Orders of the Day — British Aerospace Bill

Part of the debate – in the House of Commons at 8:27 pm on 20 November 1979.

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Photo of Mr James Hill Mr James Hill , Southampton, Test 8:27, 20 November 1979

This has been a most interesting debate. I put hon. Members who have attended it into three categories—the Front Bench and the Whips who have to attend, hon. Members with constituency interests—whether these are aviation or not is another matter—and Members such as my hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson) who is an aviation enthusiast. I like to think that I am in the third category.

The design, progress and perfection of the flying machine over the past 30 years has changed the whole concept of aviation. I remember many years ago when the design teams were designing the Princess flying boat and the Brabazon aircraft and there were no engines with sufficient power to move them through the air at sufficient speed.

My hon. Friend the Member for Bristol, North-West (Mr. Colvin) brought back nostalgic memories when he talked about Filton. I remember when the largest concrete runway in the world was created there for the Brabazon and I had the honour to be transferred from the flying boat fleet to the Stratocruiser and Constellation fleet to operate out of Filton. Therefore, I believe that the third category is right for me.

The debate today has made heavy weather of what is a small Bill. The debate has been broadened, with the permission of the Chair, so that we have talked about everything but the Bill. The Bill proposes that British Aerospace should in future operate within the framework of the Companies Acts. That will apply to several other nationalised industries, and the Government may wish to sell the shares on the open market. The ownership of the industry will therefore be transferred from the present statutory corporation to a company incorporated under the Companies Acts. Initially the shares will be held by the Government, who will eventually make them available to private ownership.

I welcome the Bill because it achieves something that all parties would agree with, namely, that employees in the industry should be given a special opportunity to buy shares. Other progressive companies, such as ICI, have in the past brought employees into those companies through share ownership. The Government have said that they wish to retain about half the shares. Will the Minister inform us whether that "about half" is 51 per cent., 49 per cent, or some lower figure? That question has been asked several times today.

Much of the Bill deals with the establishment of the new company. Clause 1 deals with the vesting of British Aerospace business and its property, rights, liabilities and obligations in a limited liability company to be called British Aerospace Limited. The Secretary of State will decide upon vesting day, but it is obvious that it will be shortly before the date upon which shares in the new company will be offered for sale. The Secretary of State mentioned that he hoped to secure continuity in management at board level, and I welcome that. When a company issues shares there is nothing more unsettling than the board being apprehensive about the future.

Clause 3 provides for shares in the new company to be issued by the Secretary of State. He will decide the nominal value of the shares that are issued, but he will not be able to dispose of them or give any directions concerning their disposal unless the Treasury gives its consent. However, clause 4 says that any excess of the amount that the Government invested in British Aerospace over the nominal value of the new company's initial share capital would be placed in a special reserve that could be used only for issuing fully paid up bonus shares.

In clause 6 the Secretary of State is required once again to gain the consent of the Treasury in appointing nominees to receive, subscribe for, or acquire shares in the company. The Secretary of State's power is thereby curtailed because he must have the consent of the Treasury.

The key to the scale and rate of disposal of shares in British Aerospace Limited, and to the balance between private and Government control within it, is provided in clause 7. That clause deals with the setting up of a target investment limit for Government shareholding in the company. Once the company ceases to be wholly owned by the Crown the Secretary of State will, by statutory instrument, fix the target that will relate to the shares that he, or his nominees, will hold. The Secretary of State must dispose of any shareholding that exceeds the new target limit.

Unfortunately, my hon. Friend the Minister of State is not present this evening. I am particularly concerned about one or two statements that he has made. I should have liked him to make clear that at the time the target limits had not been settled. In other words, there is no reason this evening for debating target levels. I am sure that I shall get clarification on the amount that the Government will retain in the new company.

We have had one or two references this evening to the statement made on 8 November by my hon. Friend the Minister of State. That statement was ridiculed by Opposition Members. Of course, once again, it was selective ridicule and hon. Members did not carry it forward to say that the statement continued, when talking of the shares, to the effect that the Bill would enable the public at large, and particularly the employees of the company, to take a more direct stake in the aerospace business for themselves rather than through the anonymous hands of the State, and that the national interest would continue to be represented by substantial Government shareholdings.

We have heard much this evening to the effect that this will mean the collapse of morale, that the board will probably wish to go against the Secretary of State in this matter and that the whole of the British aerospace industry is in peril. I do not read it quite like that. I think that this is an opportunity for British Aerospace to involve itself in more aid more private investment.

The right hon. Member for Deptford (Mr. Silkin) said that he was alarmed that perhaps pension funds or institutions might take over power on the board. I would welcome that. I realise that pension funds are in a general picture. It may even be a trade union pension fund.