British Rail Engineering: Privatisation (Hansard, 13 February 1990)

§ Viscount Davidson
My Lords, British Rail's net proceeds were £13.6 million.

§ Lord Dean of Beswick
My Lords, I am grateful to the Minister for that reply. Is the Minister aware that that was a realistic price in the interests of the taxpayers? Can he confirm that there were substantial lands included in this deal? Can the Minister also give an undertaking that if, on the sale of those lands by the present owners who purchased British Rail Engineering Limited, there are substantial profits the Government will consider implementing a clawback scheme in the interests of taxpayers?

§ Viscount Davidson
My Lords, yes. The Government approved the sale since they were satisfied that this was in BR's best commercial interests. The price was the best that could be obtained, the market having been fully tested by open tender and genuine competition. My honourable friend Mr. Portillo told another place on 17th January 1989 that the contract of sale contains a clawback provision which ensures that British Rail will benefit from any short-term sale or development of BREL land.

§ Lord Underhill
My Lords, it is interesting to hear the noble Viscount's reply. However, I have in my files the press notices of January 1989 from British Railways Board and also the Department of Transport. They refer to BRB accepting the consortium as the best bidder for the railway works; but no reference at all is made in either communication to the price. Can the Minister give a definite undertaking that no pledge was given at the time that the price would not be divulged, even though it may be in the accounts of BREL for the past year? Can he say exactly what are the conditions laid down for the clawback to which my noble friend refers?

§ Viscount Davidson
My Lords, the noble Lord may be interested to hear that i too have too those press cuttings in my file. As I said, the net sale price amounted to £13.6 million. That appears in BR's annual report and accounts for 1988–89. Any queries with regard to figures which appear in the 1989 accounts for the BREL group should be addressed to the group as it is a private company. However, I can tell both noble Lords that there is an element of land and buildings in the sale price. The BR figure of £ 13.6 million was made up as follows: net assets of BREL £.6million; sale of land and buildings for BREL £ 4.6million; sale of land and buildings for BREL £11.1 million. Net of BR costs that came to £13.6million.
The noble Lord asked about the clawback provisions. The sale involved a negotiated clawback provision which ensures that BR will receive a portion of any profit on the sale or development of BR land. The clawback provision applies for a period of seven years after the sale. I will write to the noble Lord giving further details.

§ Lord Parry
My Lords, is the noble Viscount aware that the cost of a first-class ticket from Haverfordwest to Paddington this morning was in excess of £114 and that the train was late?

§ Viscount Davidson
My Lords, that is a question as far removed from the Question on the Order Paper as any I have ever known.

§ Lord Stoddart of Swindon
My Lords, would the noble Viscount care to comment on reports that the land value of assets amounts to £217 million? How will it be ensured, when that land is sold, that the British Railways Board (if it then exists) gets its fair share?

§ Viscount Davidson
My Lords, that is the purpose of the clawback provision which was agreed at the time of the sale. I can tell the noble Lord that no land has been sold as yet.

§ Lord Stoddart of Swindon
My Lords, who is to monitor it? That is my question.

§ Viscount Davidson
My Lords, I shall have to write to the noble Lord.

Lord Bruce of Donington
My Lords, has the noble Viscount's attention been drawn to page 21 of the Daily Telegraph of 1st February? It reports that at the time of this somewhat questionable disposal to Trafalgar House the net profits of this company for the year were £7.5 million.

§ Viscount Davidson
My Lords, I have not read the Daily Telegraph of that particular date, but I can tell the noble Lord that the Office of Fair Trading examined the proposals and looked at any competition implications under the Fair Trading Act 1973. The then Secretary of State for Trade and Industry accepted the advice of the Office of Fair Trading that there were no grounds for reference to the Monopolies and Mergers Commission. The European commission was also notified formally of the terms of the sale and announced its clearance.