Westland plc

Part of Opposition Day – in the House of Commons at 4:52 pm on 15th January 1986.

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Photo of Mr Michael Heseltine Mr Michael Heseltine , Henley 4:52 pm, 15th January 1986

There are examples on both sides of export successes to the continent of Europe, to the Third world and to the United States. We are not talking about co-operative success; we are talking about the simple question whether the United States would allow a significant defence contractor to be owned or effectively controlled by an overseas country. The answer is a categorical no. I do not understand why we should have a different answer in this country. It is well known—I have made no secret of it and never will—that I hope the shareholders of Westland will recover some sense of national pride when they meet on Friday.

I must elaborate on the two specific points that I have just made. First, at the critical moment the Government had a clear preference for Europe in the rescue of Westland. Throughout 1985, as the Prime Minister has fairly said, every option was canvassed. There are virtually no opinions that are not represented on the files on the matter, but my preference clearly follows the European co-operative sentiment in the White Paper which my Department was responsible for publishing last year.

Of course, throughout the early months, when the Prime Minister rightly said that there were considerable interdepartmental discussions and even meetings, the scale of the Westland crisis was hardly perceived. The first serious solution was the Bristow takeover bid. So none of the anxieties about effective foreign control were on the agenda in a practical sense at that time. It was only with the withdrawal of that bid—I remind the House that that took place only in June of last year—that we had the disclosure of the financial crisis which many of the existing board who were there then seem hardly to have perceived. It was only when that crisis broke in June that Sir John Cuckney took over.

It often appeared as though there was no way through for the company. The only way through might have been an extremely expensive public rescue. Every option, including a Sikorsky rescue, had to be preserved and encouraged. Every one of us would have been guilty if we had blocked off such options. The Department of Trade and Industry and the Ministry of Defence worked through the options. As events unfolded I had no cause originally for concern that my European preference would not receive consideration. Of course, the DTI was the sponsoring Department but at that time it was faithfully maintaining the European option.

By October — this is the point at which the difficulties which have led to my resignation from the Government began to develop—the preservation of that choice had become a clear preference. I must say to the Prime Minister that her description of the account in the two letters of 4 and 18 October does not tally with my reading of those letters. I have a very full understanding of what is in them. If the Government can publish Sir Austin Pearce's letter and now the Law Officer's letters, I cannot understand why they cannot make available the letters of 4 and 18 October.

Those letters would show that Sir John Cuckney recognised a European preference and that the Secretary of State for Trade and Industry declared a European preference. I have to say that about that time Sir John Cuckney was beginning to advise the Government that there was no realistic European option. It was only then that my anxiety began to grow. It was at that time that the willingness that I had had until that moment to support the sponsoring Department turned to an anxiety that the preference for Europe was being choked off.

During August, as the House knows, I had concluded on behalf of this country the European fighter aircraft agreement. If I dare say so, perhaps more than any other Minister I have deep experience of how Europe works. I told my colleagues privately in mid-October that Sir John Cuckney had the wrong experience to give him an insight into how European collaboration works. It is not his fault. It is an unusual experience to have, but nevertheless it remains a fact. Collaboration in Europe, where companies—even in this country—are in practice close to their Governments, is actually led by Governments and not by companies.

I obtained, therefore, my colleagues' agreement to see whether I could help to counter the increasingly certain view of Sir John that there was no European option. I met Sir John—as the House knows, I was abroad in early November—on 26 November. He said that he welcomed help. He explained that he had not the staff to process the work himself because he was so involved with the Sikorsky negotiations and that it would be good for the company to have a choice. So I began my negotiations with the full support of my right hon. and learned Friend the Secretary of State for Trade and Industry and with that of Sir John.

It has been suggested that I was indifferent to Westland's future. I shall say something about that, because nothing could be further from the truth. My Department's responsibility for Westland was to ensure that the industrial capability, which is a critical defence interest, was maintained. I always made it clear that I would insist on the maintenance of that defence capability. Secondly, it was its responsibility to secure the best, or at least reasonable, value for money for the defence budget. It was not the responsibility of the Ministry of Defence to take over the sponsoring role of the Department of Trade and Industry or to use defence money for company rescue plans, unless the cost of so doing could be extremely limited. It is for the Department of Trade and Industry to propose in such matters, and it made it clear on 4 October that it would not use DTI money for rescue purposes.

I stated clearly that receivership would be the best solution in certain circumstances. I said that most clearly on 25 September when I became so concerned about what was happening that I instructed officials in my Department that no options other than receivership were to be discussed further without my express authority. Why did I react so strongly? I did so because, on that day, I received a submission from my Department which said that, although no costed options for Westland yet existed, there was a plan. The Government were to fund £120 million for underwriting sales of 45 W30-160s, a civil helicopter, write off £40 million of launch aid on civil projects and provide perhaps another £25 million of further cash for redundancy. As my officials said at the time, to maintain the supply of spares and other Ministry of Defence requirements would cost Her Majesty's Government, on current information from the company, about £120 million to £165 million in cash and £40 million in written-off launch aid. It might have seemed just a small helicopter company in the west country, but my perspective had changed dramatically.

The military advice to me on the value to the Ministry of Defence of the helicopter order was that it would not be justified on military procurement grounds even as a gift. It will be seen clearly that by 3 October I am recorded as saying that I was not in favour of a receivership option.