Ferranti Company: Future (Hansard, 24 October 1989)

§ The Minister of State, Department of Trade and Industry (Lord Trefgarne)
My Lords, I understand that there may be a number of options open to Ferranti that could secure the future of the company's activities. It is for the company and not the Government to explore those.

§ Lord Taylor of Gryfe
My Lords, am I right in my understanding that included in the options available to the company there are a number of potential bidders who are British, foreign and a mixture of both? Does the Minister accept that 20,000 people are employed by this company, 8,000 of whom are employed in the Edinburgh area? Is the Minister aware that 70 per cent. of the output of this company is for defence contracts? Does the Minister not agree that it would be wise for the Government to indicate guidelines to the company in its negotations which will protect employment and ensure that the company is protected from foreign predators and competitors?

§ Lord Trefgarne
My Lords, I hope the noble Lord will understand if I have to be rather guarded in my answers because it may be that a solution proposed by Ferranti will come before my right honourable friend the Secretary of State for consideration. He has a specific role as regards the Monopolies and Mergers Commission. These are matters for the company. When it has decided on the course that it wishes to follow it will then be for the Director General of Fair Trading to advise my right honourable friend if he thinks fit.

§ Lord Boyd-Carpenter
My Lords, in view of the contribution to national defence that this company makes—in his previous incarnation my noble friend must have closely followed it—quite apart from the Monopolies and Mergers Commission, are not the Government concerned that this company should continue in operation in order to help sustain our defence effort?

§ Lord Trefgarne
My Lords, Ferranti in the past has made, and now is making, an important contribution to our defence capability. I very much hope that it will continue to do so. Clearly, the company has entered into a period of some difficulty and it is for Ferranti to bring forward solutions to those problems.

§ Lord Williams of Elvel
My Lords, is the noble Lord aware that we on this side of the House associate ourselves with the point made by the noble Lord, Lord Boyd-Carpenter? Is not the Minister aware that Ferranti is the third biggest defence contractor and that it employs 24,000 people? Is not he further aware that Ferranti is intimately involved 1262 with a possible £1 billion contract for the advanced radar systems? In his previous incarnation the Minister was very well aware of that situation. Is it really the case that the Government wash their hands of this whole operation and say that it is up to the company rather than the Government to do something?

§ Lord Trefgarne
My Lords, the whole basis of our defence procurement policy these days is one of competition rather than the issuing of contracts to preferred suppliers, as was the system in olden times. I believe that the new system is infinitely preferable to the old one. The result is that in almost all major areas of defence procurement, we now have more than one preferred supplier.

§ Lord Williams of Elvel
My Lords, is the noble Lord saying that the Government are prepared to see Ferranti go bankrupt?

§ Lord Trefgarne
My Lords, the success or otherwise of Ferranti lies in the hands of the management of that company, not in the hands of the Government.

§ Viscount Montgomery of Alamein
My Lords, in contrast to what several noble Lords have said, does my noble friend not agree that in a free enterprise society it is in fact the marketplace which will decide what ultimately takes place?

§ Lord Trefgarne
My Lords, my noble friend is entirely correct. That is perhaps the principal difference between Members on this side of the House and noble Lords opposite. We no longer seek to spoon feed our industries.

§ Lord Cledwyn of Penrhos
My Lords, are the noble Lord and his right honourable friend prepared to see a French company bale out Ferranti while the Government do nothing at all? What is the Government's policy towards foreign ownership, in part or in whole, of our defence industries?

§ Lord Trefgarne
My Lords, the fact of the matter is that we already acquire some of our defence equipment from companies which are not United Kingdom-owned. For example, a year or so ago we placed an order with the Boeing Company for the AWACS aeroplane. So it is not necessarily self-evident that all our defence equipment has to come from British-owned companies. I am happy that 90 per cent. or more of it does come from British-owned companies, but that is because by and large British companies have competed for and won that business and have not been handed it on a plate.

§ Lord Taylor of Gryfe
My Lords, does the noble Lord not agree that a national interest is involved? Does he further agree that this industry is not normally conducted within the rules of the market economy, and that the national interest requires the existence of a defence capacity? Does he accept that one of the major contenders in the negotiation to take over Ferranti is in fact a state-owned company in France? Can he visualise a situation when, in competition for contracts between the French 1263 contender and the British contender in which they have a stake, the state owned organisation of France would benefit from any such association?

§ Lord Trefgarne
My Lords, what the national interest requires in these circumstances is the right equipment to be supplied to our armed forces at the right price, at the right time and to the right specification. It is not self-evident that companies have to be British-owned to achieve that.