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Government Shareholdings

Volume 127: debated on Thursday 11 February 1988

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1.

To ask the Chancellor of the Exchequer if he will make a statement on his policy on the disposal of Government-held shareholdings in the light of the National Audit Office report on the sale of the Government's shareholding in Rolls-Royce plc.

The Government will clearly take NAO's observations into account as they press ahead with the privatisation programme.

Will the Minister give the House his opinion on the statement of the National Audit Office about the £63 million put into the company prior to privatisation? Does he agree that, in the Government's besotted efforts to achieve privatisation, business ethics are at stake? Normally, when one takes the assets of a company, one takes its liabilities. That no longer seems to be the fashion. Should we not revert to ethics?

I certainly do not agree with what the hon. Gentleman implies. The capital injection into the company was a decision made as a result of negotiation and on the basis of professional advice. However, we shall he giving evidence to the Public Accounts Committee very shortly and we shall reply to those points in detail.

Is my right hon. Friend aware that last night Rolls-Royce shares closed at 126p, against an issue price of 170p? In the intervening period the price has fluctuated between 96p and 240p. Does my right hon. Friend agree that in those circumstances the conclusion of the National Audit Office, that it is now hard to say whether the share price was set at a level that maximised the proceeds from the sale, is not unreasonable?

My hon. Friend makes a telling point. I only wish that Opposition Members, who are so quick to say that issues are under-priced, would sometimes notice when shares fall to prices below the issue price.

As regards the points made by the National Audit Office, I cannot anticipate what will be in the evidence, but we shall be replying to the points in detail.

When may we expect a statement about the Government's intentions on another very important Government shareholding—the golden share in Britoil?

Is my right hon. Friend aware that many thousands of employees at Rolls-Royce were delighted to buy shares in the company in which they work? In Derby, it is even rumoured that a few Socialists bought shares when the company was sold off. If there is any message to the Government arising from the sale of Rolls-Royce, should it not be, "Carry on the good work."?

I am sure that my hon. Friend's opinion is shared by workers at Rolls-Royce. I cannot comment on whether Socialists bought shares in Rolls-Royce, although perhaps that is what Paul Foot meant when he said:

"I hope bloody Bryan Gould bought millions of shares."

Given that the Government have decided that there should be no specific requirement to deepen or widen share ownership in the Rolls-Royce privatisation, what considerations of the public interest led the Chancellor to disregard the views of the Government's advisers, Samuel Montagu and Co., and concede the £63 million debt write-off? Is it true that the Government were effectively blackmailed by the Rolls-Royce chairman's threat not to support privatisation if he did not get the extra money?

As I have already said, in reaching a decision on the capital structure and the capital injection we took into account the views of our advisers and the company, and we shall be detailing why we did that in our reply to the Public Accounts Committee.