Orders of the Day — Pilkington Brothers plc

Part of the debate – in the House of Commons at 10:36 pm on 15 December 1986.

Alert me about debates like this

Photo of Mr Gerry Bermingham Mr Gerry Bermingham , St Helens South 10:36, 15 December 1986

I found it sad that the right hon. Member for Henley (Mr. Heseltine) began his remarks in support of the company that has done so much for the town which I have the privilege to represent with an attack on my hon. Friend the Member for St. Helens, North (Mr. Evans) and me. On numerous occasions we have supported the employees, trade unions and company through oral and written questions, speeches and comments.

The company is at the heart of St. Helens and it is deplorable that a Member of Parliament who represents a lusher pasture should begin his remarks in defence of the lifeblood of our town with an almost personal attack on its representatives. When the right hon. Gentleman reads his speech tomorrow, I hope that he will realise that his initial remarks could be interpreted in that way.

If the right hon. Gentleman did not wish to attack my hon. Friend or me, we shall be delighted to hear his retractions and clarification; but if such clarification cannot be given, we must take the remarks as we heard them. Tonight I do not wish to make petty party political points. I have a genuine issue at heart.

Those who have shares in a large company have a responsibility, not only to the company, but to the people who produce the wealth that lies behind the value of the shares. The wealth of Pilkington has been a combination of both capital and labour. Labour includes the ingenuity, skill, brilliance, ideas and development over many years of those who work in the company. Most of them are not shareholders. Labour includes the efforts of those who work on the shop floor—the fitters, joiners, blowers and skilled craftsmen. The skill of such men throughout the country in the optical industry makes this product a world leader. It is a combination of their efforts, brains, ideas and lives that creates the background to the work.

I accept that if a business is to grow it needs capital and over the years there has been an input of capital. Hence we have the creation of shareholders within the company. Without that skill, effort, brilliance and technical know-how, the company would never have grown to its present size. In saying that, I pay tribute to every member of the staff, whether the managing director or the youngest recruit and apprentice. Every person plays a part in the company's development.

The pension fund managers and investment houses which own the bulk of the shares should address one simple question. In holding the shares that are often the product of the purchasing power of the pension contributions from ordinary working people, do they have a responsibility to those who made the wealth that gives value to their pension funds? The answer must of course be yes. For too long—I do not seek to be cruel in what I say—the investment managers have often considered a share as a means of making a profit, or a quick buck on a turnover through the shifting of millions of shares. We saw that happen in the Guinness bid and in numerous takeover bids that have occurred during the past few years. Ultimately the decisions of the pension fund managers determine the outcome of a bid and very often that decision has rested on what is most profitable to the pension fund.

That is the sad disease that has begun to destroy the American stock markets where there has been a growth in green mail and the emergence of people like Boesky who wheel and deal and make millions without lifting a hand to create a manufactured product.

If we develop a society in which billions of pounds can change hands at a stroke of a pen, we will create a society that will destroy the base of that society's wealth—the ability of men to create a product that is wanted elsewhere, that can be sold to create wealth, investment, expansion and new work. The bid from BTR is a classic example of the kind of bids that we witnessed in the latter part of the 1960s and in the early part of the 1970s when companies were taken over, broken up, their assets stripped, parts sold and ideas destroyed so that those who struck to create the conglomerate could repay the money that they borrowed to pay for the deal.

Pilkington would be destroyed if it was broken up. As a result of BTR's bid, will we once again witness the destruction of a major industry? We have seen that happen many times already. I do not intend to attack BTR tonight because I do not think that that is a worthwhile exercise and my hon. Friend the Member for St. Helens, North has covered much of that ground. I do not want to delay the House by repeating what he said. However, I absolutely support and endorse everything that he said.

The point that I wish to make above all others tonight is that the Government have a duty and responsibility in these matters, just as the Director General of Fair Trading has a responsibility. The time has come when the Government must accept some responsibility in the corporate market structure. They must stop the nation following the same road taken in the United States where mega-bid follows mega-bid, where groups of companies are taken over simply to be stripped out, broken up and sold off so that the creditor can make a few hundred million dollars here and a few hundred million dollars there by selling the bits that he does not want. He can keep the parts that he wants and can grow. Who are the winners in that game? Are they the employees or the nation involved? The American experience shows that the employees and the nation lose out and that the winners are the arbitrageurs—or whatever they are called today—who are in it to make a buck for themselves.

Our society is bigger than that and must not become a society in which jobs can fall at the whim of an investment manager like the leaves from a tree in autumn so that the investment manager—whether for an insurance company, a pension fund or simply a Boesky-like character—can make a fast pound in profit. We have a greater responsibility than that in the organisation of our corporate structures. I hope that tonight the Minister will give us an assurance, not just for this bid, but for other bids that are mooted, that we will begin to see the Government take on board some responsibility for the organisation of the markets that effect our corporate structures. With Government comes responsibility. The Government fought shy of taking on board the responsibility for organising the market place in the investor protection legislation recently because it took only a few days post the big bang for us to begin to see that the Chinese walls were so paper thin that they had no meaning.

Let the Government on this occasion take a principled stand and say that there is no industrial logic in what is being done and that there is no benefit to the towns and cities throughout this land which have Pilkington industries in them and there is no industrial benefit to the glass industry from the proposed takeover bid. Because there is no industrial benefit or logic, the Government have a responsibility to say no. I suggest to the Minister that, if no is what the Government say on this occasion, it may bring just a little bit of responsibility to the corporate barons within the City. As the right hon. Member for Henley suggested, it may make those who hold the bulk of shares in British industry—the investment managers of the major institutions and banks—realise that they have a responsibility as shareholders to the people who work in those industries and those upon whose backs, ideas and dreams they are making their wealth. Let us see whether the Government have the courage on this occasion to try to bring some discipline to the market.