HC Deb 31 March 1982 vol 21 cc143-4W
Mr. Murphy

asked the Secretary of State for the Environment if he has yet received the report of the shadow board set up to advise on the privatisation of the Hydraulics Research Station.

Mr. Heseltine

The shadow board presented its first report in late January and I am most grateful to the chairman, Sir Alan Harris, and his colleagues for what they have been able to do. Their report has confirmed that subject to certain financial conditions being met the HRS would be viable as a company limited by guarantee in the private sector. These conditions relate to the free transfer of assets; assistance for the provision of capital equipment and working capital so that the company can start in the private sector without any residual finance encumbrance; and a guarantee to cover the contingent liability to redundancy payments in the very unlikely event that the company has to cease trading in its early years.

I am glad to say that the Government have been able to meet these conditions and the shadow board has therefore made arrangements to incorporate the company. My expectation is that within a few months it will be possible to secure appropriate professional institutions as guarantors of the company. But in order to arrange that it can start trading on 1 April 1982 it has been registered, as an interim arrangement, in the names of the Secretaries of State for the Environment and for Foreign and Commonwealth Affairs. It will thus temporarily be a non-departmental public body.

Treasury minutes to cover the transfer of the existing fixed assets of the station and certain consumable stores—which together have an estimated market value of £6.4 million—and the guarantee in relation to redundancy payments—for which the maximum contingent liability is estimated at £2 million—have been or will be laid before the House. The liability under the guarantee is to be secured on certain of the assets transferred to the new company. The Supply Estimates for 1982–83, Class VIII, Vote 5, provide for grants of up to £2.5 million for a new computer and other capital items and of £1.1 million for the provision of working capital. Assistance in later years is not expected to exceed £1.6 million.

The shadow board has recommended that the company should make offers on terms and conditions which when taken as a whole are no less favourable than those in the Civil Service, and these have been discussed with the staff. In order to allow proper time for negotiations on terms and conditions of employment to be concluded satisfactorily most existing members of the HRS staff will be seconded to the company.

I am convinced that a newly constituted HRS in the private sector will continue to enjoy its high reputation as an international centre of excellence for civil engineering and hydraulics and that it will prosper free from the constraints of a Government Department.