§ Mr. Burtasked the Secretary of State for Trade and Industry whether he is now in a position to give further details of the incentives which will be given to those wishing to purchase shares in British Telecom.
§ Mr. Kenneth BakerInvestors will be given a choice of two schemes, which will be financed by the Government.
First, I announced on 25 May our intention to offer individual investors vouchers which can be offset against their quarterly BT telephone bills. I can now give details of this scheme. The value of the basic unit, the voucher, will be £18. All individuals who purchase shares in a personal capacity at the time of the flotation will be eligible. Those who invest about £250 will receive one voucher and those who invest £500 two vouchers. For people who invest more there will be three further levers of entitlement: those who invest about £1,000 will receive four vouchers; those who invest £2,000 will receive eight vouchers; and those who invest £3,000 or more, twelve vouchers.
The first vouchers will be sent out about eight months after the flotation, with subsequent pairs of vouchers being issued to investors of £1,000 or more at about six-monthly intervals. Investors will only receive vouchers if at the time they are due to be issued they still hold the right number of shares. Vouchers will be usable only against the investor's own telephone bill, and only one voucher will be usable against each quarterly bill.
As an alternative to the bill voucher scheme, individual investors will be able to opt instead for a share bonus. The bonus will only apply to shares purchased by individuals at the time of the flotation up to a value of about £5,000 If investors choose this alternative, they will receive at the end of three years one free share for every ten purchased at the time of the flotation and held for that period.
299WI believe these two schemes will provide an important encouragement to small investors to buy shares in British Telecom. They will continue the Government's policy of promoting wider share ownership through its privatisation programme; and the bill voucher scheme will offer a special incentive to British Telecom's customers to own shares in the company.