The powers of the special share are set out in article 71 of Britoil's articles of association.
On 18 December the Treasury put out a press statement, stating that in present circumstances the Government intend to use their special share in Britoil to prevent any bidder from gaining control of the Britoil board.
The statement went on to explain that, if and when a formal offer is made for, or control obtained of, more than 50 per cent. of Britoil's shares, paragraph 71C of the articles of association will come into effect. This allows the special shareholder to outvote all other shareholders at a general meeting on any resolution. It also allows the special shareholder to require an extraordinary general meeting. This was reaffirmed on 23 December, in the light of the statement that day by the Panel on Takeovers and Mergers about the proposed BP offer for Britoil.
No such offer has yet been made. But, whatever the circumstances, I can assure the House that the powers of the special share will be used for so long as it is in the national interest to do so.
I cannot add anything more at this stage.
The Chancellor will be aware of the widespread concern, particularly among the management and employees of Britoil, that it is well known that British Petroleum wishes to take over the company. The Chancellor's statement that he would use the golden share did not seem to act as "a formidable deterrent", as the right hon. Gentleman predicted the golden share would on a previous occasion in the House. BP seems determined to proceed with its bid.
Would it not make matters much clearer if the Chancellor were to make it clear that the purpose of the golden share is, as he has told the House on a number of occasions, to deter a bid for Britoil, rather than to in some way modify the consequences of the takeover, as BP seems to imagine it might be? I invite the Chancellor of the Exchequer to make it clear that Britoil will be maintained as an independent company, with its corporate headquarters in Glasgow, and that the fundamental basis of the golden share will be maintained, whatever bids are forthcoming in the next few days.
I have nothing to add to what I have said. This is a highly market-sensitive matter and it would not be proper for me to say anything further. I add that I do not think that this line of questioning—although I do not dispute the right hon. and learned Gentleman's right to ask the questions if he wishes to do so—is helpful to Britoil.
The location of the headquarters of Britoil is, of course, a matter for the Britoil board, as it has always been.
I note what my hon. Friend has said, and I repeat what I said a moment or two ago, that the location of the headquarters of the company is a matter for the board, as it has always been. The special share ensures the independence of the board.
Mr. Bruce Milian:
The Chancellor's statement is welcome as far as it goes, but it does riot go very far, because it contains certain qualifications. Will he give an assurance that neither now, in this "market-sensitive period", as he calls it, nor later will he tell British Petroleum that if it gains control of the company's shares he will somehow allow his present powers to lapse, perhaps after a period? We want an absolute assurance that that will not happen and that Britoil will be maintained as an independent company.
As I have already said, whether to use the share is a matter about which the Government will have to make up their mind in the light of the circumstances at the time and in the overriding light of the national interest. I have said that in the present circumstances we will use it.
As the Chancellor of the Exchequer, rightly or wrongly, has been saddled with this very controversial, but highly undemocratic, power, would it be sensitive to the national interest far him to seek the views of those bidding for Britoil as to whether they intend to support regional development and maintain the centre of the company in Glasgow?
Will the Chancellor give a clear and unequivocal pledge to use the golden share to protect the independence of Britoil, so that that is clear in Hansard? May I encourage him to fulfil that pledge and assure us that if there is a change in that commitment there will be a full debate and vote in the House on a matter of such great importance to the Scottish economy?
I cannot give any assurance about a debate—that is not a matter for me—but when I was Secretary of State for Energy in 1982 and this special share was set up, I gave a pledge that if and when the share were to be redeemed, the House would be informed first.
Does my right hon. Friend agree that raising this matter by means of a private notice question is of no help whatever to Britoil and is likely to be of advantage, only to, and in the interests of, a predator?
I apologise, Mr. Speaker. These 800 people are very worried and frightened about their future, yet all the Chancellor can say is that it is somehow a matter for the market place or the company to decide. Can the Chancellor find it within himself to assure my constituents and the people of Glasgow that he wants the headquarters of Britoil to remain there, and that he wants Britoil to remain an independent company?
I welcome the hon. Gentleman on one of his infrequent visits to the House. Had he listened, he would have heard me say that the location of the company's headquarters is a matter for the board, as it always has been. When Britoil was formed from the old British National Oil Corporation, the board decided to locate its headquarters in Glasgow and, as the hon. Gentleman will know, it built a spanking new building to house those headquarters. That is where they remain to this day.
The board has unusual powers. That is why the power of the special share to control the board is especially interesting. Article 92 of the Britoil articles of association states:
The business of the company shall be managed by the directors to the exclusion of the company in general meeting.
Does my right hon. Friend agree that there is already large and welcome foreign investment in North sea oil, but that it would cause concern if companies such as Britoil and British Petroleum were to fall under foreign control, with the result that almost all the strategic qualities of North sea oil would be controlled by foreign interests? Does he agree that any such foreign bid for Britoil or BP would be stoutly resisted, under the provisions of the Industry Act 1975, in the best interests of this country?
Given the Chancellor's welcome confirmation of the Treasury's position on this issue, will he confirm that he does not agree with the criticism that has been made against Britoil—unfairly, in many people's eyes—that it is using tactics to try to increase the share offer from about 450p to 600p? Is that not an unfair allegation against the company?
Will my right hon. Friend confirm that the golden share in Enterprise Oil has a life of five years? Why should Britoil be treated differently from Enterprise Oil? As my right hon. Friend is a believer in free markets, will he tell us how the golden share will encourage Britoil to become more efficient? It is to be protected by a share structure as antiquated as that of the Savoy.
It is not all that antiquated. It was introduced only in 1982. However, I feel much older now than I did then—perhaps I am. My hon. Friend is right to point to the fact that some golden shares are time-limited, whereas others are not. I read in the newspapers today that the Britoil board envisages the day when the golden share in Britoil will no longer exist.
Is not the need to act reinforced by the news that the Kuwaitis are buying BP shares and now have 18 per cent. of them? Is it not true that the Kuwaitis have refused to give an undertaking that they will not purchase 29·9 per cent. of the company? Is there not a danger that the Arabs might pick up a large section of North sea oil on the cheap?
There is nothing to stop someone buying shares cheaply after a fall on the stock market. The hon. Gentleman must be aware of the assurances given by the Kuwaitis that they are not seeking control over the company or the management. It would be inconsistent with those assurances if they acquired a shareholding of 29·9 per cent.
Will my right hon. Friend clarify what he means by his frequent references to the "national interest"? Does he mean Scotland's national interest, or is he concentrating on Britain's national interest? If it is the latter, what difference can it make whether the oilfields are owned by British Petroleum or by Britoil?
I am the Chancellor of the Exchequer of the United Kingdom and a member of the Government of the United Kingdom, and it is therefore the national interest of the United Kingdom about which I am speaking. However, obviously that does not mean that I would be indifferent to the views of Scottish Members.
May we take it from the Chancellor's reply that, as the inventor of the golden share, he intends to use it to keep Britoil as an independent company? Given the sensitivity of the market, should he not, in all fairness, convey that to the chairman of BP, Sir Peter Walters, as soon as possible, with the backing of all the legal opinion that he can muster?
Britoil has, of course, been independent since it was floated more than five years ago. Article 71C explicitly envisages the possibility of a bidder acquiring more than 50 per cent. of the shares and states in those circumstances what the powers of the special share are. I have nothing to add to that.