Since last July the Government have been working with the management of Shorts to seek a successful transfer of the company to the private sector. On 3 March I advised the House that I had selected two out of the six preliminary proposals for the purchase of the company, and had invited those two to submit final proposals by 30 April. They were the Canadian company Bombardier, and a partnership of GEC and Fokker. Their final proposals have now been fully reviewed, and I can advise the House that I have today approved heads of agreement for the sale of Short Brothers plc to Bombardier. Under the heads of agreement, Bombardier will pay £30 million for the share capital of Shorts. On behalf of the Government, I have offered Shorts, under its new ownership, grants of £79 million for new capital investment in the next four years and of £18 million for other costs, mainly for training. As regards the company's existing liabilities, the £390 million loan advanced by the Government earlier this year to repay commercial debts for past losses will be written off. I have also agreed to advance a further £275 million to recapitalise the company, to repay the remaining borrowings and to meet anticipated losses on existing contracts.
Of this sum at least £60 million will be in the form of an interest- free loan. That loan will be progressively cancelled as specified targets are met, but would be immediately repayable in the event of a material breach by Bombardier of the commitments it has given in relation to the future of the company. The Government will of course continue to fund the company until the completion of sale but as I announced on 10 January 1989, Government undertakings in respect of Short's liabilities will be withdrawn at privatisation as far as new obligations are concerned.
Beyond the period covered by the terms of the heads of agreement, Short's eligibility for assistance will be on the same basis as other private sector companies in Northern Ireland. In this respect, as I announced on 22 March 1989, I plan to repeal my powers in relation to Shorts in public ownership contained in the Aircraft and Shipbuilding Industries (Northern Ireland) Order 1979.
The terms of the agreement are subject to contract and also a number of conditions including the approval of the European Commission. The necessary estimates will be laid before the House at the appropriate times.
Bombardier recognises the important position occupied by Shorts in the Northern Ireland economy and intends to acquire the company as a long-term investment and to maintain it as a complete entity. Its objective is to develop the three main divisions of aircraft, aerostructures and missiles. In particular, Shorts aircraft division will become a full partner in the detailed design and development of the Canadair RJ regional jet and I have agreed to offer £18 million towards development costs on Short's part of this work.
Bombardier is a Canadian group with a range of products in the transportation industry. In 1986 it acquired Canadair, an aerospace company similar in size to Shorts, from the Canadian Government, and has since developed it successfully. It has recently launched its new
Column 228regional jet for the short to medium range market. Overall, I believe that its activities provide an excellent fit with those of Shorts.
This agreement with Bombardier for the acquisition of Shorts opens the way for the transfer of the company from public ownership to the private sector. The scale of the sums involved illustrates very clearly the problems that the company has faced in public ownership and as a relatively small enterprise in the complex and competitive arena of aerospace. At the same time, it has developed products and skills which, with the right leadership and organisation, can once again make Shorts a successful and viable operation which contributes fully to the economy of Northern Ireland. The Government believe that operating under the commercial disciplines of the private sector and as part of a larger group under Bombardier's ownership, gives Shorts the best possible opportunity for a much brighter future and fully justifies this substantial investment of public funds.
Mr. Jim Marshall (Leicester, South) : I thank the Secretary of State for answering the question that I put to him some days ago, asking that he should make a decision on the future ownership of Shorts prior to the opening of the Paris air show. Perhaps it is appropriate that a decision has been made on the eve of that show. We welcome the fact that a decision has been made because it will remove the uncertainty which surrounds the future ownership of Shorts. We also welcome a bid, which, we hope, will seek to maintain the company as a single entity, and its product range.
It will come as no surprise to the Secretary of State to learn that we still continue to dislike the Government's privatisation policy, in particular as it applies to Shorts. Our view has been, and remains, that if the Government had been prepared to provide the level of financial assistance that they are now prepared to give to get rid of the company, Shorts, as a publicly owned company, would have flourished and could have been profitable. However, once the Government persisted in their privatisation policy, we made it clear some time ago that, out of the two bids that the Government were actively considering from Bombardier and GEC- Fokker, the decision should be made in Bombardier's favour. We are delighted that the Secretary of State has seen fit to accept our view.
Does the Secretary of State agree that, important though today's announcement is, of even greater importance is the future strategy for the development of the company in view of its pivotal importance to the economy of Northern Ireland? Paragraph 4 of the Secretary of State's statement refers to the commitments that Bombardier "has given in relation to the future of the company."
It does not say that commitments will be, or may be, given but that commitments have been given. I and my party do not feel that those commitments were fully and adequately expounded in the Secretary of State's statement. It is those particulars and specifics lacking from the statement on which I wish to question the Secretary of State. First, during his discussions with Bombardier, has the Secretary of State received any assurance about the existing product range and likely levels of employment? Secondly, I am sure that the Secretary of State agrees that Shorts is a centre of technical excellence. In view of that,
Column 229has he received any assurance that the company will continue with research and development at the very frontiers of high technology? Thirdly, the success of the bid depends greatly on the financial arrangements announced today by the Secretary of State. However, as he said, those will depend on the agreement or acquiescence of the European Commission. Have there been any preliminary discussions with the European Commission, and, if so, in which direction are they likely to go?
Fourthly, the House will know that Bombardier, although a successful company, is small in international terms. It employs 13, 000 people worldwide. It is to take over a company in the north of Ireland, Shorts, which employs about 7,000 people. In those circumstances, is the Secretary of State convinced that the enlarged company has the necessary level of managerial expertise and sources of profitability to ensure its survival?
Fifthly, will the Secretary of State seek to ensure that, between today and the final takeover by Bombardier of Shorts, all members of the work force will be involved in full consultation with the Government, the present Shorts' management and the management of Bombardier?
Finally, Shorts has a distinguished past and deserves a soundly based future. We hope that that can be assured, not just for the sake of the company, but also for the economy of Northern Ireland as a whole.
Mr. King : I am grateful for the hon. Gentleman's comments about Bombardier and the decisions that we have made. Anybody who has any idea of the history and present position of Shorts and who thinks that its problems will be solved merely by pushing more money at them without changing ownership is mistaken. It is absolutely vital to give it the structure of a larger group, within the aerospace world. If we do not we shall simply be pouring more money after the substantial sums that we have already spent. I should have thought that the hon. Gentleman would have reflected on what the structure was that led to the calls for such substantial sums of money. Today, I have announced assistance of £780 million for that. Putting more money in without a substantial change in the arrangements would have been inconceivable.
I am satisfied of Bombardier's commitment to making a success of Shorts as a single company in Northern Ireland. That is one of the commitments into which Bombardier has entered. It will seek to maintain in totality the expertise, research and design development, which it sees as assets and values.
Bombardier took over Canadair which, at the time, was a loss-making, state- owned company in Canada that employed 5,000. Under Bombardier's leadership and ownership, within three years the company is now profitable and employs 6,500--1,500 more than when it was taken over. That must be real encouragement. Anybody who knows the chairman, M. Beaudoin--I have seen him in Belfast today--will know the high price that he attaches to communication with the people who work in the company.
Rev. Martin Smyth (Belfast, South) : On behalf of my colleagues and the people of Northern Ireland, and of Belfast in particular, I welcome this statement. Bearing in mind the interval between the announcement of the privatisation and the buy-out of Harland and Wolff, will there be a similar prolonged period which will add to the
Column 230doubts and questions about Short's future, or does the Secretary of State foresee a speedier conclusion to these negotiations? He will know that there has been a loss of morale and that workers have left Shorts and that some have even been enticed abroad to look after their own futures because the future of the firm was in doubt. I also welcome the fact that money has been put into training. Shorts used to have a fine training programme. Do I take it from the announcement that it will now return to on-the-job training in aircraft design and manufacture as well as other forms of training? I welcome the injection of capital, because although all have agreed that money was put into Shorts in the past, more money was needed in this area to give the company the proper tools for the job. My colleagues and I await developments. Does the Secretary of State foresee any real difficulties with the Office of Fair Trading or the European Commission?
Mr. King : I am grateful to the hon. Gentleman, who speaks on behalf of himself and of his hon. Friends. He has a direct constituency interest, but everyone would recognise that Shorts affects the interests of all in Northern Ireland because of its important position.
I hope that there is a difference between what happened with Harland and Wolff and these negotiations. The management buy-out and the involvement of employees gave rise to a more complicated procedure, with the prospectus and the offer of shares in the new company. My best expectation is that if, as I hope, we are successful with the European Commission and the Office of Fair Trading, it will be possible for the matter to be concluded within three months. As for training and the future of the company, this has been a difficult time because the employees, perhaps more than anyone else, knew how serious the company's position was and had been for some time. They knew about the large losses that were being made. If it had gone on as it was, the company had no future. Now it definitely has one--a future in which the Government and Bombardier are prepared to invest. Most importantly of all, provided that all who work in Shorts are committed to ensuring that they make the maximum contribution, if these are to be new investments, new facilities and new products, this will be an exciting development for Shorts and for Northern Ireland.
Mr. Kenneth Warren (Hastings and Rye) : I congratulate my right hon. Friend, my hon. Friend the Member for Gosport (Mr. Viggers), and the officials who have supported them in their difficult negotiations and who are not often mentioned.
Is it not good that, on the eve of the Paris air show, the competition that my right hon. Friend has mounted and which has been decided clearly shows the value of Shorts in the international aerospace community? Bombardier is a growing force in international aerospace, as the acquisition of Shorts will show. I hope that my right hon. Friend agrees.
I hope, slightly egotistically, that my right hon. Friend will be kind enough to acknowledge that the Government have entirely agreed with the report by the Select Committee on Trade and Industry on this matter of privatisation.
What guarantee can my right hon. Friend give that the security of the missiles division will be maintained, given
Column 231the sensitive work in which it is engaged? Lastly, is the £18 million which my right hon. Friend has committed to the Bombardier civil aircraft project the end of a commitment?
Mr. King : I have set out the main commitments but I have made it clear that in future the Government will treat Bombardier-Shorts in the same way as a normal private sector company in Northern Ireland. I particularly appreciate my hon. Friend's comments about my hon. Friend the Under-Secretary of State for Northern Ireland, the Member for Gosport (Mr. Viggers). The difficulty about the whole situation was that this change was absolutely vital if Shorts was to survive. It was not entirely possible to let people in Northern Ireland really understand the seriousness of the situation. We tried to get an element of realism in the approach, but that was not always appreciated. My hon. Friend the Member for Gosport had to take a great deal of flak over that and he deserves great credit for the successful outcome that I have been able to announce to the House. The agreement offers an exciting prospect for the future. I know that it is very closely in line, although not totally in line, with some of the recommendations that my hon. Friend the Member for Hastings and Rye (Mr. Warren) and his colleagues in the Select Committee pressed upon us.
Mr. Seamus Mallon (Newry and Armagh) : I welcome this announcement, and especially the fact that it will end indecision for the work force in the North of Ireland. I am sure that the Secretary of State agrees that, when £800 million of public money is used, it should be used to the advantage of all sections of the community. Will he tell the House what requirements have been written into the agreement to ensure that discrimination in employment at Shorts will end once and for all? What security arrangements have been insisted upon by the Government so that no more missiles or information about them can be stolen from Shorts to the advantage of terrorists in the North of Ireland and their paymasters in the wretched South African Government?
Mr. King : No missiles have been stolen from Shorts and we are determined to make sure that none will be stolen. I make that absolutely clear. If the hon. Gentleman is referring to a demonstration cutaway model stolen from a TA centre, that is a rather different matter. None the less, I need hardly say that we take that very seriously and have been anxious to ensure that proper precautions and proper security are in place.
The hon. Gentleman spoke about public money. This is a substantial injection of public funds for the benefit of Northern Ireland. It is for the benefit of the economy of Northern Ireland and not for the benefit of one community or another. That is important and it is fully understood in the commitments and obligations that Bombardier will enter into. The company fully accepts the laws that obtain in Northern Ireland and I know that it will seek to be a good employer in the Province. It will bring great benefit because the injection of new ideas and a different approach can only be of benefit. The company will be working together with the recognised skills and abilities that exist in Shorts and, as I said in my statement, that is a very happy fit indeed. I certainly look to this to make a major contribution to the
Column 232Northern Ireland economy. That is the justification for investment on this scale, and it will benefit all the people of Northern Ireland.
Mr. Ian Gow (Eastbourne) : While unreservedly welcoming my right hon. Friend's statement, may I ask whether he agrees that the story of Shorts while it has been in the public sector has been a very unhappy and costly story indeed? Will my right hon. Friend learn the appropriate lessons from the experience of this company being in the public sector? In so far as there are any other companies which his Department still owns in Northern Ireland, will he undertake to put them into the private sector at the earliest possible moment?
Mr. King : My hon. Friend has made a shrewd and absolutely accurate observation. The figures demonstrate the scale of the problems that have arisen and which are partly connected to market conditions and partly to the size of the company. I profoundly believe that the difficulties owe a lot to the problems that public ownership can bring and the lack of motivation that can flow from it.
My hon. Friend the Member for Hastings and Rye (Mr. Warren) invited me to pay tribute to our officials. I know that my hon. Friend the Under- Secretary of State for Northern Ireland, the Member for Gosport (Mr. Viggers), would wish to be associated with that. The officials are not often mentioned and have taken much criticism during this process. Two or three years ago not many people would have held out many prospects for the survival of Harland and Wolff or Shorts. There has been a massive undertaking and all the people who work for Harland and Wolff and Shorts now have the real chance of a much brighter future. That prospect owes much to the dedicated and hard work of the team in the Department of Economic Development as well as to the companies.
Mr. Doug Hoyle (Warrington, North) : I welcome the Secretary of State's announcement. He knows my view, that it would have been better to have kept Shorts in the public sector, but does he agree that it is good to bring the uncertainty to an end?
Secondly, as Bombardier makes a jet similar to Short's FJX, will the FJX project come to an end? Does being full partners in the aircraft side mean being full partners in the design, research and development of any future aircraft and those in the Short range? Thirdly, will the redundancies that have been announced, particularly in the white collar sector, be withdrawn, or will they stand?
Fourthly, what guarantee has the Secretary of State sought from Bombardier that it will continue in Northern Ireland? Will the Government continue to have a holding to ensure that Shorts continues as an integrated entity in Northern Ireland?
Mr. King : The RJ has already been launched. The FJX is some years away from that possibility. It is still only a design concept but some work has been done on it. Bombardier is impressed with some of its concepts and looks to Shorts to be a full partner in the detailed design work on the regional jet and in the design and development of further aircraft that may flow thereafter. I can give the hon. Gentleman that assurance.
Bombardier is making a significant commitment to the future. It wishes to develop into a substantial group within the aerospace industry. It has given a commitment that
Column 233Shorts will remain as a single company and continue in Northern Ireland and our financial proposals are linked to the maintenance of those commitments.
Mr. James Kilfedder (North Down) : The excellent work force and management of Shorts will be thankful that the decision has been made at long last, because the delay has meant the loss of many jobs and of young, highly skilled technical and craft workers. A substantial amount of public money is to be invested in Shorts, for which the people of Northern Ireland are deeply grateful, but I repeat that, as I said six months ago to the Secretary of State in the House, it is time for the Northern Ireland Office to send out not English Ministers but a representative delegation of politicians, Unionist and nationalist, Protestant and Roman Catholic, to the United States and elsewhere to seek the jobs and investments that are needed in Northern Ireland.
Mr. King : If I heard the hon. Gentleman correctly, he welcomed the announcement and I am grateful for that. He has previously said that it would be appalling if Shorts were split up and sold off in parts and I hope that he welcomes the fact that that will not be the case. I am glad now to have his support for this important development in privatisation.
I would welcome, and I know my right hon. Friend the Minister of State would, the assistance of politicians--elected Members--from Northern Ireland in the work that we try to do to bring jobs to Northern Ireland. That is the first offer of assistance that I have had and, if it is echoed, I shall be glad to see it happen.
Mr. John D. Taylor (Strangford) : The Secretary of State will recognise my interest in Short Brothers because the company has plants in Newtownards and Castlereagh. We welcome Bombardier to Northern Ireland. The right hon. Gentleman's statement is better late than never ; the delay associated with the whole matter has created great unrest within Northern Ireland and has certainly hit the morale of the company's staff. The damage done by delays and by the Ministers responsible during the past year is deplorable. The lack of investment by present Northern Ireland Office Ministers in recent years has been one of the main reasons for the decline in the fortune of Short Brothers. It can be fairly said that when another Government were in power the losses were not as bad and there was investment. The problem at Short's in recent years has been lack of investment, yet today we learn that £700 million and more is being spent to get rid of the company. Delays have also cost the loss of another 700 jobs in the past four weeks. We must not run away from the facts of the situation created by the Minister responsible for handling the future of Short Brothers.
What are the commitments to Short Brothers and to Northern Ireland? Will the company's three main sectors remain in Northern Ireland? If so, is there any time limit? What about the plant in Newtownards? What guarantee is there that Short's will continue to maintain a separate plant in the borough of Ards? What about the successful Belfast city airport which Short Brothers developed in recent years? Is it included in the sale or is the intention to hand it over to the monopoly control of the Northern Ireland Airports Authority? Can the Secretary of State guarantee that Belfast city airport will continue to exist as a separate entity? Will the right hon. Gentleman confirm
Column 234also that Short Brothers will not only be involved in the design of the regional jet but its manufacture and that the FJX is herewith abandoned?
Mr. King : The right hon. Gentleman spoke of a "deplorable" delay. I think that that was a pretty deplorable contribution. First, I welcome the right hon. Gentleman's interest and am glad to have at last his involvement and his direct addressing of the problems affecting 7,000 people, some of whom are his constituents. That is the first time that I have heard directly from the right hon. Gentleman about their concerns and interests.
The right hon. Gentleman should inform himself better about the realities of the situation. He referred to investment during the term of an earlier Government. What happened to the money that this Government provided? It went in losses because no provision was made for new products. Because the world was becoming more competitive, products also had to be sold at increasingly lower prices. Profits went and losses were incurred. That is why--I now answer the question of the hon. Member for Warrington, North (Mr. Hoyle)--700 redundancies have already been announced and I fear that they will have to proceed. I hope that thereafter--as a result of the new management, new organisation and new opportunities--there will be more jobs and not fewer. I have already drawn attention to Bombardier's record with Canadair.
Belfast city airport is included in the arrangement, so it will remain separate. There are commitments, and there are safeguards against any deals being done to the disadvantage of Northern Ireland. As the right hon. Gentleman rightly said, the airport is an important Northern Ireland asset. I can also confirm that Bombardier will be involved, not only in the design of the regional jet but its manufacture.
Mr. Robin Maxwell-Hyslop (Tiverton) : Will my right hon. Friend confirm that the technical contribution which over the years Queen's university of Belfast has made to the success of Shorts and to its potential was one of the valuable factors which Bombardier took into account? May I also put in a word of gratitude to Mr. Rodney Lund, who took over the chairmanship of what was otherwise a moribund company at an extraordinarily tense and difficult time, and express the hope that we have seen the last of restrictive practices on the part of the work force, which would have brought even a state-financed company to its knees and which have no part in the real world of which Shorts is now part, with the best opportunity it has ever had of securing its commercial future since it was expropriated by Sir Stafford Cripps with virtually no compensation to its shareholders, and therefore was not creditworthy as a free-standing and real part of the world aircraft industry?
Mr. King : I am grateful to my hon. Friend, who knows Shorts as well as, if not better than, any other Member of the House and who has taken a close interest in the company. He is well aware, and rightly so, of the real contribution that Queen's university can make in technical and research work. I have no doubt that Bombardier will wish to ensure that those close relationships continue as they benefit Shorts and so many other companies in Northern Ireland. In regard to restrictive practices, this is a very important day, which, as my hon. Friend said, could be the start of the best opportunity Shorts has ever had.
Column 235Bombardier is making its commitment. I am recommending to the House that public funds should be injected to make that possible. It will now depend crucially on the response of all who work in Shorts whether that opportunity is taken successfully. I am grateful to my hon. Friend for mentioning Mr. Rodney Lund. We certainly appreciate his tenure as chairman at a very difficult time.
Mr. Charles Kennedy (Ross, Cromarty and Skye) : May I echo the sentiments already expressed on both sides of the House about the announcement, which is all the more welcome on the eve of the Paris air show? In rightly paying tribute to the management and work force at Shorts, and through the commitment which has been shown by Bombardier, will the Secretary of State sketch in a little more detail the heads of discussion which, in his view, remain outstanding between his Department and the European Commission over the three-month period which he envisages it should take finally to conclude a European level the details of the package that he has announced today?
Mr. King : In respect of that, obviously it is necessary to get European Community approval for very substantial injections of public funds. The European Community will wish to be satisfied that they are not subsidies and distortions of fair competition within the European market. That is the key issue that has to be resolved. Having said that, I am grateful to the hon. Gentleman for what he has said. The announcement has been widely welcomed. The House may be interested to know that I advised the unsuccessful bidders this morning. I spoke to Mr. van Duinen, the acting chairman of Fokker, and I was encouraged by his response, as Fokker will continue to be a very important partner for Shorts. At midday I was pleased to hear the very positive statement by Fokker welcoming the announcement and the end to uncertainty and stating that it believed that Shorts would be in excellent hands in future.
Sir Giles Shaw (Pudsey) : May I add my congratulations to those received by my right hon. Friend and his team on his second excellent announcement after his statement on Harland recently? It is little short of miraculous that he has been able to bring those two difficulties safely home at this time. May I remind him, if he needs reminding, that the £780 million which he has now disclosed as the dowry for this enterprise is a direct reflection of the real problems of public sector competition in the aerospace industry? Is he satisfied that Bombardier has the capital resources as well as the immediate resources to find £30 million of share capital to enable development to continue? Finally, will he emphasise still further Short's relationship with the MOD in vital defence operations?
Mr. King : I am very grateful to my hon. Friend, who used the word "miraculous." If I had been asked that question two years ago, I would have used a similar word, because we faced a daunting task. The sale is important to progress and the atmosphere and attitude in Northern Ireland. It will be seen that companies can succeed by their own efforts and will do much to kill the image that exists in some parts of the United Kingdom that Northern Ireland can exist only on subsidy and assistance. My hon. Friend knows from his experience that there are a number
Column 236of highly successful, profitable and hard- working firms in Northern Ireland. I look to see Harland and Wolff and Shorts join those companies.
The cost involved is not £780 million but £750 million. Bombardier is paying £30 million for the share capital, and I am satisfied that it has the resources to do so.
Mr. Tam Dalyell (Linlithgow) : On this question of attitude, is the Secretary of State aware that some hon. Members would like, metaphorically, to vomit when they hear the reactions of some Northern Ireland Members? What firm this side of the water has ever received anything like £780 million of Government money? Should it not be recognised in Northern Ireland that for 20 years it has received resources that many of our constituents have not, and at least we should like them to acknowledge that?
What is likely to be the European Commission's attitude to the sale, and is it within regulations? Has there been any discussion about end user certificates, which created so much difficulty last year in relation to arms to Afghanistan? Has there been any discussion with Bombardier about end user certificates in relation to missiles in particular?
Mr. King : On the latter point, the rules will remain as they are. I say to my hon. Friend the Member for Pudsey (Sir G. Shaw), who asked about the Ministry of Defence, that the Ministry of Defence is familiar with Bombardier, from which is has purchased products. The hon. Member for Linlithgow (Mr. Dalyell) promised to keep his vomiting metaphorical. I understand his reaction to the churlish and thoroughly unpleasant approach of the right hon. Member for Strangford (Mr. Taylor). We believe--I have fought to ensure a future for Northern Ireland--that Northern Ireland has particular problems, but all the people in Shorts whom I saw this morning appreciate that this is a remarkable and substantial investment, and a substantial gesture from which they will benefit. One or two of their representatives should show greater spirit of generosity and appreciation.
Discussions with the European Commission will be tough, but I believe that we can achieve success. Substantial public investment is being made in one company and skilful negotiations will be necessary, but I believe that we can achieve success.
Mr. Michael Brown (Brigg and Cleethorpes) : does my right hon. Friend agree that one of the problems with the Northern Ireland economy over the past 20 years of political and security troubles is that it has been heavily dependent on the Government? One of the joys of his statement- -although initially some hon. Members may recoil in horror at the amount of public funds being made available--is the prospect for the future of the Northern Ireland economy and Shorts in particular. We are transferring a substantial part of the economy to the private sector, thereby offering greater stability and prosperity for the future of the Northern Ireland economy.
Mr. King : I am very grateful to my hon. Friend. What he says is precisely the point. I foresaw no future for Shorts unless there was a change of motivation and unless the benefits of private sector commercial discipline could be felt. It has suffered, needs new investment and a freeing of its debt burden. We shall do that and give every possible encouragement to the people in Shorts to show what they can achieve. The Paris air show will show everybody what
Column 237a competitive world aerospace is. The buoyancy of the air show will show what a good opportunity this is for the people who work for Short Brothers.
Mr. Harry Barnes (Derbyshire, North-East) : In the first four years, 70 per cent. of the capital will be provided from public funds. Would it not be appropriate, therefore, at least during that period, for 70 per cent. of the equity to be controlled publicly? Have the trade unions in Shorts been consulted? What is their attitude to the proposals?
Mr. King : On the question of the funds being made available, part of them will recapitalise the company, part will repay remaining borrowings and moneys already lost and part will meet anticipated losses on existing contracts. Those are real and substantial costs that will occur in the ensuing period. As regards other funds, I made clear in my statement the way in which the performance of Bombardier and the maintenance of the assurances that it has given will be tied in against the interest-free loan to which I referred. On the question of the trade unions, many efforts have been made to keep all the work force and the trade unions informed of the objectives and of progress. Indeed, they were fully informed today.
Dr. John G. Blackburn (Dudley, West) : Will my right hon. Friend accept the congratulations of the House and the warm tribute to the Minister for bringing a difficult set of negotiations to a satisfactory conclusion? I visited the company within the last six months. The fact that there is an £18 million investment for research and development is a testimony of our commitment to the company. The provision for the Government to take back £60 million if performance targets are not met is very important. That arrangement is in stark contrast to the financial structure created for the De Lorean company. Will my right hon. Friend assure the House that the financial targets will be strictly adhered to for the safety of the public purse?
Mr. King : We are anxious to ensure that the commitments and assurances that we have had are properly achieved. My hon. Friend correctly notes that that is the clear purpose of the arrangements. I am grateful for what he said about the efforts of my hon. Friend. As my right hon. Friend the Chief Secretary is here as well, we should also recognise the wider support that we have had in this important development.
Mr. Bob Cryer (Bradford, South) : In view of the need to secure the future of jobs in the company, can the Secretary of State assure us that no civil servants or consultants involved in assessing the position were involved with the last project in which a representative of the enterprise culture was in receipt of such largesse from the taxpayers' pocket on a much larger scale? I refer, of course, to John Z. De Lorean. Can the Secretary of State also assure us that none of the £780 million will find its way into Conservative party funds from grateful recipients?
Column 238Just in case the Secretary of State intends to reply that I was a member of the Government who gave the money to De Lorean, it is not true, because I was not.
Mr. King : I think that the hon. Gentleman suddenly saw the terrible chasm opening before him just before he sat down. If he had not done so, I would not have dreamt of mentioning that he was associated with the Government who entered into what subsequently proved to be a most unfortunate arrangement. We in this Government approach things in a different and more cautious way. We have been criticised in a relaxed manner by the right hon. Member for Strangford (Mr. Taylor) for too much delay. We have a heavy responsibility to the House and to the taxpayer when such substantial funds are involved. We do not rush into things. We try to ensure that the taxpayer gets the best return and the best bargain for substantial expenditure.
Several Hon. Members rose--
Mr. James Cran (Beverley) : I too would like to congratulate my right hon. Friend on achieving what I consider to be the impossible, given the hearings we had in the Select Committee on Trade and Industry and especially against the background of the many fears that were expressed, none of which has come to fruition. Does my right hon. Friend not agree that this has been far too long in the coming, given that the Government announced their intention to privatise in 1984? I welcome the amount of public funds going into this venture because of its special nature. However, will my right hon. Friend illuminate for the House what the company itself is putting into future investment, aside from the £30 million in equity participation?
Mr. King : In respect of the sums involved, the significant amount of money I announced for capital expenditure--£79 million--is, of course, our contribution towards the capital investment that the company will be making. From that, my hon. Friend can form an idea of the substantial investment on top of the £30 million for the acquisition of the present Short shares that the company will be making. Together with that, there will be an opportunity for it to be a full partner in the RJ programme being launched just now, which is an important commitment and investment.
Sir Michael McNair-Wilson (Newbury) : I want to congratulate my right hon. Friend and his ministerial team on the most satisfactory conclusion with Bombardier. However, how will my right hon. Friend safeguard the classified nature of the guided weapons work being carried on by the company, especially Starstreak, which is a sought-after missile in the international market?
Mr. King : My hon. Friend is right. Starstreak is a critical and important product with a high security classification. The present arrangements will remain in force and will be an important safeguard. My hon. Friend is right to identify the importance of the issue.
Mr. Malcolm Bruce (Gordon) : I beg to ask leave to move the Adjournment of the House, under Standing Order No. 20, for the purpose of discussing a specific and important matter that should have urgent discussion, namely,
"The need to ban the chemical Alar, the apple spraying product." The request is specific because the product is a chemical growth regulator which helps to make more buds set and grow into mature fruit, so it is being sprayed at this time of year. The matter is important because the chemical is especially dangerous for children, who eat far more apples and apple products for their body weight and have longer to develop the cancers associated with this product. The matter is urgent because we have learnt in the past 24 hours that the American Government have banned the use of this product. We are anxious to ensure that the British Government either do the same or explain why they are not going to do so.
I and my colleagues have expressed concern on this matter and have been in correspondence with the Minister of Agriculture, Fisheries and Food. Although the United States Government are now determined to ban the product, I received a letter from the Minister on 31 May saying that the British Government did not intend to ban the product and did not believe that the product was especially harmful. We need to know from the Government exactly how the British examination has come to an apparently opposite conclusion from that drawn by the American authorities.
The Government have also said that if they find that there is any evidence that should cause public concern, they will publish it. They stated to the Select Committee on Agriculture that they would ensure that the information
Column 240made available to the Advisory Committee on Pesticides would be made available to the public. I am sure that you, Mr. Speaker, would accept in the light of this development in the past 24 hours that the Government should tell the House exactly what they intend to do about this product. If they intend to ban it, they should do so now and inform the House. If they do not, they should publish all the information available to them and explain why they do not intend to ban it.
Mr. Speaker : The hon. Gentleman asks leave to move the Adjournment of the House under Standing Order No. 20, for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"The need to ban the chemical Alar, the apple spraying product." I have listened with care to what the hon. Gentleman has said. As he knows, my sole duty in considering an application under Standing Order No. 20 is to decide whether it should be given priority over the business set down for today or tomorrow. I regret that the matter that the hon. Gentleman has raised does not meet the criteria of Standing Order No. 20 so I cannot submit his application to the House.
Mr. Roger Gale
Mr. Simon Burns
Mr. Irvine Patnick
That the proposals described in the unnumbered Explanatory Memorandum submitted by the Department of Employment on 2nd June 1989 relating to safety and health of workers at work be referred to a Standing Committee on European Community Documents.-- [Mr. Chapman.]