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Mr. Michael Shersby (Uxbridge) : Just over 16 years ago, on 12 December 1973, standing in the place where I now stand, I raised in an Adjournment debate the status and salaries of clerks in the magistrates courts. I said :
"It is quite clear that until proper recruitment and training schemes are available in the longer term the courts will be compelled to cope with an increasing amount of work with an inadequate complement of court clerks.
That situation is quite unacceptable. Urgent remedial action in the short term is therefore essential. The central problem is that the supply of court clerks has dried up because of the poor salary structure. In addition, the magisterial service does not offer career prospects which are attractive to the type of young man or woman it is hoped to recruit."
I hope that you, Mr. Deputy Speaker, will agree that I do not often quote my own speeches, but having made that speech 16 years ago, I must point out that it is still highly relevant because I now have to raise these matters once again.
Replying to that debate, the then Minister of State, Home Office, Mr. Mark Carlisle, who is now my noble friend Lord Carlisle and sits in the other place, said :
"I am aware of the overall problem, and particularly the problem of vacancies among positions for court clerks in the magistrates' court at Uxbridge, which has heavy lists and which has had to change and curtail sittings because of this shortage."
He then said that he appreciated that salary scales were important but that
"The Home Office is not represented on the committee"
that is, the Joint Negotiating Committee for Justices' Clerks' Assistants--
"and cannot take any initiative in questions relating to salaries."
Despite the fact that that debate took place 16 years ago and that I highlighted then the real problems of recruitment, training and salaries, it appears that nothing much has been done by the Home Office in that time and, as a result, today we are facing a crisis in the magistrates courts.
The recruitment crisis is now both real and immediate. In December 1988, there were at least 167 vacancies for court clerks. At least 294 court sittings were cancelled in England and Wales and much public money is having to be spent on agency fees--£120 to £150 a day for agency lawyers who have to be brought in to act as court clerks. According to a massive telephone poll of justices' offices throughout the country carried out this month--nothing could be more up-to-date--magistrates courts in England and Wales, apart from inner London, have a total of 278 court clerk vacancies and 35 trainee vacancies. That resulted in 473 cancelled half-day sittings in February, giving a national average of five cases per sitting. That means that about 2,500 cases are unheard. In short, in the words of the famous statesman William Ewart Gladstone :
"Justice delayed is justice denied".
Of the 278 vacancies, 117 trainees are in some of those slots in temporary appointments. As a result, magistrates are not getting experienced advice, and that is serious.
In outer London, there are 16 court clerk vacancies. In other parts of the country the situation is giving rise to concern. Bedfordshire, Hertfordshire and Cambridgeshire have 13 vacancies ; in Lancashire there are 19 vacancies ; there are three in Slough, not far from my constituency ;
Column 1317five in Luton ; nine in Yorkshire ; nine in Wessex ; and in Manchester there are three vacancies, which are currently filled by trainees.
The shortage is acute because of continuing poor pay and the divisive award following the recent arbitration. Mr. David Simpson, clerk to the justices of Uxbridge magistrates court, tells me : "The situation has become so serious now that unless action is taken urgently, the crisis will become even worse and the magistrates' courts will not be able to function properly in many parts of the country."
The Justices' Clerks Society is convinced that the separation of the functions of legal adviser and administrator would not be in the best interests of magistrates courts, or in the public interest. I therefore welcome the magistrates courts review of procedure which was announced in answer to a parliamentary question tabled by my right hon. Friend the Member for Basildon (Mr. Amess). Can the Minister say when that review will be completed? Is it on schedule, and will it report to the Home Secretary in June, as was envisaged when the review was announced? Will the review of the management and control of resources in magistrates courts include the salaries, training, recruitment and status of court clerks?
Morale among those admirable men and women who clerk the magistrates courts has never been lower. The reason, simply, is that the magistrates courts service is losing out to the Crown prosecution service and to solicitors in private practice, who of course receive higher salaries.
There is today a crisis in law because of a shortage of lawyers. Is that because too few lawyers are being trained? An explanation given to me recently by an hon. Friend who is a barrister is that a number of women who qualify as solicitors do not subsequently practise for long or that their careers undergo long breaks for understandable family reasons.
I come now to the determination of salaries by the joint negotiating committee. My noble Friend Lord Carlisle said in 1973 : "The Home Office is not represented on the Committee and consequently does not and cannot take any initiatives in questions relating to salaries."--[ Official Report , 12 December 1973 ; Vol. 866, c. 576.]
My hon. Friend the Minister made a similar point in answer to a parliamentary question from the hon. Member for Stretford (Mr. Lloyd) on 13 March. That appears to be a very effective screen behind which Home Office Ministers can protect themselves from being held accountable for salary awards. I hope that my hon. Friend will not consider that a particularly unkind remark, but he will understand the frustration I feel after raising this matter in the House for 16 years and continually being told that the Home Office cannot intervene is not responsible and is not represented on the committee.
Is it not the case that every agreement negotiated by the joint negotiating committee or any award made on arbitration is subject to Home Office and Treasury approval? We all know that the Treasury has to provide the money, so why does the Home Office allow an apparently arms-length negotiating procedure to persist and deprive itself of the political initiative that is necessary if the long-running saga of underpaid, under-trained and under- motivated clerks is to be concluded satisfactorily?
Column 1318The publication of the Andrews report on salaries for Government lawyers highlights the need for salaries to be pitched at a level which will attract and retain lawyers of the appropriate calibre. Some court clerks with whom I have spoken recently feel that the Government have wilfully engaged in depriving the magistrates courts of some of their principal assets--their clerks--to staff the Crown prosecution service. I cannot emphasise too much how bitter the magistrates courts clerks feel about the siphoning off of their best personnel to the Crown prosecution service.
My right hon. and learned Friend the Attorney-General has managed to persuade the Treasury to buy the Crown prosecution service out of its recruitment crisis, but that has been done mainly at the expense of the magistrates courts, and the arbitrators have now suggested that in future the backbone of the courts service must be the unqualified diploma holders. In other words there will be a second-class service. Does my hon. Friend believe that that will be satisfactory for the magistrates courts? Does the House consider that that is good enough for a very important part of the legal system? It will take at least three years from next autumn before the service receives any benefit from the influx of newlyqualified diploma holders.
Finally, may I draw to my hon. Friend's attention the report of the outer London working party on the recruitment, training, remuneration and retention of court takers in the outer London area? It concludes that there is concern about
"the dilution in the quality of staff now available to advise lay justices. This, coupled with the incompetence of barrister agents employed by the Crown Prosecution Service to prosecute cases adequately before our Courts leads to the inevitable conclusion that unless the Government fully commits itself to supporting our service then the quality of decision making will eventually be the subject of adverse comment in the High Courts."
That is a very serious conclusion from such an expert working party and I look forward to my hon. Friend's comments when he replies to the debate.
J. Edgar Hoover said :
"Justice is incidental to law and order."
Not many hon. Members will disagree with that observation even if they disagree with the policies adopted by J. Edgar Hoover. It is vital for my hon. Friend and my right hon. Friend the Home Secretary to realise that lay magistrates, not just in my constituency of Uxbridge but throughout the country, are becoming deeply concerned that they cannot do their job effectively or discharge justice properly unless they have at their disposal properly qualified and properly paid court clerks who have a status in society which is respected and admired as it was in years gone by.
I do not believe that it is beyond the power of the Home Secretary or, indeed, my hon. Friend the Minister to persuade my right hon. Friend the Chancellor of the Exchequer before next year's Budget that additional resources should be made available to pay these people properly. Pay is at the centre of the problem. From a decently paid court clerks' profession would flow better justice, more satisfied magistrates and a more efficient organisation of the whole magisterial system.
Column 13192.14 pm
The Minister of State, Home Office (Mr. John Patten) : I can assure my hon. Friend the Member for Uxbridge (Mr. Shersby) that my right hon. Friend the Home Secretary and I never stop talking to our right hon. Friend the Chancellor of the Exchequer about these and other issues. Perhaps it has been the success of three Home Secretaries since 1979--Lord Whitelaw, Sir Leon Brittan who is now a Commissioner in Europe and my right hon. Friend the present Home Secretary--that those discussions have secured the most substantial growth of any Government expenditure programme, by some 52 per cent. on law and order services.
I am the first to recognise that certain parts of the law and order and criminal justice system feel that they have not benefited from the biggest increase in public expenditure in nearly a decade of Conservative Government, but the increase shows the great importance which the Government give to the workings of the criminal justice system. I want to reassure my hon. Friend that we talk regularly to the Chancellor of the Exchequer and his brother Ministers about these issues.
I am grateful to my hon. Friend for ventilating a tricky subject which it is not easy to discuss. I am pleased to see my hon. Friend the Member for Chislehurst (Mr. Sims) in the Chamber. He has a long-standing interest in these issues. I am not sure whether it is as long-standing as that of my hon. Friend the Member for Uxbridge, whose interest goes back 16 years, but my hon. Friend the Member for Chislehurst is a magistrate.
I was reflecting that 16 years ago I was pounding the streets of Oxford trying to become a city councillor--which I did, much to my surprise, by one vote. At that stage my hon. Friend the Member for Uxbridge was here, making the same point, which is why he is so angry at having to make it again this afternoon.
I share the concern expressed about the shortage of court clerks who support justices' clerks in taking courts. As I said, it is not an easy issue for me to brush under the carpet. The latest figures provided by the Justices' Clerks Society show a picture which is even more difficult for the service than that which my hon. Friend painted. On 28 February 1989, there were 278 vacancies--that is, about 23 per cent. of the complement-- compared with 66 vacancies on 1 April 1988. The figures demonstrate the serious deterioration.
By no means all magistrates courts are experiencing the same problems. It is a particular problem in inner London, to which my hon. Friend did not address himself, and a substantial problem in the outer-London service, which is of considerable interest to both my hon. Friends. Where vacancies occur, damage is caused because delays in justice are caused. That is bad for justice and defendants, and bad in terms of value for money for courts. It is particularly disturbing when my right hon. Friend the Home Secretary and I are trying to encourage courts to reduce waiting lists of people to be brought to trial. In no sense would I attempt to under-estimate the seriousness of the problem ; I hope that my hon. Friend recognises that.
The magistrates courts service is at the heart of the criminal justice system. A shortage of court clerks means not only that the delivery of justice is delayed but that knock-on problems are created through the whole criminal
Column 1320justice system. There has always been some movement in and out of the court service by those who are legally qualified.
My hon. Friend the Member for Uxbridge referred to the fact that it appears that a good number of people may have left recently to go into the Crown prosecution service. That is undoubtedly the fact, although we have no clear statistics.
However, it is clear that the level of loss from the magistrates court service into other professions--be they to the Crown prosecution service or another career opportunity--is at present unacceptable. With some hindsight, it is clear that the inception of the Crown prosecution service- -with its need for barristers and solicitors in quite large numbers fairly quickly and the levels of remuneration that they have recently been offered --has had a significant effect on the magistrates court service.
Of course, there have been more losses than ever before to private practice. It is interesting to reflect on why that should be. I am sure that some of those losses have been due to pay levels, linked to high housing costs in outer London areas, such as Uxbridge and Chislehurst. I believe too that there are some problems on the supply side. We are not getting enough legal graduates coming out of our universities and polytechnics who are prepared thereafter to follow the legal profession rather than, for example, going into business. That is of course dependent on pay, which in turn relates closely to status. However, we can never leave it entirely to pay, and I shall now consider that aspect in some detail. We must ensure that the court service--here the Home Office must play its part--is marketing the profession as adequately as it can, possibly in a new way. I believe that that is a task for us all.
Mr. Shersby : It is a valid point that marketing that profession is important. Will my hon. Friend consider the proposition that it might be useful for the Home Office to have some discussions with the Law Society-- possibly with the universities--about the training of suitably qualified lawyers, so that we can perhaps move in a direction that will ensure that more of those people who train as lawyers do actually practise law?
Mr. Patten : I welcome my hon. Friend's comments. There is considerable interest at present in the future of both legal professions, as brought forward in the three Green Papers of my right hon. and noble Friend the Lord Chancellor. There are other issues that must be addressed besides possible reforms in the legal profession, and one of them is exactly that which my hon. Friend has mentioned. That was an extremely constructive suggestion. Pay is obviously a critical factor. Court clerks are employees of magistrates courts committees and their salaries and conditions of service are negotiated alongside those for other court staff in the joint negotiating committee for magistrates courts staff. However, settlements reached within the joint negotiating committee, in order to rank for grant, must be approved by my right hon. Friend the Secretary of State, who will have due regard to the operational needs of the service and, of course, to affordability.
Alas, in the 1988 pay round it was not possible for the two sides to reach agreement, and the matter was referred to arbitration. The decision of the arbitrators, taking into
Column 1321account the level of vacancies at 1 April 1988, was that court clerks should receive a 7 per cent. pay increase, and that, in addition, the minimum scale point for professionally qualified staff should be point 10 on the 22-point scale on which court clerks and senior administrative staff are paid. My right hon. Friend the Home Secretary has recently approved the award for grant purposes. There is now no further delay in the payment of backdated sums to those in the courts service, who give such excellent help to that service. It is being put into effect now and thus puts an end to what has been a most undesirably long and protracted pay round.
The next pay round is soon to start and the settlement date is 1 July 1989. Once again, it will be for the joint negotiating committee to give full and careful consideration to the way in which the shortage of clerks has increased over the past year. I cannot believe that the joint negotiating committee will not take that into very close account. The Central Council of Magistrates Court Committees has sought a meeting with Ministers to discuss the present difficulties which my hon. Friend the Member for Uxbridge has raised. My right hon. Friend and I will be glad to participate in that meeting in the not too distant future.
Earlier, I referred to the fact that not all magistrates court committees are experiencing the same problems. There is some flexibility in the pay structure and I wonder whether all employers are using that flexibility to the maximum. Court clerks can be paid by committees which wish to match that pay to the needs of recruitment and retention. Court clerks are paid within five point bands on a 22-point scale. In some areas, that is sufficient, although I accept that, in some instances, committees will be constrained in their use of the upper points on the scale by the salaries paid to justices' clerks and their deputies at the top of the profession locally.
A number of committees have decided, with the agreement of the local authorities--they meet 20 per cent. of the cost and the Home Office meets the remaining 80 per cent.--to offer local pay supplements in excess of nationally agreed salary scales to retain legally qualified staff and to attract others. It is for the committees, as the employers, to take that decision. Those of us who value the magistrates court service as part of the intrinsic locally based system of justice will want, as much as possible, those decisions to be taken locally rather than by the Home Office. We shall seek to continue with such local decision-making as far as possible. It is for local committees to decide what arrangements best meet local circumstances.
We have also approved more trainee clerks and have created an additional 25 posts. We are actively encouraging committees to apply for more. We need such posts to encourage more people to come into the profession. They represent a medium-term investment for us as they will provide some relief while post holders are under training. Eventually, they will give us a pool of qualified staff who can join the main stream of the service.
A particular problem, however, is that the magistrates court service does not have a particularly high profile and
Column 1322it is not brought to the attention of many who seek to follow a legal career or who are coming to the end of their training in our universities and polytechnics. Such people may consider whether to go into the City, whether to become a solicitor or join the Crown prosecution service. I wonder how often they think, "Shall I go into the magistrates court service?" Perhaps the Home Office should do more in conjunction with the legal professions' representative bodies, such as the Law Society and the Justices' Clerks Society and others, to promote the magistrates court service as a profession. I have had a look at our recruitment literature recently and it does leave a little to be desired. Perhaps we should take a leaf out of the Ministry of Defence's book, which always produces excellent recruitment literature. We intend to produce literature that has a wider appeal than some of the bureaucratic stuff that we have put out thus far. We intend to target that literature better at schools so that the magistrates courts service is considered as a possible career before people leave school. It is important that that career is considered by those going on to higher education.
We shall launch the booklet at the Sunday Times careers fair at Olympia from 8 to 10 June. We shall give it as much of a push as possible at that fair and at subsequent ones. We also intend to produce a second booklet aimed at those in higher education who are studying law.
We are conscious of the fact that the 1990s will see an increasing amount of competition to attract those entering the job market. We shall have to fight along with others to ensure that an adequate number enter the magistrates courts profession.
Interesting initiatives have been undertaken around the country. The Leicestershire magistrates committee is pooling its resources to set up a consortium of committees to recruit clerks from a considerable area instead of a number of court areas competing with each other locally. They are beginning to try to build up links with local schools, colleges, universities and polytechnics. We need to do a lot more of such positive recruiting.
To a certain extent, the future of the magristrates courts service is under discussion. It will be coming under even closer scrutiny in the next few months as the Home Office's scrutiny of the organisation and resources of the magistrates court service is completed. We will want to look carefully at the recommendations. They will be reported to my right hon. Friend the Home Secretary and me in June this year. The scrutiny will cover matters which relate broadly to the use and allocation of resources--a fairly large topic. It will not look at the pay structure since that is a matter for the joint negotiating committee.
However, the deliberations of the scrutineers will inevitably include salary and pay structure matters, and they will have to be taken into account as we look to the future of the magistrates courts service in this country. That service is suffering from problems that I hope that the pay negotiations which have just finished and the negotiations which are about to start will do a certain amount to alleviate, especially when linked to improved recruiting. We all wish to attract more people into the service.
Mr. D. N. Campbell-Savours (Workington) : Last week The Observer led with the story, "Tornado Rip-Off". the article purported to investigate Britain's biggest ever arms deal and the middlemen who fixed it. I have to admit that the article was well written and I tender no criticism of the journalist who wrote it, except to say that I am sure that he will find that the elusive Mr. Charles Langley resides at Lonrho headquarters.
The article alleged that the British armaments industry, backed by the Government, is fuelling the middle east arms race. In referring to arms orders potentially worth as much as £150 billion and while attacking the basis for the deals, the newspaper stated : "behind the cheers for this most profitable defence deal in our history lie moral and financial problems."
The newspaper questioned what it called huge commission payments, the morality of selling vast quantities of sophisticated weapons to middle east and Third-world countries, the role of the Export Credits Guarantee Department in providing finance for the purchases and the risk to the taxpayer of default in the payment in the event of a change in regime. The bulk of the orders go to British Aerospace. It stands accused in The Observer --I shall repeat a comment in the French newspaper L'Express--
"of being willing to pay exceptional commercial expenses." The Observer failed to spell out clearly the origin of the story it published and the reason why it was published. Unfortunately, the newspaper is owned by Mr. Tiny Rowland and the article was a Rowland plant. Mr. Rowland is not only a newspaper proprietor but an arms dealer. He has a direct interest in the fortunes of the Dassault company in France, the country's principal military aircraft manufacturer. It was Tiny Rowland who negotiated, directly and through a labyrinth of middlemen, a series of deals primarily in Africa but also in the middle east, involving the sale of luxury jets, jet trainers, fighter bombers including Mirage 2000 and F1 aircraft.
Tiny Rowland regards British Aerospace as a keen competitor. On a number of occasions he has set out to frustrate attempts by British Aerospace to sell aircraft. The most recent example of that involved the £150 million deal to sell Hawk ground attack aircraft to Kenya. In this case, he was pushing the rival Dassault Mirage aircraft. Dassault was also a direct competitor with British Aerospace over the deals outlined in The Observer last week. According to the newspaper's report, when the company heard of British Aerospace's success in landing the Saudi deal, a Dassault spokesman said : "What has happened is unexpected, incomprehensible and catastrophic. The decision to acquire Mirage 2000 had already been taken on technical grounds. This brutal change is of a political nature."
Of course, there is a great deal more at stake for Mr. Rowland than mere profit. He is a man obsessed. He loathes the chairman of British Aerospace, Professor Roland Smith, because he forced him off the board of the House of Fraser during Rowland's argument with the Al-Fayeds. He equally loathes the right hon. Member for Chingford (Mr. Tebbit) for acting as an unpaid adviser to the professor and because of his failure to intervene during the Harrods takeover. The problem is that his obsessions are increasingly spilling over into the columns of The
Column 1324Observer, doing immense damage to a great national newspaper. For some years, he has used the newspaper to run his personal vendetta against the Al-Fayeds and he is now, with last weekend's article, launching a new campaign to undermine British Aerospace's sales efforts in various parts of the world by using the columns of his newspaper to foster his commercial interests.
In doing so, this man is undoubtedly compromising journalists. He has, in effect, become a gladiatorial, proprietorial tyrant who is manipulating his newspaper in a way that puts him on a par with the worst aspects of Murdoch control of Fleet street journals. This must stop, and he must be stopped. He is destroying The Observer. Its circulation has fallen dramatically from 900,000 in June 1989, when he took it over, to just over 700,000 last month. Meanwhile, its rival, the Sunday Times, has held its readership steady at 1,350, 000 with marginal movement.
This man is undermining British industry, and in particular British Aerospace, with accusations that equally apply to himself with relation to his arms dealings. The time has surely come for him to divest himself of control of this newspaper. An excellent team of journalists at The Observer are increasingly the subject of criticism inside and outside the House of Commons, and surely see themselves as professionally undermined as they are forced to act on occasions as Lonrho hacks, furthering the dirty work of an obsessive Fleet street mogul and international arms dealer.
I wish to turn to a different aspect of British Aerospace's activities in balancing my contribution to the debate--its acquisition of Royal Ordnance and the Rover Group from the Government, a huge rip-off at the taxpayers' cost and, in my view, the rip-off of the century. In April 1987, as hon. Members have good cause to remember, British Aerospace paid the Government £190,000,000 for Royal Ordnance. Ironically, in pursuit of market ideology, the Government acting totally unlike any sensible private vendor ; desperate to get rid of a public asset at any cost, they placed a ludicrous time limit on the date by which a sale had to be achieved.
The Government failed to consider the development value of land holdings by relying on an out-of-date, totally inadequate valuation which put the price of 380 acres of prime development land in Greater London at only £3.5 million. Subsequently, Warburg Securities valued the same land at £517 million, identifying a £500 million gift to British Aerospace's private shareholders at a direct cost to the taxpayer.
Understandably, the Public Accounts Committee, a Committee of which I am a member, concluded in October last year :
"We are concerned that BAe, owners of RO, could make a substantial gain on the sale or redevelopment of these sites without benefits accruing to the taxpayer."
Meanwhile, the Ministry of Defence insisted,
"We got a pretty good price for Royal Ordnance."
That was only half the story. We then found out that this asset, picked up on the cheap, managed miraculously to turn in a profit of £56 million last year. What had originally been acquired for reasons of speculative asset development had somehow and mysteriously been transformed into a honey pot of new trading profitability--a nice slab of trading profit to bolster British Aerospace's uninspiring trading performance.
Not content with one back-door subsidy to British Aerospace, the Government repeated the exercise with the Rover Group sale, producing an even more spectacular
Column 1325"success". Lord Young was certainly not exaggerating when at the time he called it the deal of the century. Having failed in the summer of 1986 to split up and sell off Britain's last volume car manufacturer to multinational competition, the Government became desperate for a purchaser--preferably, given the recent public outcry, a British one. Of course, there was no suitable purchaser on the horizon, so to whom could the Government turn? Who owed them a favour? Why, of course, British Aerospace.
In keeping with his eccentric understanding of market discipline, Lord Young announced an auction with a difference : there was to be one bidder ; the auctioneer would pay the commission ; and the bidder would be paid to take the goods away. He asked £150 million for the job lot, approximately the value of the cars the Rover Group held in stock, but to sweeten the pill--just in case the removal truck broke down on its way from the auction--the Government would write off the company's debts and provide a gift of £800 million. Fortunately, the European Community, the only sane body of people around these days, moved in and forced the Government to reduce the handout to £547 million. Thank the Lord for the blessed bureaucrats from Brussels. Even so, British Aerospace was effectively given £379 million to take the Rover Group away.
Days after British Aerospace had agreed to the purchase, despite the assurances from Mr. Graham Day that the takeover would not lead to redundancies, it was announced that the Cowley, south and Llanelli plants were to close and that 3,400 people would have to lose their jobs. Promptly tackled on that squalid about-turn, Mr. Day cheekily responded that those redundancies were not the result of the merger, but of other trading considerations, including over-capacity. Only a fool could possibly swallow that explanation.
A few days ago, we all read with great interest reports that Rover made £65.7 million last year--£10 million per month, as the headlines said. The question is whether it was known that Rover Group would make such profits when it was taken over. Was that taken into account in the sale price? Was it known that, with projected profits of £100 million for Rover in the coming year, British Aerospace would recover the whole acquisition cost of their interest in Rover in little more than 18 months? That does not even take into account the asset value of the group.
Under cover of the Rover profits and the Saudi deal, British Aerospace announced that the Rover group had somehow been revalued at £829 million. That did not take into account the redevelopment land in the south. The empty site at Cowley alone had been valued by Warburg at £40 million. As was to be expected, we now hear rumours of a sale. What of its 40 per cent. share in Leyland-Daf, picked up at about the same time as the Rover group takeover? It is estimated that, when it is floated in the summer, it will net £160 million--more than British Aerospace paid for the whole of the Rover group.
In reality, Rover's performance since the takeover has been disappointing. With United Kingdom car sales at record levels, Rover has a reduced market share and looks as if it is about to lose more as its competitors bring out new models ahead of it this year. The jury is still out on whether Rover will remain in the volume car market. We
Column 1326now have to see whether those profits will go back into research and development or into the pockets of private shareholders. How has the parent company, British Aerospace, been performing? As The Times put it :
"Without these two purchases, BAe would not be looking too clever."
The world's aircraft producers are working flat out, but the commercial aircraft division of British Aerospace made a loss of £49 million last year--£41 million on Airbus alone. What the real figure will be, must be anybody's guess. The weapons and electronics division is having difficulties despite every effort within the work force. Yet on paper, as a result of Government handouts, British Aerospace looks in good condition.
Shareholders' funds have doubled to £2.1 billion and net assets have doubled. Property holdings are up from £91 million to £234 million before any Royal Ordnance or Rover Group land development potential has been realised. Most importantly for some, no doubt, dividends are up 10 per cent. The private shareholders will make a killing at the taxpayers' expense as, inevitably, British Aerospace further diversifies into speculative property development on the back of land gifted from the taxpayer in complex dealings over privatisation.
It seems that Professor Roland Smith, the chairman of British Aerospace, has found, not unnaturally, easier ways of making money than making aeroplanes--land development and acquisitions. Since last January alone, British Aerospace has bought Ballast Nedham Groep NV, a Dutch construction company, for £48 million. It founded BAe Simulation Ltd., bought an option on Reflectone Inc., a United States simulator company, was rumoured to be in the market for GEC Avionics and, as recently as February this year, acquired De Moer, a Dutch civil engineering company, for an undisclosed sum. I am sure that Professor Smith is grateful to the taxpayer.
By next year, Royal Ordnance and Rover Group may have paid for themselves out of profits alone. British Aerospace's shareholders can then continue to enjoy the benefits of at least £1.3 billion--£1,300 million--of gifted capital, even before the full development potential is calculated. The cash cow has not even begun to be milked. The question is whether the profits will be generated by manufacturing activity or property speculation. I do not for one minute suppose that the shareholders of British Aerospace are concerned about where the profits come from, as long as they are there. One can only presume that they are rubbing their hands with glee, as the beneficiaries of the biggest rip-off of taxpayers' assets this century.
The Parliamentary Under-Secretary of State for Defence Procurement (Mr. Tim Sainsbury) : The hon. Member for Workington (Mr. Campbell-Savours) has covered a wide area in a characteristically robust speech. I think I detect four or five main themes. We started with some extremely interesting observations about an article in The Observer. The hon. Gentleman linked that article to British Aerospace's export achievements, for which I was glad to hear him express his support.
Later in his speech, the hon. Gentleman returned to some other aspects of British Aerospace's activities, including some of its civilian work. In the hon. Gentleman's consideration of the profits achieved by companies under British Aerospace management, it would
Column 1327not be unreasonable for him to have regard to the quality of the management that is brought to bear on those companies and their performance, and to consider whether better management, which must be in the interests of everyone concerned, including the work force, is not something to be applauded, especially as it can be identified through higher profits. The hon. Gentleman talked also about the purchase by British Aerospace of Royal Ordnance plc and Rover Group. I suspect that the hon. Gentleman will not be altogether surprised if I draw his attention to the fact that the subject of the debate is the relationship of the Ministry of Defence with British Aerospace. Tempted as I might be to say quite a lot about The Observer and its proprietor
Mr. Sainsbury : The hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore) tempts me further, but I must resist the temptation to discuss a matter that is not the responsibility of my Department.
I am afraid that the same goes for some aspects of the civilian work of British Aerospace to which the hon. Member for Workington referred--for instance, the dealings with the Airbus consortium and the curious fact that it seems that the more Airbuses are sold the larger are the losses made by the participating companies. One hopes that the company will improve its performance under the restructured management of which we have read. The hon. Member for Workington will not be surprised if I do not say too much on that front.
Again, much to my disappointment, matters relating to Rover Group and its acquisition by British Aerospace are matters not for me but for my noble Friend the Secretary of State for Trade and Industry. I am sure that if the hon. Gentleman addressed his remarks to my right hon. Friend the Chancellor of the Duchy of Lancaster he would be given a robust response.
The hon. Gentleman also referred to the acquisition of Royal Ordnance plc. He made some fairly forceful remarks on the subject, as we have come to expect of him. In his approach, the hon. Gentleman seems to be liable to give as much credence to speculative reports and matters which are not valuations but views expressed by unqualified non-surveyors as he does to professional surveyors on aspects that have been thoroughly researched.
If I understand him correctly, he is saying that the purchase of Royal Ordnance plc. by British Aerospace was some sort of monstrous rip-off. In his view, the property value of the assets of that company was astonishingly high. He quoted a figure of £400 million, and said that it was based on a Warburg valuation. I do not know how familiar he is with the origin of that figure. It was not a valuation at all. It was a bit of pure speculation by some desk operator in a merchant bank, who may have been doing an in-house analysis of the value of British Aerospace, and, lacking any expert knowledge of the situation, looked at a large number of acres of land and put against them a large valuation per acre, assuming that all that land was capable of redevelopment.