HL Deb 11 July 1989 vol 510 cc242-4

12.38 a.m.

Lord Lyell rose to move, That the draft order laid before the House on 29th June be approved.

The noble Lord said: My Lords, as is normal with orders of this nature, the order is being made under paragraph 1 of Schedule 1 to the Northern Ireland Act 1974. It authorises additional expenditure of £294 million by the Department of Economic Development for purposes connected with the privatisation of Short Brothers plc. Noble Lords may wish to refer to paragraph 3 of page 5 of the Northern Ireland summer supplementary estimate 1989–90 which is available in the Printed Paper Office. That supplementary estimate explains that increased expenditure of £294 million is partly offset by the receipt of £30 million from the sale of the company's shares.

Your Lordships will appreciate that, unlike the main estimates for Northern Ireland which were approved by the House on 26th June this year, the draft order before us this evening deals only with expenditure in connection with Short Brothers plc. Noble Lords who were present at the debate on 26th June may recall that I explained that the disposal of Shorts would require substantial further amounts of government funding over and above the £5.3 million for Shorts which is already included in the main estimates for the current year 1989–90.

Your Lordships may also recall that my right honourable friend the Secretary of State announced on 7th June this year the details of the financial package agreed with the Canadian company Bombardier for the sale of Shorts. The £294 million being sought this evening relates to the second part of that package, the first part being the £390 million loan made earlier this year, which was included in the Northern Ireland spring supplementary estimates for 1988–89.

Of the £294 million that is before us this evening, £275 million will be used to recapitalise the company, to repay remaining borrowings and to meet anticipated losses on existing contracts. We intend that at least £60 million of this sum—that is the £275 million net—will be in the form of an interest free loan. That loan will be subject to full or partial payment if Bombardier fails to abide by the detailed and specific performance-related requirements of the loan agreement. Also, in order to encourage investment in research and development, the loan agreement will provide for progressive cancellation of the loan if certain specific targets relating to research and development and capital expenditure are met.

The remaining £19 million that we are seeking will be used first of all to provide financial assistance for the capital investment and training programmes to be undertaken during this financial year by Shorts under its new ownership, and, secondly, to meet the fees of the Government's professional advisers.

The Government also intend to provide grant aid of £91 million toward Shorts future capital expenditure and training programmes, totalling some £216 million in the period 1990 to 1993. This last sum is not covered by the order that is before us this evening and the approval of your Lordships' House will be sought for this in due course.

Your Lordships will appreciate that at the point of sale it will be necessary to assess the losses incurred by Shorts since 31st March 1989. That figure will be added to the cost of sale. The funding requirement to meet these losses will be met in the first instance by an advance from the Northern Ireland Civil Contingencies Fund, and this will be repaid in due course through a supplementary estimate which will be brought before your Lordships probably in the autumn of this year.

I want to conclude by saying that Shorts now faces one of the most exciting and challenging periods in its history. The proposed expenditure before us this evening will ensure that it is returned to the private sector with a capital base that will enable it to face the future with confidence. My Lords, I beg to move.

Moved, That the draft order laid before the House on 29th June be approved.—(Lord Lyell.)

Lord Graham of Edmonton

My Lords, we on this side of the House certainly appreciate, understand and approve what the Minister has brought before us today. Both my noble friend Lord Prys-Davies and I have been present on previous occasions when the whole anxious future for Shorts—which concerns the future of the people not just of Belfast but of all Northern Ireland—was the subject of great concern on the part of the Minister and his ministerial colleagues. I think he understands that we also share his anxiety.

In effect, we have been presented with the authorisation for tapping some of the moneys which he advised would be required when the financial package came before the House. Certainly we are minded to say that this is proper and is needed.

Can the Minister help me on one point? I think that he mentioned £91 million for training. Can he tell us whether it is the normal training which would be conducted by a large organisation such as Shorts in respect of its engineers or draughtsmen undertaking basic training programmes or is there anything special about the training facility that would be made available? If the Minister is unable to answer that I shall understand.

In the schedule there is a matter to which he did not refer: the development of tourism. Would the Minister care to say something about that? As well as referring substantially to aircraft and shipbuilding industries, there are other matters in the schedule that I should have liked to have taken up had there been time. Can the Minister tell me what is involved in the phrase "the development of tourism"?

Lord Lyell

My Lords, I congratulate the two noble Lords on their stamina. They have sat throughout the heat of debate.

I do not know what is referred to in "the development of tourism", the gross provision and the net provision, and the appropriations in aid of precisely £1,000. Normally these sums shown as £1,000 tend to be in the schedules and in the appropriation orders to show that there has been a contra entry in the payments. It looks as though there has been a very small appropriation in aid. Quite rightly, the noble Lord has pointed out that the net provision is only £1,000, down from £6.106 million to £6.105 million.

I shall obtain an answer and write to him on why that sum on tourism appears in an order which I presented to your Lordships as being exclusively dealing with Shorts.

The £91 million about which the noble Lord asked is the sum which we shall be spending on training. However, I pointed out that this would be over the next three years, between 1990 and 1993. This is how we shall envisage the funds being spent. But we think that it will be necessary, and it would be normal in financial restructuring of this type over the next three years. Indeed, the sum that I have over the next three years for training with regard to government support is nearer £12 million. I shall obtain the precise answer for which the noble Lord is searching.

My stamina may be failing slightly this evening. I shall certainly find out and write to him. However, I am grateful for the attention that he has paid. I shall draw his perspicacity to the attention of the chairman of Northern Ireland Tourist Board, who I know will be grateful for the attention paid by your Lordships at this late hour. I think that it would be the wish of your Lordships that I commend the order.

On Question, Motion agreed to.