord Brabazon of TaraMy Lords, I thank my noble friend for his question. He has put the matter very much better than I possibly could.
§ Lord DiamondMy Lords, may I say to the Minister, with all the greatest respect, that it is possible for any objectively minded person to be rather unclear about what the Government are saying, having regard for the fact that two of his answers did not seem to line up completely one with the other? May I, therefore, ask him whether, if on reconsidering the matter and reading the Official Report, he finds it necessary to add a word or two, he will not hesitate to do so?
§ Lord Brabazon of TaraI will indeed, my Lords.
Viscount St. DavidsMy Lords, would the noble Lord not agree that there is a unique and simple reason why British Airways should be able to ask that its debt should be treated in a different manner, and that is that uniquely, and contrary to all the other airways, it has suffered nationalisation?
§ Lord Brabazon of TaraMy Lords, that is a point on which I do not think I wish to comment at the moment.
§ Lord BeswickMy Lords, I wonder whether in answer to his noble friend Lord Peyton the noble Lord will make it clear that there is no question of selling off any public assets at a profit? Is it not in this case, as with British Telecom, a matter of disposing of public assets by way of gift coupons?
§ Lord Brabazon of TaraMy Lords, I would not agree with the noble Lord that we are giving away British Airways.