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Companies (Equity Purchases)

Volume 35: debated on Monday 17 January 1983

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asked the Secretary of State for Industry what advice and assistance are available from his Department for managers purchasing the equity of a company which previously employed them.

My Department does not provide any advice or assistance specific to these management buy-outs. However, companies being set up in this way can apply where appropriate for assistance under the various schemes operated by the Department provided that they satisfy the standard criteria. Managers can also obtain advice and information from the Department's small firms centres.

Has my hon. Friend noted the truly excellent results of the National Freight Corporation? Is he aware that the only regret of its employees in my constituency and elsewhere about the change of ownership is that some of them did not buy as many shares as they might have done? Will my hon. Friend assure Conservative Members that he is giving every encouragement to management within nationalised industries to buy out parts of those industries?

I have indeed noted the encouraging first 32 weeks' results of the National Freight Corporation. In a sense, that was a staff buy-out rather than a purely management buy-out, and it is one of the most noticeable in the recent trends. My hon. Friend will know that, from small beginnings only a few years ago, many management buy-outs are now taking place with many advantages, not the least of which is to preserve viable units which are much better outside the nationalised sector when the employees and the management have a positive stake in the operation. He will know that changes in the Companies Acts and fiscal legislation have made it easier to achieve such buy-outs, which we shall always encourage where appropriate.

If the Minister is so keen on management buy-outs, why is he not more keen on helping co-operatives to set up and develop? Why has he cut the funding available for the Co-operative Development Agency and made so little public money available for the setting up of that particularly important type of small business?

The hon. Gentleman should realise that there are various ways in which economic activity can take place. The management buy-out is extremely important and it has produced many excellent results in recent years. Under the Government the management buy-out approach has started to take off. We had a full debate on the funding of the Co-operative Development Agency and there was a wide welcome for the new remit that I gave it, the results of which have been encouraging.