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Column 677obtain a final decision on planning permission, which would inevitably prolong uncertainty and delay the achievement of the wider aims of privatisation.
There may well be some gain to be made from developing the sites, but that would only occur after substantial hurdles in the way of development have been overcome. Given all the risks, uncertainties, delays and costs that will be involved, it is clear that the allegations of enormous windfall profits from such development simply do not stand up to close examination.
Mr. Steve Norris (Epping Forest) : I represent one of the significant sites involved, so I am grateful to my hon. Friend for giving way in such a short debate. Does he agree that contrary to all the ludicrous speculation about values amounting to hundreds of millions of pounds attributed to those sites, the NAO report in fact clearly states :
"The NAO noted that they valued these sites as at 31 March 1989 at no more than 8.3 per cent. of the figures reported by the media in 1988."
Does my hon. Friend agree that as the most ludicrous of all those figures was probably about £400 million, the NAO is basically saying that the actual value of those sites has never been more than about £25 million to £30 million--exactly as we assumed when the original sale of Royal Ordnance was made?
Mr. Sainsbury : I know that my hon. Friend takes a close interest in those matters, as does our hon. Friend the Member for Enfield, North (Mr. Eggar), in whose constituency lies the Enfield site. The figure that my hon. Friend quotes from the NAO report is the latest valuation, some two years after the date of the sale, since when there has been an increase in property values. The figure of 8.3 per cent. puts the matter in perspective.
The suggestion that in all this the Department neglected to obtain good value for money for the taxpayer from the sale of Royal Ordnance, and was somehow misled into parting with valuable assets at less than their real value, is particularly misguided.
The allegation that appears in the press from time to time that we sold individual sites for their existing use values of a few million is nonsense. At the time of the sale, we were fully aware of the low value of the sites which the National Audit Office's equally expert surveyors have now confirmed, and of the substantial risks and costs of developing them which our surveyors had identified. We withheld from bidders for the company details of the alternative use valuations of the sites precisely because they were lower than the existing use valuations. In fact, the total alternative use valuations of the Royal Ordnance sites was a negative figure. The hon. Gentleman made allegations about decisions to close taken before the sale. I firmly reject any suggestion that the closure of the Enfield factory was decided before the sale. Although the company had decided before the sale to apply to develop the Waltham Abbey site and the surplus piece of land within the boundaries of the adjacent Enfield site, no decision had been taken to close the Enfield operation. That decision was made after the sale by the new owners, and was announced in August 1987. We have no record of any meeting involving the Ministry of Defence at which the future ownership of Royal Ordnance was discussed with Royal Ordnance subcontractors, as the hon. Gentleman has suggested.
Column 678At that time, Royal Ordnance Enfield would have been involved in preparing its tender for the second tranche of SA80 production. Tenders were invited in June 1986 for reply by November 1986, and the decision to accept the Royal Ordnance tender, subject to confirmation by the new owners of the company, was made in February 1987. No doubt, Royal Ordnance would be able to say whether it had held any meetings with subcontractors at which the future ownership of the company was raised.
The essential point is that, at no time before the sale of Royal Ordnance was agreed on 2 April 1987, was anyone in a position to make any authoritative statement about the future ownership of the company--neither anyone connected with the Department nor anyone at Royal Ordnance, since that company was not even a party to the sale negotiations.
It is unfortuate that the new evidence that the hon. Gentleman claims to have had in his possession for nearly two weeks, as of yesterday was still not in the hands of the Public Accounts Committee. I hope that he will bring it forward. I assure the hon. Gentleman that neither his constituent nor his business has anything to fear if he does so.
In conclusion, I repeat that the various allegations which have been made about the sale of Royal Ordnance are completely unfounded. The company was sold for £190 million in an open and wide-ranging competition to the bidder who made the highest offer--a highly satisfactory return for the taxpayer. The valuations that were made at the time of the sale have been generally endorsed by the surveyors commissioned by the National Audit Office. The company, in its new ownership, has already begun the process of rationalisation and restructuring, which we expect to be of great benefit to the Department and hence to the taxpayer in fostering a more competitive ammunition industry.
The most important point is that it is now absolutely clear that the sale of Royal Ordnance was no "rip-off" of the taxpayer. There was not and is not a "pot of gold" which the Ministry of Defence virtually gave away. The Enfield site has not been sold, has no planning permission and has had no development carried out upon it. The site values that have been quoted by some Opposition Members are nonsense. The reports that appeared in the press about likely development profits were, it is now clear, plainly inaccurate and unjustified.
None of them came from responsible valuers in possession of all the facts. Indeed, I note that, in the case of the figure quoted in the Warburgs report, the company itself, in a statement to the National Audit Office, acknowledges that
" there was no suggestion in the report on British Aerospace that the values ascribed to properties represented professional valuations arrived at after examination of the sites and upon the basis of particular assumptions."
It was recognised that a proper professional valuation had not been made, that the sites had not been examined and that the necessary assumptions had not been made.
This transaction has been subjected to an unusual degree of scrutiny. The various investigations have
Column 679concluded that all proper procedures were followed and that due regard for the taxpayers' position was taken. In the words of the National Audit Office report,
Column 680"The National Audit Office recognise that the Department and their advisers took account of the relevant considerations in reaching their decisions and arranging for the sale of the company." Question put and agreed to.
Adjourned accordingly at one minute to Three o'clock.
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