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Mr. Grylls : Finance is at the centre of the hon. Gentleman's argument, and he has tried to reassure the House about the Labour party's spending plans. If, for example, a Labour Government were to take the water industry back into nationalisation, it would be necessary to add to the cost of acquisition the investment programme of the industry, which is about £28 billion. As soon as 51 per cent. ownership is exceeded--my hon. Friend the Financial Secretary will instantly intervene to tell me that I am wrong, if that is the position--it is my understanding that the industry becomes part of the public sector and, therefore, has to be consolidated in the public sector. All the capital expenditure of the water industry and of British Telecom would become part of the Government's public expenditure. Is the hon. Gentleman saying that all the capital expenditure of British Telecom and of the water industry, and of any other organisation that is nationalised, has already been costed, or is he saying that, because a Labour Government would not be able to afford such a programme, the capital expenditure of the water and telephone industries, for example, will have to be reduced? The hon. Gentleman should be open about these matters.
Mr. Brown rose --
Mr. Deputy Speaker : Order. The hon. Member for Surrey, North-West (Mr. Grylls) should seek to make his speech in the course of the debate and not by means of intervening in the speech of another hon. Member.
Mr. Brown : I get the impression, Mr. Deputy Speaker, that you would like me to make some progress with my speech and not to give way so often to those who wish to intervene. I have done my best to respond to the perfectly proper questions that Conservative Members have put to me, and to do so courteously.
The intervention of the hon. Member for Surrey, North-West touched on the important matter of adding to the public sector borrowing requirement through
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renationalisation. It is a difficult matter for the Opposition. It is my view that we should devise structures in such a way as to enable public utilities to operate as separate centres so that they are not automatically drawn back into the Government's PSBR. That is why I have an affection for partnership arrangements with the private sector. I appreciate, of course, that such arrangements will endure only if private sector shareholders are able to secure a reasonable return on their investments. It follows in logic that the new-style nationalisation, if that is how Conservative Members wish to regard it, is not the same as the old approach. I hope that that goes some way to meeting the inquiry of the hon. Member for Surrey, North-West and demonstrates the thinking that lies behind what is called the new-model Labour party.Mr. Ian Taylor : These are interesting matters and we would like to pursue them, with the hon. Gentleman's help. I am not entirely certain what he meant when he talked about keeping public utilities out of government. Under normal Government practice, a nationalised industry would be subject to external financing limits. Is the hon. Gentleman saying that there would not be EFLs for the companies that he is talking about? That would be critical to the policy that he seeks to pursue. One of the advantages of going into the private sector is gaining access to private capital, which means that the investment programmes for water companies, for example, can go ahead for the benefit of customers for the next decade. If the companies were in the public sector, EFLs would prevent the programmes taking place.
Mr. Brown : As I said to the hon. Member for Surrey, North-West, that is an important matter and one that is worthy of a full day's debate. Perhaps I am setting myself up for a third Friday. I very much enjoy the constructive contributions of the hon. Member for Esher to our debates as we consider the Finance Bill in Committee. He is fully entitled to at least a reply in outline, and with his permission I shall provide it by saying that we are trying to find our way to a structure that does not involve all the investment programmes of the public utilities being drawn into the public sector borrowing requirement. That is the strategic objective, and it is not one that will be impossible to realise. It is wrong to suggest that it is completely out of court. The objective involves a relationship with the private sector, and especially with the private money markets, which in the past have not served nationalised industries well. That is why we propose to proceed in the way that I have outlined.
I shall return to the main text of my speech. I wish to draw the attention of Conservative Members to some of the costs that the taxpayer has had to bear in the course of the Government's privatisation exercise. The costs to the taxpayer of privatising the water industry, for example, ran to about £2,173 million, for a total gain of about £882 million. The total cost to the taxpayer of that exercise, due largely to the write-off of debt and the injection of cash, is £1.291 billion. That is a substantial sum. In total, the taxpayer is subsidising the privatisation by £3.3 billion, and that is based only on the known costs. Conservative Members will say that the new structures justify the expenditure, but it is very heavy indeed. The Financial Secretary was quick enough to criticise our proposals for British Telecom, which would incur only a fraction of that, when Labour achieves office.
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The sale of National Power and PowerGen has also been expensive for the taxpayer. The Government underpriced the shares by 37p. It follows logically that they lost the taxpayer £390 million. By the close of trading on Tuesday 12 March, 100p part-paid shares were trading at 137p--up by over a third in just one day. Under the Conservative party's own criterion, which is that the true value of an industry is what it will fetch on the market, the taxpayer has now lost £2.5 billion from the sale of the electricity industry. I think that that is an extraordinary price for the taxpayer to be asked to pay. Arguments about efficiency and managerial structures of public utilities should be dealt with on their own terms rather than by forgoing these assets--which are the state's assets--and losing taxpayers' money to transfer the utilities at great expense from the public to the private sector.People's distress at the loss to the taxpayer of the true value of those assets is exacerbated enormously when they consider the profits made immediately the utilities are in private hands. They suspect that those profits have less to do with an efficiency exercise than with job losses and, above all, utility charges.
Mr. Maude : Do they not want environmental improvements?
Mr. Brown : We are not yet discussing the investment programme. The Northumbrian water company made a year on year rise in its pre-tax profits of 369.6 per cent. That is a substantial rise in anybody's terms, and it cannot be attributed solely to different managerial expertise in the private sector. I note that no Conservative Member has the cheek to say that it can.
Mr. Tebbit : I shall do so in a moment.
Mr. Brown : I look forward to hearing the right hon. Gentleman's speech.
Mr. Neil Hamilton (Tatton) : As soon as possible.
Mr. Brown : The Government Whip, the hon. Member for Tatton (Mr. Hamilton), is reclining in a leisurely way in what I take to be his Friday suit. Perhaps he arrived late. I should perhaps explain that my speech is protracted because I have been fantastically generous in giving way to his hon. Friends when they have inquired, rightly and properly, into the policy of Her Majesty's Opposition, soon to be Her Majesty's Government.
The use that the privatised water companies have been making of their profits is quite interesting. South West Water has decided to spend its money not on environmental improvements, but on a bid for the south-west regional television franchise. If successful, it will have a 20 per cent. stake in the new company, West Country Television Ltd. What on earth has that to do with running a public utility and ensuring that the water supply is fit to drink? I suppose that South West Water could advertise that it is so by means of its newly owned television franchise, but that is not the same as putting the money into ensuring the actuality.
Severn Trent Water which, as the Financial Secretary said, covers his area- -has just spent £212 million on a waste disposal company. Waste disposal now accounts for 15 per cent. of Severn Trent's activities. It may be legitimate for a water company to diversify into waste disposal. I have less quarrel with that than with Thames Water, which has a stake in the insurance industry. Welsh
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Water has a stake in street cleaning ; the Welsh and Yorkshire regional water companies, Northumbrian Water and Southern Water are involved in information technology ; and apparently all the regional water companies are involved in property and leisuredevelopment--Welsh Water already owns two hotels. I remember what Conservative Members said when they discovered that British Rail owned hotels. They thought it was terrible and that they should be sold off straight away, but now that the other utilities are privatised, such activities are apparently to be encouraged. It is suggested that the investment programmes of the great public utilities will take off now that the companies are in private hands, but British Telecom is not setting a good example to the rest. Notoriously, its profits for the year were more than £3 billion.
Mr. Maude : Investments are also at £3 billion.
Mr. Brown : The Financial Secretary rightly suggests by his murmurings as he cowers behind the Dispatch Box--either that, or he is falling asleep, I am not sure which--that there has been a public outcry about British Telecom's £3 billion profits. Consumers suspect that that reflected in their billing arrangements, and they are not wrong.
Mr. Riddick : What about investment?
Mr. Brown : The Financial Secretary's Parliamentary Private Secretary asks a good question. The investment programme has fallen by 11 per cent., or £370 million, compared with last year's programme.
Sir Michael Marshall : Will the hon. Gentleman come clean and tell us what he regards as a reasonable return on investment? British Telecom's profits are normal compared with those of any other international company. Is he suggesting that it should have a lower return on investment than other similar international competing industries?
Mr. Brown : That is a difficult argument. After all, it is the Labour party that is proposing to buy shares in the organisation. Presumably, the hon. Gentleman would justify that by the return on investment, which he says is satisfactory and correct for an organisation of that size. It is the Financial Secretary who is saying that the returns on the investment are so good that the Conservative party will sell more of the Government's stake in that utility--presumably they will sell them at below their true market value. Is that the Financial Secretary's intention, or will the shares be pitched in at the actual market value? Perhaps he will answer that question--I have been very generous in answering questions.
Mr. Maude : The details of the further partial sale of British Telecom shares later this year will be divulged to the House in due course.
Mr. Norris : I know that the hon. Gentleman was very strict with himself about answering our questions, but he has not answered the question asked by my hon. Friend the Member for Arundel (Sir M. Marshall). In the context of the size of the company and the size of any parallel
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undertaking anywhere in the world, the profits of British Telecom are comparable and reasonable. More important, does the hon. Gentleman agree that when the profit figure is almost exactly identical to the figure for capital investment in the company the same year, it is an even more reasonable return on investment?Mr. Brown : The hon. Gentleman would do better to put those assertions to British Telecom's customers than to me. I am a BT customer and I have noticed that my bill has risen substantially over the past year, although I am not sure whether that is reflected in the level of consumption.
Mr. Riddick : It has risen because the hon. Gentleman talks too much.
Mr. Brown : My real problem is trying to get a word in edgeways. The Financial Secretary to the Treasury said that the British Government had led the way in privatisation. He compared Great Britain after 13 years of Conservative Government with countries that he regarded as analogous, and those included Sri Lanka, Argentina, Brazil, Mexico, the Philippines, Venezuela and Cuba. He also referred to several grim eastern European dictatorships. While some people in the Labour party might compare those countries to Britain under the right hon. Member for Finchley (Mrs. Thatcher), I would not do that. However, it was interesting that such an analogy occurred to the Financial Secretary. The only nations that he suggested might be a correct analogy to the position of the parliamentary Labour party were North Korea and Albania. Such a proposition must have Mr. Peter Mandelson absolutely weeping into his duvet.
Mr. Maude : I will develop my analogy further. What Britain had in common with the eastern European countries at the beginning of the 1980s was an excessively large state sector which had to be reduced by businesses being returned to the private sector. Eastern and central European countries are going through exactly the same process now. The only redoubt of reaction is from the British Labour party and, of course, the North Korean communist party.
Mr. Brown : The debate has ranged widely, but it is probably not terribly productive to extend it to reforms in eastern Europe, although I wholeheartedly welcome what has been happening over the past three years in eastern Europe. It must be common ground in the House that the freedoms that we hope that people will enjoy in eastern Europe are freedoms that it is perhaps too easy to take for granted in western Europe.
Mr. Oppenheim : What about Ceausescu?
Mr. Brown : The hon. Member for Amber Valley seems to be trying to lay Ceausescu at the Labour party's door. There must be embarrassing pictures of just about everyone in public life, not just people from our side, with that gentleman.
Mrs. Gorman : I am grateful to the hon. Gentleman for giving way and I promise not to interrupt him again because, like everyone else, I am anxious to hear other hon. Members.
Does the hon. Member for Newcastle upon Tyne, East (Mr. Brown) remember the remarkable event last year when the leaders of so many Socialist countries came to
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this country and stated publicly at the Conservative party conference how much they admired the privatisation policies and what they had done to transform Britain? That was a magical moment. Does the hon. Gentleman recall the old days when the Labour party used to trot out its socialist friends from eastern Europe in an effort to boost the party? I notice that Labour Members nowadays are not really fond of associating themselves closely with those people.Several Hon. Members rose --
Mr. Deputy Speaker : Order. I draw attention to the fact that the House has been sitting since 9.30 am and it is now 11.13 am but, so far, Back Benchers have only been able to intervene.
Mr. Brown : I accept that point, Mr. Deputy Speaker. If hon. Members will allow me, I should like to complete my speech with less of the knockabout stuff. However, I must tell the hon. Member for Billericay that, regrettably, I have no friends in eastern Europe, communist or otherwise, disreputable or reconstructed.
The Financial Secretary to the Treasury may cite examples from Sri Lanka, the Philippines, Venezuela, Cuba and other states that he believes are directly comparable to Conservative Britain, but he cannot cite a trading partner of ours in the European Community which is putting its telecommunications network into the private sector. In every case the telecommunications network is owned and controlled by the state. Our EC trading partners are not lining up to follow Britain's example. I believe that the only two EC states whose telecommunications networks are in the private sector are Greece and Spain.
Another issue that has aroused a considerable amount of public interest and comment in respect of the Government's privatisation programme is the way in which the salaries of top executives are adjusted immediately after privatisation-- [Interruption.] Conservative Members groan and look uncomfortable at that, and well they might.
After Cable and Wireless moved into the private sector, the chief executive managed a 114 per cent. pay increase. The pay of the chief executive of Jaguar rose by 100 per cent. after privatisation. Similarly, the chief executive of Enterprise Oil received a pay rise of 167 per cent. after privatisation. The lucky man at British Airways received a 126 per cent. increase and the individual at the British Airports Authority received a modest 110 per cent. increase. In all, the trading company privatisations managed an average increase for the top executives in the first year of 78 per cent. That was not bad going. Of course, the wages of others in the industries did not follow suit.
The position was not quite so marked with the utilities. According to Incomes Data Services, the average pay increase was 62.1 per cent. although there were some stark examples. In 1990, the chairman of Thames Water, Mr. Roy Watts, was awarded a pay rise of more than 168 per cent. when increases for the other top executives of water companies averaged 100 per cent. The chairman of Anglian Water, Bernard Henderson, received a 100 per cent. increase in 1990. I understand that the pay increase for the chairman of British Telecom is to be announced today. The figure has not been brought to me in the Chamber, but at some stage in the debate I hope that it will be possible to draw the attention of the House to it. It is
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anticipated to be about 14 per cent. this year, but that is on top of the 32 per cent. that he gave himself last year. The suggested pay award for the employees is 8.3 per cent.The Opposition have rightly made much of the position of the consumer. We believe that the privatised companies, whether they be trading companies or public utilities, are more concerned with the interests of the shareholders than with the interests of consumers or the country in which they operate. That is particularly important in the context of public utilities. However, it is clearly not right for the debate to be conducted along the lines of politicians' assertions with no evidence. In fact, we have some evidence to help us. The London Business School conducted a survey with the United Research Group. That survey of privatised public utilities showed that customer service and product quality came bottom of the list of priorities that were put to senior managers. Only 27 per cent. of those surveyed mentioned product quality as a priority and only 18 per cent. mentioned customer service as a priority. Although that was merely a survey, it is indicative of attitudes among the newly privatised managements of those great ulitities. British Telecom has found that complaints from the public have been running at more that 30,000 this year. The Office of Telecommunications has stated that the total of complaints for 1990 showed a 21 per cent. increase over representations made in 1989, which itself was more than 34 per cent. higher than the figure in 1988. Gas complaints have been running at just over 21,000 and electricity complaints at more than 10,000. That suggests that the consumer is not satisfied, and one can understand that. The Conservative party is satisfied--indeed, it wants to go further. The Conservative party envisages private coal mines, private railway networks, privatised schools and privatised health care. All of that has its enthusiasts.
I have a pamphlet--I am always trying to improve my knowledge of such matters, and I know that the Conservative party is in favour of self- improvement--entitled, "The NHS--a suitable case for treatment", written by the No Turning Your Back group of Conservative Members. It must be Government policy because many of those people are now Ministers or at least serving in the Whips Office. The pamphlet talks about plans for the private sector, and it states :
"Particularly important for extending competition and co-operation"--
that is, inside the national health service--
"is that the spur should come not just from within the NHS, but with the private sector as well As well as tendering for ancillary services, which have so far saved the NHS over £100 million"-- I understand that the figure has risen since then--
"partnership with the private sector has grown far beyond this." The point that they do not make is that the money that they allege has been saved to the national health service has been saved at the expense of the wages and conditions of employment of the employees--not employees who are well remunerated, but employees who are not very well remunerated at all.
I agree with the next point in the pamphlet, which states : "Hospital waiting rooms are being made more like airport lounges". That is true. Just as in an airport lounge, one departs from a hospital lounge without getting medical treatment. The pamphlet goes on :
|£ million
-------------------------------
1985-86 |67.880
1986-87 |70.325
1987-88 |73.315
1988-89 |91.859
1989-90 |114.955
1990-91 |135.233
<1>1991-92 |122.564
<1> Estimates.
Gross Pay (£pw) Net income in work after mortgage and community charge Net income on income
(£pw) support after mortgage and
|community charge (£pw)
|mortgage £50,000 |mortgage £75,000 |mortgage £100,000
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
200 |60.84 |-1.42 |-63.68 |101.22
250 |93.84 |31.58 |-30.68 |101.22
300 |126.84 |64.58 |2.32 |101.22
350 |159.84 |97.58 |35.32 |101.22
400 |197.34 |135.08 |72.82 |101.22
450 |234.84 |172.58 |110.32 |101.22
500 |272.34 |210.08 |147.82 |101.22
That would speed up operations, would it not? We would see blokes from Tarmac coming in with chainsaws and hammers to sort out the business. [Laughter.] I see that Conservative Members are happy with that ; it cheers me up. The document concludes :
"Innovative partnerships with the private sector will bring more and more benefits as experience is gained."
It is a bit tough if one happens to be the patient on whom that experience is being gained. However, the pamphlet goes on :
That idea has taken off in Newcastle. As I pointed out in the public spending debate, the management of the health authority is doing precisely that. It has found that it can make more money selling radiotherapy beds. It first closed 15 of them, but it sold the remaining radiotherapy beds to neighbouring health authorities and generated an income for itself--by not treating people who live in Newcastle, of course. People in Newcastle are not allowed to go into hospitals for radiotherapy treatment as in-patients ; they have to be treated as day patients regardless of condition. That strikes me as so outrageous as to be indefensible, even by Conservative Members. The Freeman hospital in Newcastle is the flagship of the Conservatives' opting-out proposals. Not only was it the first hospital to opt out, but it is the one in which the famous IBM experiment on computerised costings is taking place. The allegation from the Conservative side is that that crypto-privatisation--that change of systems which would enable private and public money to go into the health service--will somehow help patients. One of my constituents, Mrs. Price, who lives in Monkchester road, has a pain in her knee. It is swollen and it is hurting her. Her general practitioner has asked the hospital consultant to look at her. She received a letter from the appointments officer, stating : "I acknowledge receipt of a letter from your family doctor requesting an out patient appointment."
That is a reasonable enough beginning, but the letter goes on to say :
"We apologize for the fact that there is a waiting list of up to 30 weeks for a routine out patient appointment?"
That is what the opted-out system has done for that hospital.
Mr. David Lightbown (Staffordshire, South-East) : What about the rest of the letter?
Mr. Brown : The hon. Gentleman asks, "What about the rest of the letter?" I shall read the whole letter for him, which will teach him to intervene from a sedentary position. The letter goes on to state :
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"Every referral letter is read and prioritised by the Consultant concerned, and a letter will be sent to you approximately four weeks prior to your visit to out patients, with details of the date and time of your appointment.If you are concerned in any way regarding your medical condition, please discuss this with your family doctor who may be able to help or advise."
The family doctor has already helped and advised. His suggestion is that she should go to a hospital and be looked at by a specialist consultant. The specialist consultant is saying that she will have to wait in pain for the next 30 weeks. That is just not acceptable.
Mr. Neil Hamilton : That did not happen under Labour.
Mr. Brown : The hon. Gentleman, from a sedentary position, rightly points out that that did not happen under Labour. I suppose that he will go on to say that it was a long time ago.
Our objections to the Government's privatisation programmes are, of course, the costs of privatisation, which have been borne by the taxpayer, and the excessive profiteering which protects the interests of the shareholder against those of the consumer and, sometimes, against those of the environment. The issue of boardroom pay has stuck in the throats of just about everyone who has been following the matter, and the number of complaints received by the privatised utilities has increased substantially.
The Government have much to be ashamed of in their privatisation programme and nothing to boast about or to be proud about. It is absolutely clear why the Government are holding the debate on no matter of substance to vote on. With their record on privatisation, they are doing absolutely the only thing that they possibly could--they are practising holding an Opposition Supply day for the time when we become the Government and they have to hold Supply day debates.
11.26 am
Mr. Norman Tebbit (Chingford) : I hope that I shall be briefer than some other speakers. I shall not attempt to follow either my hon. Friend the Financial Secretary to the Treasury or the hon. Member for Newcastle upon Tyne, East (Mr. Brown) through all the byways down which the hon. Gentleman in particular has taken us. In particular, I will not speculate on what goes on under Mr. Peter Mandelson's duvet : I give an absolute commitment on that.
Let me at once declare my interests in the debate. First, I am a taxpayer. Secondly, I am a consumer of the services of both the former nationalised and still nationalised businesses. Thirdly, I am a shareholder in Thames Water and British Telecom. Fourthly, I am a non-executive director of the latter company. Fifthly, just for the record, I hold the curious office of honorary adviser to the chairman of British Aerospace. I was also, for six of the eight years during which I served as a Minister in the Government of my right hon. Friend the Member for Finchley (Mrs. Thatcher) a sponsoring Minister of nationalised industries. For 17 years, I worked for a nationalised industry. On the whole, therefore, I claim some right to know a thing or two about nationalised and denationalised industries.
I should like to emphasise at once one or two things that my hon. Friend the Financial Secretary said. He is right. He referred to Christian Democrat Germany, not least what was once called East Germany, or cynically
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known as the People's Democratic Socialist Republic of Germany. That was the one which was never democratic, although it was certainly socialist. The process of denationalisation is now under way there in Germany, in Mitterrand's socialist France, in Hawke's Labour Australia, in the more advanced countries of black Africa, under the Nationalist South African Government of President de Klerk, in South America and throughout eastern Europe. It is also happening in New Zealand where, in an advanced step, the national telephone company has been denationalised. Many other countries are now looking at the success of the denationalisation of our telephone company, and will be following suit.Only the most backward reactionary socialists and hard-line Communists, referred to by the BBC's disinformation unit as "conservatives", believe any longer in state ownership and centralised economic planning--only them and, as we have heard again today, the modern British Labour party. Opposition Members call it "social ownership". It is more like an economic social disease--a business and commercial pox. These days, there must be more advocates of state ownership in the British Labour party than in the Albanian Government. As my hon. Friend the Financial Secretary said, the Labour party would now be hard-pressed to find soulmates anywhere--even in Cuba. Apparently not even Cuba believes in state ownership any longer. The British Labour party would have to go to North Korea to find anyone who would join it in its belief that centralised state planning and nationalisation are the way forward. I shall restrict my remarks to only two or three of the many areas that could be debated this morning. First, I shall make some general observations on the issues and some observations derived from my experience as the sponsoring Minister for some state industries. Secondly, I shall make specific remarks about some of the nationalised industries, especially British Telecom, and about one organisation that has not yet been mentioned, the former freight division of the British Waterways Board.
Calls for Government spending are always in excess of what any Chancellor feels could be prudently or even imprudently financed. There are few businesses in which there are not more ways of spending money than there are of financing that expenditure. We are all familiar with the annual round of discussions between the Treasury and other Departments, which leads, sometimes through the so-called Star Chamber, to the public expenditure White Paper, which is the means by which the seemingly irreconcilable are eventually reconciled.
Incidentally, I should like to answer the point made by the hon. Member for Newcastle upon Tyne, East about the subject of debates for the Adjournment. I remember a Labour Government who debated the public expenditure White Paper on a motion for the Adjournment because they could not get a majority, since the Labour party was split over the cuts in hospital, school and social spending, that were imposed on the Labour Government by the International Monetary Fund--as a result not least of the follies of nationalisation that were committed by the last Labour Government. The hon. Gentleman should therefore be careful when he criticises the use of motions for the Adjournment.
As Ministers strive for the approval of their spending plans, the outcome is decided on all sorts of less than logical factors, not least of which is the political weight and influence or even the sheer tenacity of the Secretary of
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State concerned. It is hard enough deciding between whether there should be more expenditure on defence, or on education, the police, the health service, welfare or the other services, all of which fall fairly and squarely within the responsibility of the Government. As the finance director of any conglomerate will testify, it is hard enough to arbitrate on the financial needs of businesses that have little in common except ownership. However, if all that lot is put together in the public expenditure round, it is impossible to find any criteria on which one can arbitrate fairly between the demands of those inescapable Government responsibilities to which I have referred and the needs of commercial businesses.In addition, if the business is nationalised, the Government are not only the financier and appointer of its management, but the regulator. The sheer impossibility of being fair when the Government are both the regulator and the financier, giving rise to the clearest possible conflicts of interest, stands out for all to see. The role of regulator may require the Government to impose extra costs on industries. However, in the role of financier, the Treasury may say that those costs cannot be afforded without closing another hospital, which is what the previous Labour Government did.
Inevitably, one also runs into the role of Ministers as politicians. We have heard this from a would-be Minister this morning, when the hon. Member for Newcastle upon Tyne, East was busy trying to buy votes by pretending that Government control, even though it would result in cutting the capital expenditure programmes, would bring lower prices and improved quality to the consumer.
Mr. Nicholas Brown indicated dissent.
Mr. Tebbit : The hon. Gentleman shakes his head. He may be willing to argue this, but he will not be able to find any historical argument to buttress his case. What I have described has been the problem of nationalised industries over the years. Things would be even more difficult for a Labour Government because, as we all know, Labour politicians are always in thrall to the bosses of the big unions which, historically, have had large memberships in the nationalised industries.
Let me tell the House from my experience--perhaps not all my hon. Friends in the Government will be pleased to hear this--how the needs of nationalised industries are decided under any Government. In order not to personalise the matter let us take as an example what I shall call the nationalised British Widgets Corporation. The senior managers of that business would meet the senior officials at, say, the Department of Trade and Industry. The managers would already have produced a draft corporate plan. The senior officials at the DTI would then second-guess the senior managers. After much to-ing and fro-ing, a modified corporate plan would be agreed by the Widget board, which would bring it before the Secretary of State. The Secretary of State would then third-guess it and send his senior officials to their Treasury opposite numbers, who would then fourth-guess them. A compromise would be reached, which the Secretary of State would then fifth-guess, before going to see the Chief Secretary, who would sixth- guess him.
By this time, the financial year of the British Widgets Corporation would be half over, but the corporation would still not have an approved corporate plan. Indeed, it would know that, even when the corporate plan was
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approved, it would be a mess because the corporation had committed itself--or been unable to commit itself--to the necessary programme of investment. The bargaining would continue, with the Chief Secretary trying to arbitrate between the needs of the British Widgets Corporation and those of the national health service. The Secretary of State for Trade and Industry would be wondering whether to force cuts in another capital programme that had already been agreed for another industry, so that he could avoid a crisis at the British Widget Corporation.That is what actually happens, year in, year out, as a consequence of the state ownership of industry. If all that was not enough, it is possible that, at about the same time if there were such a Minister, the Secretary of State for England would crash in to tell the Prime Minister and the Cabinet that, if anyone tried to close the loss-making Widget plant in England, he would resign to join the English Nationalist party. That is the way in which these industries are treated and managed. One could not run the proverbial alcoholic reception in a brewery in that way, let alone an industry, but it is an inescapable feature of the state ownership and political control of business.
I lived with that for six years. I had to fight like a tiger against my colleagues in the Treasury to ensure that what was then British Leyland--it is Rover Group now--could proceed with the K engine, which is now the heart of its most successful model. I had to decide that case on the basis of the management's estimates of the market. It was an act of great courage, because most of the time those estimates were wrong. Fortunately, on this occasion, they were right. I had to persuade the Treasury to let me authorise expenditure on the car which became the Jaguar XJ6, and without which the group would not have a product line at all by now. Again, happily, I was right rather than wrong. I had to fight for the 524 Rolls- Royce engine, and again, I was right.
I am sure that other products on which I lost the battle might have been even better investments. As a politician, I had to make those choices and persuade other politicians that they were right. I was not the right man to do that, and nor was any other politician. If I got some of the decisions right, it was as much by luck as by good judgment. On products ranging from groundnuts to that expensive motor car in Ulster, my predecessors over the years got many decisions wrong, and that would happen again.
A while ago, we discussed some aspects of British Telecom. The process to which I have referred led the Post Office, which used to run our telephones, to ration telephones and neglect the capital investment which was so desperately needed to operate a decent telephone system. We all know what a party line is. Of course, not everyone in the House sticks to it. Sometimes it is hard to find one. People make up their own. I suspect that we have heard a bit of that this morning from the hon. Member for Newcastle -upon-Tyne, East. From time to time, I thought that his was a better party line than that used by his leader and some of his right hon. and hon. Friends.
Mr. Nicholas Brown : I am enjoying the right hon. Gentleman's speech very much. Does he accept that, if one of us is to make up Labour party policy, it is better that I do it than that he does it?
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Mr. Tebbit : I am an independent sort of fellow now. If I were offered a consultancy, I might be able to do the hon. Gentleman's party some good. I did my party some good from time to time, as he may remember. If he wants some advice on a strictly commercial basis, I will give it to him. I could even do so in private, although I might leak from time to time.
I was talking about party lines. Do we remember what a party line was? It was an arrangement used when British Telecom was nationalised, by which two subscribers had to share one line because the business could not provide lines for all the people who wanted them. That is what customer service was about in nationalised industries. When British Telecom was denationalised, one call in 25 failed to get through. Now, less than 0.5 per cent. of calls are not immediately successful. When British Telecom was denationalised, there were 20 million lines ; the figure is now 26 million. There were 8,000 miles of optic fibre cables in existence then ; there are now 800,000 miles. There was then but one digital switching unit ; now the whole main network has digital switching, and 73 per cent. of all British Telecom lines are served by modern digital local exchanges.
British Telecom has created a mobile phone cellular network with more than half a million customers. It covers an area in which 97 per cent. of the population live. I hope that my hon. Friend the Financial Secretary will assure my right hon. Friend the Chancellor of the Exchequer that it covers every known restaurant in central London.
Itemised billing is now available to 19 million of our customers. All the achievements that I have listed spring largely from an investment programme of £14.5 billion since 1984, without any contribution from the taxpayer or any hassle with the Treasury. British Telecom has not competed for funds with hospitals, schools, defence or anything else in the Government programme. That investment programme currently runs at just less than £3 billion a year. Last year alone, the Treasury received from British Telecom £1.4 billion in corporation tax and dividends. If that were not enough, let me rub the nose of the hon. Member for Newcastle-upon- Tyne, East in it a little. He talked about the costs of privatisation. When British Telecom was privatised, the market valued it at about £8 billion. The Government's half share is worth about that figure today.
Mr. Nicholas Brown : Because of the profits.
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