House of Commons Hansard Debates for 7 Jun 1991

Mr. Maude : My right hon. Friend gets right to the point, as usual. That is exactly what the hon. Member for Dagenham was saying. The Labour party will regulate the industry, reduce its profitability, wreck it and lower the price. Thus, it will steal money from those millions of people who have invested their hard-earned cash in shares in the water businesses.

Mr. John Marshall : Does my hon. Friend agree that the position is much worse than that? It will affect not just the millions of individuals who have invested directly in water, British Telecom, electricity and gas, but everyone who has a pension or life insurance with-profits policy will be affected by the confiscation proposals of the Labour party.

Mr. Maude : My hon. Friend calls it confiscation ; I call it theft. The Labour party will deliberately reduce the value of people's property, in order more easily to take the industry back into state ownership.

A little later, the hon. Member for Dagenham was asked whether that general approach would apply to shareholders in the other utilities, as well as water. He replied :

"I think that is very probable. I think we shall certainly be consistent in our general approach."

I think that the Labour party probably will be too. It will seek to wreck all those industries in the same way.

That leads us to ask where Labour's policy will end. It looks like a partial agenda. As so often happens, the hon. Member for Kingston-upon- Hull, East has given us a glimpse of the hidden agenda--the real Labour agenda. In an interview in May last year, the hon. Gentleman said of the British Airports Authority :

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"These are areas which we are going to turn into public utility companies. We are not going to leave them as private sector companies."

Is that still Labour party policy? Is that another company that will be taken back into public--state--ownership? The hon. Gentleman was pressed to explain whether that meant that the BAA would be renationalised. The article continued :

"Prescott avoids a direct answer."

It goes on to say that the hon. Member for Kingston upon Hull, East said :

"I have already told you more than I should. I have said more than I should."

As so often, the hon. Member for Kingston upon Hull, East did his country a sterling service. He lifted the curtain and enabled us to see the Labour party's real agenda. What could be clearer than his statement that he had already said more than he should?

I hope that the hon. Member for Newcastle upon Tyne, East will tell us two things in his speech. I hope that he will come clean about Labour's real agenda and lift the curtain even further on Labour's hidden agenda for confiscation and theft. I hope that he will say what the Labour party intends to do, so that the millions of consumers can prepare themselves against the eventuality of a return to shoddy services, union-dominated bureaucracies, and the millions of shareholders can prepare themselves for another chapter of Labour's highway robbery.

I also hope that the hon. Member for Newcastle upon Tyne, East will apologise to the House and country for all the deceptions, deceits and scare stories on privatisation used by the Labour party. I hope that, just for once, he will accept that the Labour party was wrong and we were right, and apologise to the House.

10.21 am

Mr. Nicholas Brown (Newcastle upon Tyne, East) : Confiscation, theft and highway robbery are heady charges to be summoned to the House to answer on a Friday morning, but those are the charges that the Financial Secretary puts to me in his slightly hysterical romp through what he thinks are the Labour party's policies.

You, Mr. Deputy Speaker, will know better than anyone here that Fridays are reserved for debates on motions, private business, private Members' motions, private Members' Bills or Government legislation, but today we are discussing none of those. Instead, we are holding a Government-inspired debate on a motion for the Adjournment. The Government have been unable to find anything better to do with parliamentary time than hold a student union-style debate for its own sake, with no real conclusion except

"That this House do now adjourn".

The Financial Secretary then has the nerve to express surprise that my right hon. and hon. Friends have found something better to do than come here and take part in an Oxbridge-style debate. If the Government have the sort of priorities that we think they have, why are we not discussing legislation to deal with what the Prime Minister believes to be the great issues of the day--pit bull terriers, Hackney council or the English cricket team? Those are the sort of priorities that the Prime Minister has and, surely, we should be discussing legislation on them now, instead of having to stay up until 4 am next Tuesday as I expect that we shall

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have to do. The Government have found nothing better to do with parliamentary time than hold this debate today and I hope that the electorate will take note of that.

Mr. Oppenheim : I am astonished at the hon. Gentleman's attitude. He says that we are discussing a matter of no importance, yet we debate the future of some of the biggest companies in this country--employing tens of thousands, probably hundreds of thousands, of people--and the interests of not only their millions of customers, but their millions of shareholders. He comes to the House and belittles all those interests.

Mr. Brown : The hon. Gentleman, I hope not deliberately, misunderstands me. I am saying that the proposition that the House do now adjourn is a matter of no importance. That motion was put in front of us today not by the Opposition or a private Member, but by the Government who are responsible for moving forward the legislative programme. Are they able to do that? No, they are not.

Mr. Oppenheim : Will the hon. Gentleman tell us Labour's policies?

Mr. Brown : The hon. Gentleman now intervenes from a sedentary position asking me to give Labour policies. I was about to do that when he intervened to complain about what I said earlier. He cannot have it both ways and I suggest that he sits still for a little while at least, and listens to our modest and reasonable policies. We have made three specific pledges on renationalisation, which I will read from our policy review document, "Looking to the Future", so that the Financial Secretary can be absolutely clear about what we are saying and what we are not saying. The first of those propositions relates, as the Financial Secretary said, to the water industry. In the policy review document we clearly state that the provision of water is so fundamental that it should be made a priority for a return to the public sector. We go on to say : "We shall of course pay a fair market price for any equity or ownership rights which we wish to acquire in the water industry." On the subject of electricity we have made it absolutely clear that we shall take control of the national grid so that the Government may play the necessary strategic role in the industry-- including the security of supply. We have confined our pledges to the national grid, not the rest of the industry.

Mr. Tebbit : The House will notice the difference between the words used by the hon. Gentleman when speaking about water, which he said would be returned to public-sector ownership--of course he means state ownership- -at a fair market price, and those he used when speaking of the national grid, over which he said that a Labour Government would take control. Does that mean that the national grid would be repurchased or would it merely be expropriated without payment? What does he mean?

Mr. Brown : I can easily answer that question. It means that the national grid would be repurchased. We have no intention of expropriating anything-- [Interruption.] The Financial Secretary intervenes to say that that seems fair-minded, for which I am grateful to him.

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Mr. Maude : I merely asked whether the national grid would be repurchased at a fair market price and, if so, what sort. Would it be the Dagenham doctrine of a fair market price?

Mr. Brown : I thought that it was too good to be true. I obviously misheard the Financial Secretary. "Fair market price" means exactly that. If the Financial Secretary is asking me to set that price, obviously I cannot because it depends on prevailing market conditions, but we would look to those prevailing market conditions to set the price.

Mr. Maude : The hon. Gentleman may like to take this opportunity to help us. I am not asking him to set the price in pounds and pence, but how the price would be arrived at. Does he follow the Dagenham doctrine of over -regulating business and wrecking its profitability so that the price falls, which is what the hon. Member for Dagenham (Mr. Gould) explicitly set out? Is that still Labour party policy?

Mr. Brown : I think that the Financial Secretary is misinterpreting what my hon. Friend the Member for Dagenham (Mr. Gould) means. I am absolutely certain that no Labour Member would seek to wreck a public utility--quite the reverse. We believe in publicly owned public utilities and would do nothing to damage them. When we say "market price" we mean precisely that.

Mr. Ian Taylor (Esher) rose --

Mr. Menzies Campbell rose --

Mr. Brown : I am much in demand and am enjoying being cross-examined as though I were the Minister, while Ministers are behaving as if they were Opposition Members. I shall give way to the hon. and learned Member for Fife, North-East (Mr. Campbell) and then to the hon. Member for Esher (Mr. Taylor).

Mr. Menzies Campbell : I wish to press the hon. Gentleman on the issue of the fair market price. In some forms of compulsory acquisition, the fact that acquisition is proposed must be ignored in the assessment of the value of compensation. If the Labour party were to come to power with a proposal for an acquisition of the sort suggested by the hon. Gentleman, that would inevitably affect the value of shares the day after the change of Government. Would a fair market price include the acquisition as a factor to be taken into account or disregard it? That may be an important consideration in the actual value of the shares at the time of the takeover.

Mr. Brown : The best way to answer that is to say that we would not want to pay too much, but we would not pay too little--

[Interruption.] I see that Conservative Members feel that that is not as ample a reply as they would like. I understand their disappointment, but it is difficult to respond without knowing the precise circumstances. All I can do is to set out the principles involved. The circumstances will differ with different industries. In a moment I shall discuss British Telecom, the subject of our third pledge, but we already own 49 per cent. of the shares--

Mr. Grylls rose --

Sir Michael Marshall (Arundel) rose --

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Mr. Brown : I promised to give way first to the hon. Member for Esher.

Mr. Ian Taylor : The hon. Gentleman is very kind. He is one of the reasonable men in his party so I am sure that we all understand that when he says fair he means fair. The problem is that some of his colleagues do not understand what fairness is in the context of the stock market. There have been questions about whether dividends for the water companies and others would be allowed. He must know that if a water company is valued on the stock market as a quasi-utility, the dividend yield is important to shareholders, and if it is questioned, that causes a fall in the share price. Millions of shareholders in the water industry will be listening carefully to the Labour party's policy on that. Although the industry may be safe in the hon. Gentleman's hands, it may not be safe in the hands of his colleagues.

Mr. Brown : I am grateful for what the hon. Gentleman said about my being fair and reasonable. I like to think that that is why I was chosen to speak for the Opposition in this debate--

Mrs. Gorman : The hon. Gentleman is the acceptable face of socialism.

Mr. Brown : I thank the hon. Lady for that compliment. The Labour party's approach to these matters does not mean that the whole of an industry has to be taken back into the public sector. We envisage private share ownership sitting alongside a public sector involvement--that is our policy for British Telecom. The policy review document states clearly that

"the public stake in British Telecom's equity remains at 49 per cent. We shall buy sufficient shares at a market price to take that stake to 51 per cent."

Hon. Members will notice that we do not say 100 per cent. That is our pledge and it follows logically that there would be private shareholders and public shareholders. It follows, too, that the position would not be very different from that of today.

It will not have escaped the attention of the right hon. Member for Chingford (Mr. Tebbit) that a 49 per cent. stake in any company is a significant stake. It makes the holder a significant shareholder--

Mr. Norris : But it is not the same as 51 per cent.

Mr. Brown : Neither is it far short of 51 per cent.

Mr. John Marshall rose --

Mr. Brown : The hon. Gentleman is third in the queue.

Sir Michael Marshall : I am sure that Conservative Members appreciate the hon. Gentleman's giving way so much, although I am conscious that we may be helping him to fill out what would otherwise be an uncomfortable morning for him. I accept his reasons for a lack of precision about some of his figures, but he can be precise in one area at least. He mentioned the water industry. He will know of the commitment to capital expenditure of £28 billion on the industry over the next decade. Will he assure us that if a Labour Government are returned they will undertake to meet that commitment? Will he add that to the rest of Labour's expenditure list, which already suggests that heavy public expenditure will be the order of the day?

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Mr. Brown : The hon. Gentleman must not be graceless when I give way to him. I do not have to give way to my Conservative inquisitors ; I could plough on through my speech and really excite everyone but I want to assist them. He makes a good point : he is right that significant investment is required in the water industry, not just for historial reasons but because new environmental standards are rightly higher. I suspect that much, if not all, of the investment programme is unavoidable and will be continued whoever forms the next Government--

Mr. Grylls : If British Telecom were more inefficient and served the public worse now than when nationalised, that would be a good argument for taking it back into public ownership. However, as the hon. Gentleman knows perfectly well, that is not so and British Telecom has been transformed in respect of its service to the public--the customers. So why does the hon. Gentleman want to take it back into state ownership? If it were failing the nation I could understand why, but it is not.

Mr. Brown : I have only just got to British Telecom--Conservative Members keep intervening to ask me about water and electricity--It is our intention to make a moest adjustment to the state's already large shareholding in British Telecom--

Mr. John Marshall rose--

Mr. Brown : Hang, on ; there is a queueing order today. The hon. Member for Epping Forest (Mr. Norris) is next, and after that I should like to make my speech.

We could justify our position on British Telecom solely on the grounds that it is a good investment, but we have a rather more sophisticated justification and I have it in the text of my speech. If the hon. Member for Surrey, North-West (Mr. Grylls) is not satisfied by it, I promise to give way to him again later. It is time for my next intervention.

Mr. Norris : I am grateful to the hon. Gentleman for allowing me to intervene, but he was remarkably disingenuous to suggest that the only difference between our party and his on British Telecom is a mere 2 per cent. The hon. Gentleman is trying to con the British people into believing that 49 and 51 per cent. mean the same. Everyone knows that they are profoundly different.

Does the hon. Gentleman accept that nationalisation by the back door, leaving 49 per cent. of the stock stranded and strangled by ownership by the state, is the most dishonest form of nationalisation of all?

Mr. Brown : The hon. Gentleman makes too much of this. Shareholders perceive the effect of having one large partner with 49 per cent. of the shares. The hon. Gentleman said that 51 per cent. is a more powerful holding. Of course it is an absolute holding, but 49 per cent. is not that different. I realise that the Government have announced their intention to divest themselves of further shares--

Mr. Maude : To help the hon. Gentleman get his figures worked out, may I point out that the Government's holding in British Telecom is now less than 48 per cent., at 47.9 per cent.? At today's share prices, increasing that stake to 51 per cent. would cost £730 million. Is the hon. Gentleman aware of that?

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Mr. Brown : I was aware of that ; I was not aware that the stake is slightly less than 49 per cent., but I am not sure whether that alters the argument much. I apologise to the hon. Member for Hendon, South (Mr. Marshall) for allowing the Financial Secretary to intervene out of turn, but he probably takes precedence.

Mr. John Marshall : It is amusing to see that the classless society has not yet pervaded the Labour party. Does the hon. Gentleman intend to take the whole water industry into public ownership? He will be aware that it has never been wholly publicly owned.

Mr. Brown : I understand that. My area was served by a private water company regulated by a tough but fair regulatory regime. I do not think that it would be necessary to take 100 per cent. of the water industry back into public ownership to achieve our objectives. That is not our proposal for British Telecom, and it would not necessarily be what we would do in the case of the water authorities.

I should like to come to more intractable problems and reply to a point made by the Financial Secretary in his slightly over-the-top speech. The Tory charge, which the Financial Secretary has made, is that we will not be able to afford these three relatively modest purchases and that if we could afford them we would not be able to afford anything else. There is some strength in that argument.

Mrs. Gorman : Does the hon. Gentleman agree that his definition of affording those purchases means that Labour would have to tax the public to enable them to buy back what they do not really want because they are better off with what they have? The hon. Gentleman is talking about hidden taxes.

Mr. Brown : The hon. Lady is here a week early. I shall be here next Friday to deliver my very popular speech on Labour's tax policies. I know that it is popular because that will be the third occasion on which the House has invited me to deliver it. If the hon. Lady wishes to cross- examine me on Labour's taxation policies I shall give her the opportunity to do so next Friday. I promise to give way to her the moment she rises in that debate.

Conservatives say that to sell the nation's assets at less than their true value is a bargain, but that to buy them back at the same price would be theft. That argument would certainly be advanced if a Labour Government ever tried to renationalise at anything less than market price. I am sure that that is what the Financial Secretary would say.

Mr. Maude : We are interested in what Labour means by market price. Is it the price that would apply in the market without the intervention of a Labour Government, or is it the price according to the Dagenham definition, which is that a Labour Government would take action to regulate the water industry? That would be likely to depress the share price.

Mr. Brown : I was coming to that issue. The regulation of an industry should not be set alongside the share price.

Mr. Menzies Campbell : It has consequences for the price.

Mr. Brown : Of course it has. Would anyone argue that the share price should be maintained against the interests of the consumer or the environment? Labour stands for

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regulation rather than for allowing the interests of shareholders free rein. There is nothing new and, I hope, nothing exceptional about that.

Our quite modest renationalisation pledges will have a cost attached and I suspect--as we approach the next election I think I know--that there will be other even more pressing demands on the public purse. As the hon. Member for Billericay (Mrs. Gorman) will discover next week, our taxation and public expenditure policies are tightly drawn.

Mr. John Marshall : Oh.

Mr. Brown : The hon. Gentleman jeers. The Labour Treasury team has firmly set its face against allowing the tail to wag the dog and permitting public expenditure to get out of hand. It is unlikely that all our expenditure pledges will be implemented in the first year of a Labour Government.

Mr. Oppenheim : The hon. Gentleman is most generous in giving way. As he is to speak in next Friday's debate, he is obviously the Opposition's Man Friday. Perhaps he should start a ticketing system so that interventions can be regulated. He has said that a future Labour Government will be firm about public expenditure. Over the past few months every Opposition Front-Bench spokesman has told the House that his Department will have spending priority. Spokesmen on health, employment, and overseas aid have said that their Departments will receive priority. The hon. Member for Derby, South (Mrs. Beckett) has said that only pensions and child benefit will be priorities. The hon. Gentleman has said that spending £700 million to buy back British Telecom will be a priority. Which of those policies will take priority? Will one of them be a top priority or an absolute priority, or will they all have priority?

Mr. Deputy Speaker (Mr. Harold Walker) : Order. Overlong interventions are made at the expense of hon. Members who are waiting to speak.

Mr. Brown : I did not say that the extra 2 per cent. stake in British Telecom would be the sort of priority that the hon. Gentleman seems to imply. I went out of my way to say something different. [Interruption.] Perhaps the hon. Gentleman would stop heckling and allow me to answer his intervention before trying to make his next point.

The precise ranking order of Labour's spending priorities will be determined in government and will have to fit the framework of the overall management of the economy and, in particular, the taxation and public spending policies. We fought that battle inside the Labour party throughout the 1980s, and I and my hon. Friend the Member for Derby, South (Mrs. Beckett) have won it. The hon. Member for Amber Valley (Mr. Oppenheim) finds that hard to stomach. It is right for Opposition Front-Bench spokesmen to set out the goals that they hope to achieve in government. However, they must all be set in the context of the famous phrase "as resources allow".

Mrs. Gorman : Would a 2 per cent. stake or the threat of such a stake in these industries have the same effect as a 2 per cent. stake by Hanson in ICI, about which the Labour party have been creating merry hell for the past couple of weeks?

Mr. Brown : The differences is that Labour does not intend to dismember the industries, sell their assets and

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make substantial numbers of the work force redundant for short-term gain and a risk to continued supply by that public utility.

Mr. John Marshall : I thank the hon. Gentleman for his great tolerance in giving way on so many occasions. His speech is almost a reply to a series of interventions. He said that spending priorities would be worked out in government. Is he telling the House and the country that at the next general election Labour will not be able to give the British people a list of spending priorities? We are being asked to buy a pig in a poke, and it is a very expensive poke.

Mr. Brown : I like the bit about a very expensive poke. It will be part of my job to cut it a bit. The hon. Gentleman misrepresents what I said. Of course we shall put our objectives to the electorate. We have repeatedly said that the exact year-by-year order in which the priorities are redeemed will be a matter for the Government and Cabinet to fight over in the public spending round, which is what happens at the moment. That is all that I am saying. Our pledges are clearly set out in the public domain. To excite the interest of the right hon. Member for Chingford, I tell the House that they have been ruthlessly costed. The right hon. Gentleman is not so excited as I hoped.

We realise that achieving the protection of the consumer and the environment through public ownership may not be immediately obtainable on coming into government. Nevertheless, the environment and the interests of the state, as well as those of the consumer, must be protected. As my hon. Friend the Member for Dagenham has rightly said, we intend to put in place regulatory systems that will oversee the public utilities. We shall ensure that regulatory systems are strengthened so that utilities work in the interests of consumers and of the nation.

We propose to establish a new body--the consumer protection commission-- that will cover all major utilities. It will bring together and strengthen the present major regulatory bodies. The commission will be accountable to a Select Committee and it will examine the performance of individual public utilities in public. In other words, there will be parliamentary scrutiny through a new Select Committee structure. If the proposal is implemented, it will reduce the present number of quangos. I think that that will appeal to Conservative Members and that they will welcome such a policy. I see from the faces of the Conservative Members who are in the Chamber that they do not welcome it.

It is not convincing when Conservative Members argue that our plans for the public ownership of public utilities would not be popular. Far from that being true, I think that we have public opinion on our side. I draw a distinction, however, between public utilities and other trading companies. I accept that the position of British Telecom is, to some extent, anomalous in the terms of the debate. That is because it has some of the features of a public utility and many features of a private trading company. I see that there is an intellectual difficulty.

Mr. Maude rose --

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Mr. Brown : On that note I give way to the Financial Secretary, if he wishes to intervene.

Mr. Maude : It may be that the hon. Gentleman is about to deal with the matter that I wish to put to him. If so, I shall await his comments upon it with eagerness. He seems to be saying that for ordinary trading companies there is no case for a return to state ownership. If that is so, why did the Opposition oppose every privatisation, root and branch?

Mr. Brown : The Minister was right when he said that I might be about to move on to that very issue. My contribution to the debate has been not so much a speech so far, but more of a series of responses during Question Time. I have enjoyed the experience enormously.

Mrs. Gorman : Is the hon. Gentleman practising for the job?

Mr. Graham Riddick (Colne Valley) : Answer the Minister's question.

Mr. Brown : The hon. Lady is absolutely right. The interjection of the Minister's PPS, the hon. Member for Colne Valley (Mr. Riddick), goes to show that he has entirely missed the point of these occasions.

I shall move on to some of our criticisms of the Government's privatisation programme.

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