British Telecom Shares: Sale Receipts (Hansard, 14 May 1985)

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

§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth)
My Lords, payment for BT shares is being made in three instalments. The first instalment was 1017 paid in November 1984. Gross receipts from that instalment were £1.5 billion. Subsequent instalments are due in June 1985 and April 1986. Each of these instalments will raise £1.2 billion. The receipts are paid into the Consolidated Fund, where they are used to finance the Government's programmes.

§ Lord Beswick
My Lords, I thank the noble Lord for that Answer, and, of course, I accept that the receipts go into the general kitty. Will the noble Lord now confirm that, out of that general kitty, the recent tax concessions were only made possible because of those receipts? Secondly, will he now agree that the gross appreciation of share values which took place in private hands was not compensated for or balanced by any increased production of real wealth; was it not therefore inflationary, and are we not now facing a situation which is dangerous to the future stability of our society?

§ Lord Lucas of Chilworth
My Lords, I cannot agree with the noble Lord, Lord Beswick, in relation to his first supplementary, that this money has financed tax concessions. This money has gone into "the kitty", as he puts it, from which Government programmes in all are funded. So far as appreciation is concerned, that is as a result of the very nature of the success of the company since its privatisation. I can see no danger, inflationary or otherwise, in that success.

§ Lord Harmar-Nicholls
My Lords, is my noble friend aware that to do justice to the two Questions which the noble Lord, Lord Beswick, has put on the Order Paper would require at least a two-day debate and that the circumstances would require information which will be available only about two years from now? Is it not a misuse of our Question and Answer procedure to put such wide-ranging Questions on the Order Paper in this way?

§ Lord Lucas of Chilworth
My Lords, I think I understand what lies behind the question of my noble friend Lord Harmar-Nicholls. It is, of course, for your Lordships to decide whether or not this is an abuse. I find the Question of the noble Lord, Lord Beswick, interesting, and I think I could possibly answer him better in a couple of years' time.

§ Lord Shinwell
My Lords, if, as the noble Lord has just said, some of this money, either in instalments or in total, goes into the Exchequer, what programme does it finance? Can the noble Lord specify any particular programme, constructive in character, which has the effect of reducing unemployment or which even helps to make it unnecessary to borrow more finance from abroad or from people in this country? Can he specify anything at all, or will he just indulge in some casual talk about it, without having any knowledge of what is happening?

§ Lord Lucas of Chilworth
My Lords, the noble Lord, Lord Shinwell, raises a number of points. I could specify the YTS programme, which goes towards job creation. That is one of the programmes financed by the Government from the monies that are available to them.

A noble Lord
What job creation, my Lords?

Lord Oram
My Lords, since the Prime Minister, in her speech to the Scottish Conservatives the other day, made much of the value of wider share ownership, are the Government monitoring the extent to which, when shares are taken up by small investors in the early days of a particular privatisation, they seem quickly to get into the hands of large investors? Was this the reason why, in the case of British Telecom, there had to be an in-built incentive for investors to hold their shares for a prescribed period of years?

§ Lord Lucas of Chilworth
My Lords, the answer to the question of the noble Lord, Lord Oram, is quite simply, as was announced in another place a short while ago, that 81 per cent. of those who originally invested in BT are still shareholders today; that is to say, they were a fortnight ago.

Lord Bruce of Donington
My Lords, is the noble Lord aware that his statement that the appreciation in the value of the shares since the flotation has been due to its privatisation is a lot of nonsense, and that the change of ownership has had no effect in that regard? Is not the reason why the shares have appreciated because the issue was grossly under-priced? Is the noble Lord aware that, as a result of that, the Exchequer has been deprived of well over £1,000 million, and that had the Government been the directors of a private company they would by this time have found themselves prosecuted under the Companies Act?

§ Lord Lucas of Chilworth
Really, my Lords! Four questions have been raised by the noble Lord, Lord Bruce of Donington, in a somewhat rhetorical way, and I do not think I can agree with any one of them.

§ Lord Cledwyn of Penrhos
My Lords, the noble Lord has given us a good deal of valuable information. The most important information is that by next April the Government will have received £4 billion of public money. In these circumstances, is not the public entitled to know precisely how the Government propose to spend this public money? Will the noble Lord speak to his right honourable friend and ask him whether or not, in the course of the next few months, and certainly after April 1986, a White Paper will be published showing how the £4 billion is in fact to be spent?

§ Lord Lucas of Chilworth
My Lords, the noble Lord the Leader of the Opposition knows very well it is not a practice to hypothecate taxation or governmental receipts. That has never been the practice of any Government, and we are not going to alter that practice. He will also know, and the House will recognise, that Government expenditure is always the subject of a White Paper, which sets out the programmes upon which the Government are going to embark.

§ Lord Barnett
My Lords, I recognise that it is not the practice to hypothecate revenue receipts, but would it not have been much more sensible in economic and social terms if in this instance the Government 1019 had taken that £4 billion and had planned to use it for capital investment rather than on social security, unemployment benefits and other revenue expenditure?

§ Lord Lucas of Chilworth
No, my Lords. That has been tried before, and it has not succeeded. Indeed, I am quite sure that, had we hypothecated it in that way, the noble Lord opposite would have asked me why I had not done exactly the opposite.

§ Lord Diamond
My Lords, the noble Lord, as an ex-Treasury Minister, knows very well, as indeed the whole House knows, that there is no question of hypothecation. What we are asking the Government is: why do they continue to sell capital assets and not invest in any capital construction in their place? Why are the Government continually selling the silver to pay for the groceries?

§ Lord Lucas of Chilworth
My Lords, my noble friend Lord Cockfield has answered this question about selling the silver in order to buy the groceries. It is a non-question.

§ Lord Gisborough
My Lords, does my noble friend agree that the amount of money put into training is about as good a capital investment as could possibly be arranged in these times?

§ Lord Lucas of Chilworth
My Lords, I am grateful to my noble friend Lord Gisborough. Of course, he is absolutely right. The return on that investment in training will be seen over the forthcoming years.

§ Lord Kaldor
My Lords, is the noble Lord aware that money received by the Government from the sale of capital assets is not the same as money received from taxation; that is to say, it is not available as a counterpart to finance Government expenditure? Therefore, the £6 billion that the Government are taking in is not a substitute for £6 billion of taxation—

Noble Lords
Question!

§ Lord Kaldor
If it were, the whole financial balance would be impaired. It is really a substitute for £6 billion borrowed, is it not?