§ Mr. Mason
Decisions have recently been taken about the capital structure of Short Brothers and Harland Ltd. and about responsibility within the Government for future financial support for the company.
It has become clear in recent years that the company could not sustain the burden of servicing Government loans, totalling £14 million, as well as bank loan and overdraft facilities amounting to £9 million. Such a capital debt was out of all proportion to the company's authorised share capital of £2.5 million.
Accordingly, the Government have agreed to waive the accumulated interest due on all Government loans outstanding; to write off loans of £5.05 million related 933W to certain aircraft produced in the past; and to convert the remaining Government loans, totalling £8.95 million, into share capital. In addition, the Northern Ireland Department of Commerce has subscribed for 4 million new shares of £1 each at par. The company's articles of association have been amended to provide for an increase in the authorised share capital from £2.5 million, of which £2.36 million had been issued, to £19.31 million. These changes took effect before the end of the company's financial year in August 1976, and the issued share capital of the company now stands at £15.31 million and its borrowings at £9 million. The gearing and capital structure are now realistic and commercial.
Before the restructuring the Department of Industry, through its holding company—S.B. Realisations Ltd.—held 69½ per cent. of the shares. The remaining shares were held, in equal amounts, by Harland and Wolff Ltd., and the receiver of Rolls-Royce Ltd. Following the restructuring, and after the necessary inter-departmental transfers have been completed, the majority shareholding will lie with the Northern Ireland Department of Commerce and the control of the company will be my responsibility, operating through that Department, which has indeed in recent years provided the financial support for the company. Thus the balance of shareholding in Shorts will now accord with declared Government policy that a future devolved administration in Northern Ireland should have responsibility for, and control of, the local economy. The issued share capital, as increased, will be held as follows: 61.45 per cent. by the Northern Ireland Department of Commerce; 33.85 per cent. by the Department of Industry; and 2.35 per cent. each by Harland and Wolff and the Rolls-Royce receiver. The 33.85 per cent. share-holding of the Department of Industry reflects an increase in that Department's stake in the company from 1.64 million to 5.182 million shares.
In future, therefore, I shall answer for Government policy towards Shorts in Parliament, and the Permanent Secretary of the Northern Ireland Department of Commerce will be the Accounting Officer.
These changes do not mean that there is any change in Shorts' access to the 934W relevant departments in Whitehall. Moreover, the board of Shorts will establish a close relationship with the board of British Aerospace, when that body is set up. A statutory requirement for co-ordination and consultation is already written into the Aircraft and Shipbuilding Industries Bill.
I would emphasise that the Secretary of State for Industry, as sponsor of the United Kingdom aerospace industry, will continue to have the same sponsor responsibility for Shorts as for any other part of that industry. So the company will be kept fully informed of Government thinking on future commercial and civil aircraft. He will also retain his interest, as a substantial shareholder in Shorts, for such matters as key appointments to the Board.
Likewise there will be no change in the company's close relationships with the Ministry of Defence. Shorts will continue to be treated in the same way as any other firm in the United Kingdom aerospace industry and to enjoy access to the work of the Ministry's research and development establishments. The Ministry of Defence will continue to keep the company informed of relevant staff targets for Service equipment and of the Services' operational requirements and will fully consider them in the award of purchasing contracts in appropriate fields.
In August 1972 the Government gave an assurance to this House that the liabilities of the company would be honoured. In the course of the recent arrangements for restructuring the capital of the company my predecessor as Secretary of State for Northern Ireland re-affirmed to the directors that the Government adhered to that assurance.
What I have said indicates the importance which the Government attach to the future wellbeing of Short Brothers and Harland, which celebrates its 75th birthday this year. In recent years the Skyvan utility aircraft and the Seacat and Tigercat missiles have been sold world-wide. The company has also established a unique niche for itself in the field of aero-engine podding. Its Blowpipe missile is currently in production for the Army and for export. I share the company's high hopes for the SD3–30 feeder line aircraft which has 935W recently gone into service with Command Airlines in the United States and with Time Air in Canada. The company has established substantial international links. The high technology industry which the company has developed in Northern Ireland is of enormous significance to the economy of the Province. I look to Shorts to build on the enviable reputation which they have earned in the past and to devote their energies and talent to enhancing it for the future.