Orders of the Day — British Aerospace Bill

Part of the debate – in the House of Commons at 3:40 pm on 20 November 1979.

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Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East 3:40, 20 November 1979

In this country we have what is probably the most efficient system of agriculture in the world. I wish that all business activities were as efficient. It has its own framework, as has agriculture in most countries. I hope that Labour Members will accept that, although I have a doctrine and a thesis, the action proposed in this Bill is not doctrinaire. [Interruption.] I ask hon. Members to suspend their judgment for a moment. If we were taking a doctrinaire view, we would not be offering to the public roughly half the shares in British Aerospace we would be offering them all. We are not doing that. We propose only such a change as will suffice to remove the immunity from the market which we see as a danger to the continuation of the success of British Aerospace.

At the same time, we intend to retain a large Government stake in the industry. It is our hope that the framework proposed in the Bill will provide a stable position for this important and successful industry. We are offering a pattern of ownership which follows the successful precedent of British Petroleum. In that case there was, for many decades, a very large public ownership of shares, coupled with a large private enterprise share, all associated under independent and highly successful management in a competitive international field. It is that precedent that we seek to follow in this Bill.

We believe that management will function best when it knows that its business is utterly dependent on pleasing not Ministers and civil servants, however well intentioned they may be, but customers and investors. In the aerospace industry the customers are intensely sophisticated. In this modern age, investors—individual and institutional—are also sophisticated. The biggest investors are the pension funds and the insurance companies, disposing of the savings of millions of our fellow countrymen for their retirement or against personal mishap. Satisfying these sophisticated investors is the surest guarantee that management will be of the highest quality and that the industry will be internationally competitive.

We wish to create a situation in which the spur to satisfy not only the customers but the investors as well will be a stimulus towards the success that we all want for this industry. That stimulus is the best way to ensure an expanding order book, an increasing number of jobs and good profits. Of course, British Aerospace in its new form will still have the Government as a substantial client. Perhaps the Government will be its most important client. However, the Government and Ministers will no longer be the masters.

The Bill will allow the Government on an appointed day to vest the existing business in a company, all the shares of which will be held by or on behalf of the Crown. The Government will have the power to sell those shares. British Aerospace Limited will be an ordinary company, subject to the Companies Act. Very soon after the transfer of business the Government intend to sell about half their shares. The Government will be a substantial shareholder and, as I have emphasised, a substantial buyer through the Ministry of Defence. The purpose of the Bill is to establish a stable partnership between public ownership and private ownership which we hope will endure over the decades ahead, whatever the Government of the day.