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Ms. Richardson : I know that she has never denied it, but several people in her camp say that they are not against abortion in certain circumstances. I applaud the hon. Lady for being honest enough to say out loud, albeit from a sedentary position--
While all those attempts have been going on, I have been at pains to point out to the House that public opinion has been going in a counter direction. The 1988 Marplan poll asked a sample of 1,552 people in 103 constituents
"Do you think that women should have the right to choose an abortion in the first few months of pregnancy?"
Eighty per cent. of the women and men who were polled agreed that they should. Eighty one per cent. of women were in favour. When the sample was analysed, it was found that 86 per cent. of those who said that they were Church of England were in favour, and, surprisingly, 67 per cent. of Roman Catholics were also in favour. The fifth report on British social attitudes in 1988 showed that 54 per cent. of men and 54 per cent. of women supported the idea that only the woman should decide whether to have a child.
Although no one likes the idea of abortion--contrary to what has been said here this morning--the sample shows that a substantial majority of the population believes that it is the woman who is important. I have been quite taken back during the debate by the lack of reference to the women who have to make agonising decisions and who do not like having an abortion, but who have one for various reasons which are personal to them, either medical or social. When we say "social", we mean things that are connected with their personal lives and their families. The public obviously recognise that those women are the ones who are important and who should make the choice. A relatively small group of hon. Members, who are against abortion, have been trying to convince the House
Column 1384that women should have no say at all, and that public opinion should be treated with contempt, in favour of their narrow and, in my opinion, cruel, moral judgment. So far, thank goodness, they have been unsuccessful.
The hon. Members for Basildon (Mr. Amess) and for Maidstone have both asked the Minister directly--I, too, will be interested in his reply--whether the forthcoming Bill on embryo research and other matters that appeared in the Warnock report will contain some opportunity for the House to make a decision on abortion. My personal view is that I hope very much that that Bill will not contain any reference to abortion. As I understand it, the Government are proposing to give the House an option of voting for or against pre-embryo research, which is probably the right way to deal with it. However, to mix the whole argument up with abortion would be wrong and would, in fact, obscure many of the other parts of Warnock that need to be fully explored and fully debated. I hope that the Minister will resist any blandishments to include a clause on abortion. The hon. Member for Basildon really went over the top when he talked about the millions that are being made, as he alleges, out of abortion clinics. I do not know very much about the commercial sector, but I know quite a lot about the charitable sector. I am a trustee of the British Pregnancy Advisory Service, and I have seen or heard nothing of which I could be ashamed. I invite the hon. Gentleman to come along to see for himself. If he is talking about the commercial sector, which existed long before the 1967 Act came in, that is a different matter, and one which he must take up with the Minister and on which the Department of Health must decide. I am sure that the Minister will be able to confirm, however, that everything is all right in the charitable sector.
I shall give as an example some figures that I obtained only this afternoon, when I knew that I would be participating in the debate, and which I have had confirmed by the British Pregnancy Advisory Service, which is one of the biggest charitable organisations. The BPAS carries out one third of all the National Health Service abortions. Sixty eight per cent. of BPAS's total income is spent on fees and salaries, and 77 per cent. of the total NHS expenditure on abortion is spent on fees and salaries. The BPAS is not, therefore, paying out lavish money.
The average cost of a BPAS abortion, at 1989 prices, is less than £190, including overheads. The cost of a National Health Service abortion, at 1988 prices, is £190, excluding overheads. The BPAS cannot, therefore, be charging exorbitant fees. National Heath Service hospitals using BPAS services are, therefore, not wasting public money but saving it.
I wish that the hon. Member for Basildon and other Conservative Members would stop making allegations about the charitable sector. I do not deny that it pays wages, because people must be paid for their work and expertise. However, they are not millionaires and they are not trying to make profits in the dreadful way that the hon. Member for Basildon suggested. All BPAS counsellors and general practitioners are paid on a sessional basis. They therefore see however many patients turn up at a session, which includes contraception, infertility advice, pregnancy testing, and counselling on matters other than abortion, as well as abortion counselling and referral.
The consultant who performs the operation has no link with patients until they visit the clinic. There are therefore
Column 1385no incentives, links or profiteering. There is no Department of Health information to uphold claims of abuse of misuse. If claims of abuse or misuse had been made, the Department would have withdrawn the rights of the pregnancy advisory service or the BPAS to act. Several references were made to the Carlisle baby. Of course everyone was shocked by what they heard, but I was shocked by the lack of concern shown throughout the saga for the mother. Much as been said of the baby, who was allegedly born alive and who breathed for a while before dying, which we regret. I also have feelings for the mother, who had her name, medical records and life history dragged through the courts, but for what? Why should she have been so castigated? Why should she have had to open up her life in that way?
I wish that Conservative Members, in their concern for premature babies--we are all concerned about premature babies--would think of the mother and the father.
Ms. Richardson : If Conservative Members do, they certainly do not mention it. Time and again, Conservative Members drag up the case of the Carlisle baby, but it will not further influence the public. I know that the Minister wants to ask all the questions asked by the hon. Member for Maidstone, so I shall make one or two final points. The anti-abortion Lobby fails to face up to the fact that the Abortion Act 1967 was woman-centred legislation. It was enacted because before that women felt forced to go to back streets for abortions.
The force of the Abortion Act 1967 was to protect and support women. There is nothing wrong with that. We should now take it a step further and introduce earlier abortions for women who want them. At present they are alowed only in exceptional circumstances. Early abortions will be possible only if we amend the legislation to provide for self-referral up to 12 or 14 weeks.
We must ensure that NHS facilities are evenly spread throughout the country. Incidentally, that would deal with the arguments about the charitable sector. Women in the west midlands--an area which you, Madam Deputy Speaker, represent--have much more difficulty in getting an abortion than women in the north-east or south-west. Wealthy women always have and always will be able to get an abortion, even if the anti-abortionists succeed in repealing the Act, which I hope they do not, but ordinary women face great difficulties.
We are moving into the 1990s. Women are being exhorted to train for new technologies, to plan their lives, to enter new industries and fill the gaps in the employment market. How can they do that if restrictions on abortions make it even more difficult for them to plan their family properly? Family planning is being cut. I hope that Conservative Members do not approve of that. I certainly
Column 1386do not. How can women control their bodies if this male-dominated House makes it more difficult for them to plan their lives and keep their family happy?
Only this evening I was talking to a member of staff who told me that when many years ago a local friend of her mother's who had 13 children became pregnant for the 14th time and when she tried to abort the child herself, she died. I do not want those days to return. I want women to be confident that they are not being patronised and that the legislation supports and gives them as much information and as many facilities as possible, and then allows them to make choices about their life, family, partners and children. That is the way to approach this thorny subject. None of us likes abortions or wants people who do not want them to have one. We should improve the 1967 Act to give women the choice.
The Parliamentary Under-Secretary of State for Health (Mr. Roger Freeman) : I congratulate my hon. Friend the Member for Hyndburn (MrHargreaves) on his success in the ballot and on introducing yet another debate on this extremely important subject. I also pay tribute to the eloquent contributions by my hon. Friends the Members for Basildon (Mr. Amess) and for Maidstone (Miss Widdecombe) and to the contribution by the hon. Member for Barking (Ms. Richardson). These are important issues and, from my point of view, any hour of the day or night is appropriate to debate them. My hon. Friend the Member for Maidstone asked a number of questions. Although I shall, in the time available to me, answer as many as I can, I hope that she will permit me to write to her in due course so that I may answer them more carefully and comprehensively.
My hon. Friend the Member for Basildon drew attention to those who were present in the Chamber at this early hour, and he was charitable in referring to me, for which I thank him, and to others, including the Whip who was on the Bench at the time. It should be noted that one of the new members of the Whips' Office is now on duty. We congratulate my hon. Friend the Member for Sheffield, Hallam (Mr. Patnick) on his appointment and hope to welcome him to many more debates at these early hours.
On the Order Paper earlier in the day was a motion to wish the Serjeant at Arms well for the future. I am sure that hon. Members who are present now and were not in their places earlier will wish to be associated with those good wishes. It must be unusual for a distinguished servant of the House to be thanked and then to have to remain in the Chamber for the succeeding 24 hours. In regard to this debate he and I perform the same duties. We are servants of the House. My job as Minister is to make sure that the Act with which we are concerned is administered properly and to provide information and statistics to the House, but not to make moral judgments or take any initiative in relation to an extension or contraction of the Act. Therefore, I see my role as being to answer questions of fact and to assist in the deliberations of the House.
This subject has featured often in our deliberations. The hon. Member for Barking said that in the present Session, for example, the House had debated on 16 December a motion on the rights of the unborn child, introduced by my hon. Friend the Member for Slough (Mr. Watts), and that six private Members' Bills on abortion-related subjects have been introduced, including the Abortion
Column 1387(Amendment) Bill sponsored by my hon. Friend the Member for Maidstone. There have been two Adjournment debates, one introduced by my hon. Friend who initiated tonight's debate, on the United Nations convention on the rights of the child, and the other on 8 June on the Carlisle baby case initiated by my hon. Friend the Member for Maidstone. In addition, 112 parliamentary questions on abortion topics have been addressed either to the Department of Health or to the Office of Population Censuses and Surveys, for which I have ministerial responsibility.
There has been reference tonight to the prospect of legislation on the issues dealt with in the Warnock report which the Government have said will be introduced during the lifetime of this Parliament. There has been considerable media speculation in recent weeks about its content and timing. Hon. Members will understand that I cannot go beyond restating that commitment to bring forward a Bill. It would not be right for me to comment on the contents of the legislation and in particular on whether, as some hon. Members have suggested, it should contain provisions about abortion. I shall, as I have done in the past, draw the attention of the Leader of the House to the comments that have been made.
In 1967 Parliament was given the opportunity in a private Member's Bill to build on an existing framework of criminal law which prevented abortions except in a very restrictive set of circumstances. Parliament agreed to do so on a free vote. It is, of course, open to Parliament to alter that framework. I realise that many hon. Members feel sincerely that the law needs radical adjustment. It is against that wide divergence of views that the Government must operate. We also have the views of the Select Committee in another place, which has suggested a framework for amending the abortion law. Clearly, the Government must take account of all those factors, and of what has been said in this debate, in looking at the legislative position. That we shall carefully do. This debate focuses mainly on the administration of the Abortion Act 1967. As the House knows, my Department takes seriously its task of monitoring the operation of the Act, which was introduced as a private Member's Bill and was passed by both Houses on the basis of a free vote. The Act allows abortion where two doctors certify in good faith the the risk to the life, or injury to the physical or mental health, of the pregnant woman or the existing children of her family would be greater if the pregnancy continued than if it were terminated.
As Parliament has decided that abortions may lawfully be carried out in the circumstances set out in the Act, the Government, like their predecessors, consider that facilities for abortion treatment should be available. The Government also have a duty to ensure that the provisions of the Act are properly applied until and unless Parliament chooses to change that law.
Within the National Health Service the level of gynaecological provision, including abortion, is, like any other provision, decided by individual health authorities. The Government believe that such decisions are best taken locally in the light of authorities' first-hand knowledge of local needs and priorities and competing claims on resources. The private sector adds to the range of options available offering flexibility to both patients and health authorities. It is for health authorities to decide the extent
Column 1388of any arrangements made for treating NHS patients in the private sector. In 1988 some 9,000 abortions were performed under such arrangements.
The operation of the Act is monitored closely by my Department, through its control of the private abortion sector and the investigation of specific complaints. All operating medical practitioners are required to notify the chief medical officer of each abortion that they perform. The notification form contains many details, including the grounds for abortion, the estimated gestation and the method of operation. Those forms are scrutinised by staff authorised by the chief medical officer to ensure that they do not indicate any contravention of the abortion law.
It might be helpful to my hon. Friends and to the House if I were to say something at this point about the way in which the operation of the Abortion Act is monitored in the private sector. Before we approve a clinic or private hospital for the termination of pregnancy under section 1(3) of the 1967 Act, the premises and facilities are inspected by the Department's medical and nursing officers, and persons connected with the application are interviewed by investigating officers. An important element in the process of approval, and subsequent monitoring, is the system of
"assurances"--instituted in the early 1970s after some abuse of the original arrangements had become apparent. The assurances are specific undertakings which proprietors of "approved places" are required to give to the Secretary of State on the conduct of their premises and the facilities available. In effect, the assurances form a set of conditions on which initial approval depends and contravention of which could lead to the withdrawal of approval, thus preventing any more abortions from being carried out at that place unless approval is reinstated.
All private sector nursing homes, clinics and private hospitals approved under the Abortion Act are subject to periodic, unannounced inspections by the Department's medical, nursing and investigative officers. A thorough check of business and administrative arrangements is made and patients' notes and medical records are examined. Any irregularities are followed up and the appropriate action taken to obtain future compliance by the proprietors. In an extreme case this could involve the withdrawal of the Secretary of State's approval or, where there is evidence that a criminal offence may have been committed, a reference to the Director of Public Prosecutions. The machinery that I have described does not reveal any abuse of the Act. My hon. Friend the Member for Maidstone asked me to comment specifically on that.
The Carlisle baby case was raised by my hon. Friend the Member for Maidstone. This case was the subject of the Adjournment debate on 8 June during which I addressed as fully as possible, and as far as the requirements of confidentiality and possible legal action allowed, the issues that gave rise to the concerns expressed by hon. Members. My hon. Friend asks again why no attempt was made to resuscitate the baby. As I told the House on 8 June, the doctor concerned made a clinical judgment that this was not a live birth.
Miss Widdecombe : The Minister says that the doctor decided that it was not a live birth. The question that I asked in this debate was how can one accept, when a child has been breathing without the aid of artificial equipment,
Column 1389has a pulse rate and has survived for three hours, that that was not a live birth? Under what circumstances do we call a person an unperson?
Mr. Freeman : I am about to deal with that point. The decision was properly, and entirely, for the doctor, and it would not be appropriate for me to comment on it. It was a clinical judgment. I shall deal shortly with the circumstances surrounding it. If he had decided that resuscitation should have been attempted, the appropriate action would have been taken.
How doctors decide whether a baby has been born alive is a question that should be asked of obstetricians and paediatricians. My understanding is that a doctor's main criterion of a live birth before 28 weeks of pregnancy is that, when born, the baby starts to breathe properly. In these circumstances a heartbeat will, of course, be present, but a beating heart on its own would not be regarded as sufficient to label the delivery a live birth since delivered foetuses of 16 weeks or even less may have beating hearts although they have no prospect whatever of surviving. I am making no moral or ethical judgment.
Deciding that a live birth has occurred is only one step towards reaching a decision on the appropriate subsequent management. Very few live born babies of less than 28 weeks continue to survive without a great deal of intensive care. Even if they do survive, there is a significantly increased risk of their developing substantial handicaps. The doctor responsible for the care of the mother and the baby has to weigh all the relevant considerations and use his or her knowledge and clinical judgment to decide what action is appropriate and in the best interests of the mother and baby in the circumstances of each case.
My hon. Friend the Member for Maidstone asked me how a doctor could avoid the possibility of a live birth through the application of medical techniques or injections. My hon. Friend the Member for Basildon asked how doctors can use techniques such as dilation and evacuation. I am making no moral judgment, but these are matters for clinical judgment. It is not right for the Minister or any politician to make judgments about what are essentially clinical matters. I appreciate that my hon. Friends have strong views on this subject. All of us have strong views, but these are matters for clinical judgment.
The conscience clause has been mentioned. Section 4 of the Abortion Act 1967 provides that
"no person shall be under any duty, whether by contract or by any statutory or other legal requirement, to participate in any treatment authorised by this Act to which he has a conscientious objection". Under a longstanding agreement with the medical profession, no reference to termination duties should be included in the advertisement of hospital posts, but it should be included in the job description made available personally to all applicants. This procedure ensures that all practitioners, including those who, for whatever reason, do not wish to undertake such duties, are made aware of
Column 1390the requirements of the post before interview. National guidance about this was sent to regional health authorities in 1975 and 1979 by the former chief medical officer. In view of a recent error on the part of Trent regional health authority over the wording of an advertisement for a consultant post in obstetrics and gynaecology, the chief medical officer will remind regional medical officers of the existing guidance.
For non-medical staff, in a recent ruling in the House of Lords--R v. Salford health authority--Lord Keith of Kinkel stated that, in its ordinary and neutral meaning, the word "participate" in section 4 of the Abortion Act referred to taking part in treatment.
I am of course aware that my hon. Friends the Members for Hyndburn and for Basildon have introduced Bills proposing amendments to the conscience clause. They fall to be considered by the House in accordance with the procedures governing private Members' legislation.
My hon. Friend the Member for Hyndburn spoke eloquently about the difficulties experienced by hospital staff who have a religious or ethical objection to abortion. Everyone can sympathise with someone who experiences pressure to take part in a form of treatment to which he has a conscientious objection. Any such pressures could take a number of forms, but it is very difficult, if not impossible--I am sure that my hon. Friend would agree--to legislate to encourage the development of appropriate attitudes. What is clear is that the law explicitly protects those who have conscientious objections to taking part in abortion treatment. The law is crystal clear on this subject, and we expect both the letter and the spirit to be observed. I am sure that the hon. Member for Barking will join me in that. Let me conclude by dealing with the issue of financial links. Since the passing of the Abortion Act 1967, several attempts have been made to introduce legislation relating to the links between doctors and agencies who refer women for termination of pregnancy and the institutions in which they are performed. These have led to the existing requirements that all nursing homes must notify the Secretary of State of any financial arrangements between the nursing home and any medical practitioner, pregnancy advice bureau or referral agency, and must report any changes in existing financial arrangements. Furthermore, all pregnancy advice bureaux referring women for abortion at places approved under the Act must identify financial links with other businesses, and doctors must not operate on patients whom they see at a referral agency.
Those requirements are drawn to the attention of administrators of premises when the first visit of inspection is made. Checks continue to be made on subsequent visits, and company searches are carried out as necessary. Proprietors and administrators are well aware that failure to comply with an assurance could constitute grounds for withdrawal of registration of bureaux or approval of nursing homes. I hope that this has been a useful debate, and that it has increased understanding of a very important issue.
Mr. Geoffrey Lofthouse (Pontefract and Castleford) : I wish to speak on the unwelcome bid by Hoylake Investments for BAT Industries. Before I begin, let me stress that I have no vested interest in either BAT Industries or the Transport and General Workers Union, of which I am not a member and to which I shall probably refer. At £13 billion, this is the biggest takeover bid ever seen in this country--and among the biggest anywhere in the world. Outside the utilities and the oil industry, BAT is Britain's largest industrial company. Many of my constituents and those of many other hon. Members are employed by it. It contributes much to our local economies. British companies in the group include Argos, Wiggins Teape, Eagle Star, Allied Dunbar and British American Tobacco. It is acknowledged to be a world-class business with a leadership position in many key markets. Worldwide it employs more than 300,000 people in 19 countries ; in the United Kingdom it employs 32,000 in about 250 constituencies. BAT has invested £668 million in fixed assets in the United Kingdom over the past eight years.
I believe that Hoylake is a consortium specially formed for the purpose of taking over BAT Industries. It consists of Sir James Goldsmith, Jacob Rothschild and Kerry Packer--the Australian gentleman in the stocking mask. There are some minor players as well, including GEC, Agnelli and some foreign banks intended to provide credibility. Goldsmith is known for many aspects of his life. Among his sayings is, "Takeovers may be interpreted by some corporate raiders as being for the public good, but that is not why I do it. I do it to make money."
The idea is that instead of offering £13 billion in cash, which it does not have, the company should borrow more than £12 billion, pay off the loan by selling components of the company and then be left with the tobacco company for nothing. That would be highly damaging to the strength and success of such companies as Argos, the catalogue retailer, which operates in my constituency.
At the end of last year Argos had more than 220 stores nationwide. It is one of the biggest employers in the retail sector, with about 10,000 employees. It has in Castleford a distribution centre which was opened in 1984 with an initial work force of 52. In June this year, its work force on the site was 270 permanent staff and it provides temporary employment for a further 200 people at seasonal peaks.
The total investment by Argos in its Castleford distribution centre is £9.4 million. It plans to continue its investment, not only in that region but in the north in general and has plans to extend the number of Argos outlets to more than 600. The House will see that we are hopeful about the further increase in the number of jobs that Argos will provide in hard-hit areas, such as my constituency, with limited employment opportunities.
The House will be aware that I have frequently spoken about the problems that my constituents face as a result of the rundown of the mining industry. We have suffered severely and are still suffering, and it appears from the intention of British Coal to reduce in this financial year the
Column 1392number employed in the industry by 20,000 men, that those problems will continue. My constituency cannot afford to lose any more jobs. Castleford may not be the first place that hon. Members would think of for a model of the fictional Gotham city, but we share with that city the belief that BATman has been good for us. We do not want any jokers or penguins to come along and spoil it. That would happen if the bid is allowed to go through, because many specific benefits result from BAT's ownership of Argos. It has access to expertise and technologies within the BAT group in areas such as information systems and training development. With BAT Industries behind it, Argos was able more easily to buy leases in places where it was not regarded as a prime tenant. That credibility gives a certain access to high-profile brands. Argos's ownership removes cash restraints enabling more rapid expansion and reinvestment than could be achieved independently or under new ownership concerned with paying back the purchase price before reinvesting. Under BAT Industries, Argos can continue to engage in long-term planning rather than having to concentrate on short-term gains.
As well as its contribution to Castleford, Argos brings much to the national economy in four main areas--jobs, investment, orders and shopping. The number of people employed by Argos alone averages 10, 000 and rises to 16,500 to cope with seasonal demands. It is planning a £200 million expansion programme to treble its number of outlets and in 1989 it spent £25 million on shop fitting. It also plays a part in developing retail technology. Most goods are bought from British firms or United Kingdom subsidiaries of overseas firms. Approximately 40 per cent. of goods sold by it are made in the United Kingdom, allowing suppliers to invest in new technology, capacity and personnel.
The expansion of Argos is helped by its being part of BAT Industries and that has increased consumer choice for 45 million customers and increased retail competition. Significant investment in quality control and production safety ensures the supply of safe products.
I have put the Argos case as I know it and as I have had it explained to me. The Hoylake bid is bad because it is uncertain that a future owner of Argos would sustain the company's excellent progress and allow it to continue to generate record profits, expand and create even more jobs. The benefits gained from being part of BAT Industries would be lost, and there is no certainty that the new owners would provide the existing level of commitment to the growth of Argos. Highly leveraged bids put constraints on a company to produce short-term profits, often to the detriment of long- term growth. Without investment, it becomes harder for a company to compete in the market place or to develop new retail opportunities, which leads to reduced consumer choice and less retail competition. I am no financier, but one does not have to be a big-shot financier to see that such backing and investment will not be available if the Hoylake bid succeeds. If it is successful, BAT will be financed not by shareholders' funds, but by what are called junk bonds. These are unsecured IOUs that offer much higher interest rates in return for accepting much higher risks. They were invented and developed in the United States, where investors were persuaded that the higher returns--often 3 or 4 per cent. higher--compensate for lack of security.
More than two thirds of the money raised in junk bonds was to be used to finance leveraged bonds. The term
Column 1393leverage refers to the debt level necessary for raising funds. The bonds were originally intended to allow managements to buy their companies from divesting owners, but the leverage technique is increasingly being used to allow predators to acquire huge corporate assets on borrowed money.
Such acquisitions depend on substituting debt for equity. The acquirers buy the organisation, using junk bond funding to pay off the original shareholders. The junk bond holders require their high level of interest, and the bonds are due to be repaid in full at the end of the agreed term. In this way, the company's gearing or ratio of debt to equity is raised significantly. Servicing the debt becomes the paramount corporate objective, to the exclusion of longer-term concerns. Investment, research and development, training, employment and capital expenditure--all are subordinated to the need to bring in as much cash as possible.
Time, talent and resources are devoted to the short-term aim of squeezing assets to the limit so as to produce enough profits to meet the high interest charges. If sufficient profits are not forthcoming, assets have to be sold to cover the payments. All notions of corporate responsibility and investment for the long term frequently disappear. Average gearing rates would rise from 15 per cent. to more than 50 per cent., making companies more vulnerable in an economic downturn.
The United Kingdom has so far escaped the effects of large-scale leveraged buy-outs. The Hoylake bid for BAT Industries, involving a 14 : 1 debt equity ratio is greater by a factor of 15 than anything seen before in Europe. If it is successful, it will lead to the breaking up of a major British company and old-fashioned asset stripping on a scale never seen before. It will be the sale of the century of major British businesses with considerable worldwide interests operating on a global scale.
BAT does a good job for us in the United States. It is one of the largest United Kingdom companies in America, having built a business over the past 60 years worth $7 billion--from a $50,000 investment and all from retained earnings. The work of six decades would be gone within months. The new owners of these businesses will have to borrow money to buy them, and then they, too, will need to service debts before they are able to invest in capital equipment, staff training and development and research and development. The bid has important implications also for British industry as a whole and for companies in every constituency. It could open the floodgate for similar bids in Britain on the same scale as that which has been experienced in America, where about 10 per cent. of the capital value of publicly owned quoted companies has disappeared. The so-called retirement of equity could lead to the early retirement of many British workers. Research that has been conducted on the United Kingdom plc computer model of the stockbrokers Hoare Govett suggests that half of the top-ranking alpha securities on the London stock exchange could be threatened. It is forecast that 32 major British companies could be subject to a leveraged takeover by 1993.
I do not know what the implications of that would be for the economy. I do not know what would ensue if large firms were to disappear from the stock market as a result of being asset stripped, but I do know what it would mean
Column 1394for leading employers in my constituency. I can guess that it would be bound to have a serious consequence for London's position as a leading global stock market. There could be repercussions for pension funds and other investing institutions. Where are pension funds, including my union, going to invest their money if major blue-chip equities have gone to the financiers' knackers yard? If junk bonds are raised abroad, will the interest add still further to the balance of payments deficit? What will be the loss of remitted overseas earnings?
I do not know the answer to many of these questions. I suspect that many hon. Members pretend to know them but in reality do not have the foggiest idea either. I believe, however, that these matters are of fundamental importance to British business, to jobs and the economy as a whole.
Enough basic questions about the long-term effects on the capital structure of the corporate sector and the effect on growth and further jobs have been raised for us to commission a major inquiry of the Monopolies and Mergers Commission to allow us to determine what fears are justified.
I have mentioned the interest of the Transport and General Workers Union, which has set out its case to me by letter. It has supported the opposition to the bid. I shall quote two paragraphs from its letter of 19 July, which was sent to me by Mr. Peter Smith, a district secretary. He wrote :
"The bidding group has openly announced that if the bid is successful they will dissect and asset strip all divisions other than tobacco, hence the fear and apprehension of the TGWU members involved (over 150 persons). It seems that the takeover bid will consider nothing other than the thirst to make a quick profit with scant regard for employees and their families.
I would personally wish to point out that the TGWU has developed an excellent working relationship and has found the company neither remote nor insensitive to the desires and aspirations of their employees."
That is a reference to Argos. The letter continues :
"Indeed, over a 3-4 year period, the Union has made real improvements both financially and socially in terms and conditions of employment.
The Castleford Depot alone has in a relatively short period of time expanded and doubled the number of employees. Nationally the picture is reflected with new distribution centres at Welwyn Garden City and Bridgwater."
With all that in mind, I urge right hon. and hon. Members on both sides of the House to support my request to the Government to refer the bid to the commission before it is too late. By the time that the House returns from the recess in the autumn, BATman may have gone and the joker could be moving in on the major employers in the constituencies of a number of right hon. and hon. Members. I ask the Minister to refer the bid to the Monopolies and Mergers Commission. 6.59 am
Mr. Neil Hamilton (Tatton) : I congratulate my hon. Friend the Member for Wokingham (Mr. Redwood) who is to make his maiden ministerial speech in this debate. Among the prophets of modern free enterprise capitalism, my hon. Friend has an honoured role to play. I count him second only to our right hon. Friend the Prime Minister in this House, and only just behind Sir James Goldsmith, as the person who has most popularised the concept of free enterprise in its modern form, which has done so much to transform the British economy.
Column 1395I congratulate also the hon. Member for Pontefract and Castleford (Mr. Lofthouse) on his success in securing the debate, even at this hour. The hon. Gentleman spoke eloquently of his constituency interests and of his fears for the jobs of his constituents. I hope that I shall be able to reassure him.
I begin my speech, as did the hon. Member for Pontefract and Castleford, by declaring that I have no financial interest of any kind in any of the companies that are the subject of the bid or involved in making it. I stand to gain in no sense, except that we all stand to gain from companies being well run and the jobs of their employees being made more secure as a consequence. In that sense, the country as a whole benefits.
The hon. Member for Pontefract and Castleford is entitled to express his concern, but he speaks before the full facts are disclosed and analysed. Neither the offer document nor BAT's response has yet been published. Together, they should provide the detailed information on which we can all base our opinions. It is appropriate to wait until their publication in August before rushing to premature judgment. Otherwise, the debate will be based on popular emotion and bias rather than objective views.
The burden of the hon. Gentleman's remarks was the possibility that the demerger of a conglomerate such as BAT could create unemployment. I draw attention to the irony of the hon. Member for Pontefract and Castleford rushing to the defence of a multinational conglomerate based on tobacco products, when such a company normally occupies a secure place in the Labour party's chamber of horrors of international capitalism. Nevertheless, I gather that the hon. Gentleman considers that BAT is an exception to the rule. It has not been suggested that transferring the ownership of BAT's various subsidiaries would result in any closures. Certainly that is not the intention of the prospective bidders. The facts disclosed in due course will prove or disprove the suggestion that companies within BAT are poorly run--which is the case made by Sir James Goldsmith and his partners.
BAT is a disparate group of companies engaged in totally unconnected activities, ranging from tobacco and insurance companies to department stores and papermaking. The essence of the bidder's case is that the companies are underperforming and that their performance would be greatly enhanced by restoring their independence or joining them with others that can offer the appropriate and different skills needed in each of the industries concerned. The demerger is aimed at making the subsidiaries much more secure and at protecting the jobs of those who work in them. The companies' prosperity would be enhanced, so their productivity and number of employees would increase. There would be increased investment in research and capital equipment, leading to higher profitability. If the case is made for all that, the suggestion that jobs are in jeopardy would be proved false. The opposite would be the case. Hoylake is, in a sense, trying to privatise within the private sector.
The objective is to liberate those subsidiaries from the control of the conglomerate. If there is a demerger it will be possible for those who run the companies locally to participate in management buy-outs and for the employees to acquire a real share in the enterprises in which they work. One of the beneficent aspects of the Government's
Column 1396period of office is that we have made it possible, not only within the public sector but within the private sector, for the benefits of capitalism to trickle down in that way.
BAT is often described as being a major British industrial company. The hon. Member for Pontefract and Castleford made it clear that it is not a British industrial company in anything other than a very minor way. Its industrial activities in the United Kingdom account for only 9 per cent. of its assets and 8 per cent. of its profits. It is basically a holding company of foreign subsidiaries. Most of its industrial activities are overseas.
Therefore, the restructuring of BAT would result in a major return to this country of capital previously invested overseas which, when repaid to shareholders, would contribute to the continued industrial development of the United Kingdom. There is a great opportunity here for the repatriation of capital to Britain, something which I thought that the Labour party was in favour of.
It has been stated that the offer being made for BAT would result in the creation of an ongoing highly geared or heavily borrowed company, weighed down by debt to such a degree that it could render its future fragile.
The hon. Gentleman spoke with some feeling about the way in which the offer will be financed, saying that it would be financed by junk bonds. There is a significant difference between the proposal for financing this bid and junk bond-based bids. What is proposed here is not the issue of a bond to be financed out of future speculative profits, which is what a true junk bond is, but a bond which is to be financed by demergers and selling off the assets which are presently underperforming and so are undervalued.
The figures that are available for anybody to see in published reports show that if Hoylake succeeds in its bid it will not create a highly geared or heavily borrowed company. In fact, it will be a less highly geared or heavily borrowed company than BAT is at the moment. The debt that will be incurred will be repaid within a year from the proceeds of the announced disposal of those businesses that have nothing whatever to do with the traditional core business of BAT. It can be seen from the reports available from City analysts that the resultant company would be classically financed, with substantial capital and a normal level of ongoing debt. Claims that a highly indebted and therefore endangered company would result from the transaction are false and seem designed to appeal to emotion rather than to reason.
Whatever the merits or demerits of the proposed offer for BAT, there can clearly be no element of restraint of competition. Therefore, there is no case for a reference to the Monopolies and Mergers Commission. That view seems to be shared by almost every commentator in all the quality newspapers with one exception.