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British Petroleum Limited

Volume 932: debated on Thursday 26 May 1977

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10.

asked the Chancellor of the Exchequer if he will make a statement on the disposal of part of the Government's holding in British Petroleum Ltd.

The Bank of England is proceeding with the arrangements for the sale of sufficient stock to reduce the public sector holding to 51 per cent.

Is it the Government's intention that part of this holding will be disposed of to United States investors using the mechanism of the North American securities market?

The method of disposal is still under discussion. At present I cannot say anything about precisely how it would be done.

Has BP's involvement in Sea-bed Mining been made with the approval of the Treasury? What are the calculations of the consequences of this in future for its profitability?

The answer to the first part of my hon. Friend's question is "No, Sir". The second part does not apply.

Why is it that although it was held in the past the disposal of these shares would cause a reduction in the PSBR, the purchase of shares in, for example, the British Aircraft Corporation and Hawker Siddeley Aviation will not cause an increase in the PSBR?

Actually, it is rather simple. When one acquires assets by giving gilts in return for them, that does not add to the PSBR. It causes additional problems in financing money supply, but does not—[Interruption.] That is an entirely different matter. Certainly, the sale of a proportion of BP shares would mean a reduction in the PSBR.

As the Government at present hold only 51 per cent. of BP legally, the rest of the shares being under dispute, how can the Government reduce that holding and still retain 51 per cent.?

Because, on the best advice that we have received, there is no merit in the Burmah claim.