British Petroleum Company (Share Issue)

Oral Answers to Questions — National Finance – in the House of Commons at 12:00 am on 19th December 1957.

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Photo of Mr Frank Beswick Mr Frank Beswick , Uxbridge 12:00 am, 19th December 1957

asked the Chancellor of the Exchequer why Her Majesty's Government have not exercised their right to take up shares in the recent issue of British Petroleum.

Photo of Mr Nigel Birch Mr Nigel Birch , Flintshire West

It would have been contrary to the intention of the measures my right hon. Friend announced on 19th September for the Exchequer to have injected new money into the market.

Photo of Mr Frank Beswick Mr Frank Beswick , Uxbridge

I do not know about the business of injecting new money into the market, or about the business of "stagging" new issues, to which the right hon. Gentleman referred last week, both of which remind one of conversations on the grouse moors. [HON. MEMBERS: "Oh."] Would the Economic Secretary tell us whether he really thinks this sort of fairground method of raising money really does meet the needs of one of the major industries of this country?

Photo of Mr Nigel Birch Mr Nigel Birch , Flintshire West

I really do not know what the hon. Gentleman refers to as a fairground method of raising money. This money was raised in the way every other issue is raised.

Photo of Mr John Cronin Mr John Cronin , Loughborough

Have not the Government lost between £1 million and £2 million of public money already by not taking up those shares?

Photo of Mr Reginald Paget Mr Reginald Paget , Northampton

asked the Chancellor of the Exchequer (1) to what extent Her Majesty's Government as majority shareholder was consulted as to the terms of the British Petroleum issue;

(2) to whom the underwriting and sub-underwriting of the British Petroleum issue was allocated; what was the cost of the underwriting; and to what extent, as majority shareholder, Her Majesty's Government was consulted as to the allocation or the cost.

Photo of Mr Nigel Birch Mr Nigel Birch , Flintshire West

Her Majesty's Government were told in advance what form the new issue would take but its terms and the underwriting arrangements were the responsibility of the company.

Photo of Mr Reginald Paget Mr Reginald Paget , Northampton

Is not that very regrettable? What are the Government going to do about it? It is fairly clear from the result of the market that they paid over £2 million too much for their money, that £1 million of this wasted money falls on us, and that they also wasted £750,000 by a hand-out to the underwriters? Are they satisfied with that position?

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Kidderminster

The issue was twenty times over-subscribed.

Photo of Mr Nigel Birch Mr Nigel Birch , Flintshire West

As the hon. Gentleman knows, it is not always entirely possible to predict in advance the result of issues. The price of this issue, with which we had nothing to do, was fixed a long time in advance. As the hon. Gentleman also knows, in quite a number of recent cases there have been large losses by the underwriters. It was their duty to get the best terms they could, and I have no doubt they did so.

Photo of Mr Reginald Paget Mr Reginald Paget , Northampton

It has never been quite as bad as this.