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Dr. Godman : I am grateful to my hon. Friend for giving way. I had not intended to take part in the debate, principally because I am not feeling very well.
Is my hon. Friend satisfied that European Community legislation cannot prevent the Government of the day from expressing sympathy for a management -employee buy-out as against the would-be acquisition of a port by some foreign multinational company?
7.15 pm
Ms. Walley : My hon. Friend makes a valid point. I can well foresee circumstances in which local employees may wish, at all costs, to proceed with an employee-management buy-out to avoid the horrendous implications of a foreign company buying out the trust port. If that could not be made possible because the provisions did not exist in the Bill, those employees would wish to use every option open to them to ensure the employee- management buy-out. We would insist on exploring our need to operate in harmony with European directives to ensure that employees do not lose the option of an
employee-management buy-out.
Mr. Bell : I hesitate to intervene in the speech of my hon. Friend, but no doubt she has read--as I have--the debate on the amendments in the other place and will have noted the great anxiety felt there, as it was in Committee, about the possible privatisation of the port of Poole. We are glad to see the hon. Member for Poole (Mr. Ward) in his place tonight. In Committee, he expressed concern that the port of Poole might be privatised.
Is not the port of Poole a classic example of where, even though employees may not wish the port to be privatised, it may be privatised against their will? The amendments
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will facilitate that task. It might be opportune if we could hear the views of the hon. Member for Poole on the amendments. Does my hon. Friend the Member for Stoke-on-Trent, North (Ms. Walley) agree that, although a port such as Tees and Hartlepool is even now reluctant to be privatised, other ports such as Poole are totally opposed to the idea?Ms. Walley : I shall be guided by you, Mr. Deputy Speaker, as to whether it would be in order for me to respond to the comments by my hon. Friend the Member for Middlesbrough, which may have been slightly outside our remit.
Mr. Deputy Speaker : I am grateful to the hon. Lady. I am getting worried that the discussion is almost turning into a Second Reading debate. I hope that most of the arguments will be used on this group of amendments and that after that we may proceed more rapidly.
Ms. Walley : I am grateful for your advice on that, Mr. Deputy Speaker. I would also understand if the hon. Member for Poole (Mr. Ward) wanted to intervene now, rather than later, but I have no doubt that he will make a contribution if he wants to.
There is anxiety throughout all the trust ports about the implications of the legislation. There is a fundamental objection to the amendments involving compulsion. However, if it is accepted that that argument has been lost and nothing more can be done, the amendments relating to employee -management buy-outs give the trust ports some let-out and provide the only opportunity for the ports to continue under the direction of local people who are concerned about them.
We should have liked the legislation to give complete priority to the concept of management-employee buy-outs--a concept that could have been modified and further clarified during the Bill's progress. At this late stage, there is still confusion because the Government have not said whether, if that concept is the preferred option, they will go along with it. That is a matter of great concern and regret to the Opposition.
We still do not know whether the Government will let
employee-management buy-outs go ahead if other bids worth far more money are made. The trust ports share our concern. The principle of management- employee buy-outs had cross-party support in Committee. However, at the end of our deliberations we have been left with the same assurances that we had at the beginning. We have been told that the Government will consider what they can do. They will only consider, they will not give the firm commitment that my hon. Friends and I want.
We are forced to conclude that the Government are not keen on anything except window dressing. We have learnt from other debates this week that what the Govenment might say is different from what they do. We should not have such a window dressing when it comes to employee-management buy-outs ; we need a firm commitment that those buy-outs will go ahead.
The clawback property tax was designed to deter land predators from asset stripping ports. Although the ideology is right, in practice the tax has no effect other than to reduce correspondingly the tender offer to meet that possible liability. That reduction means that a management-led buy-out is not financially viable, but the aim
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of such buy-outs is to promote and develop a port and to use the land for the purpose for which it was acquired--port development. The Government have not granted any concession on the basic 50 per cent. levy for management-led schemes. However, it is worth noting that the Finance Act 1990 offered a 3 per cent. concession. The Government now seem loth to offer a meaningful discount, which is necessary to achieve a successful bid.My hon. Friend the Member for Middlesbrough said that we had pressed for the guidelines in Committee. We were then assured by the Minister that those guidelines would be available. We were content to take advice from the Government about how they would proceed to firm up the proposals for employee-management buy-outs. The Government should have followed the proper procedures and made the guidelines available to those in another place who were discussing them. However, I gather that the guidelines were first made available to the Association of British Ports. The Government's handling of the guidance notes is another example of the way in which they have been remiss in their entire handling of employee-management buy-outs.
Mr. Bell : The guidelines appeared in draft form in the other place. On insisting that they be placed in the Library, my hon. Friends and I discovered that they were sent to the managing director of the British Ports Federation, Mr. J. Sharples, by a Mr. M. W. Jackson--apparently he is a civil servant. It was only because of the unofficial title of those notes --"The Secretary of State's guidance notes on the procedure for sale of trust ports"--that we ascertained that they were the guidelines for which we were looking. Does my hon. Friend agree that it is remarkable that we have to suss out those guidelines from the Library as a consequence of a debate in the other place? Does my hon. Friend agree that it is remarkable that those guidance notes were not sent by the Minister to members of the Committee for the use in the House today?
Ms. Walley : I am grateful to my hon. Friend for drawing the details of the issue to the attention of the House.
We pressed for the guidance notes to be made available and we had every confidence that they would be sent to the other place in due course. No one was more astonished than me when I read Hansard of the other place and discovered that the debate was adjourned for half an hour before those guidance notes could be discussed. Far be it from me to suggest that this place does exactly the same. In an earlier point of order concern was expressed that Ministers may be making announcements other than in the House, which denies hon. Members the opportunity to question Ministers. I agree with my hon. Friend the Member for Middlesbrough that the guidance notes should have been available at the appropriate time so that those discussing this important Bill could have had the opportunity to peruse them and so discover their implications for
management-employee buy-outs.
We eventually got those guidance notes, but we understand from reading them that there is still confusion about the Government's exact commitment. The purpose of this debate is to try to discover whether there is a firm commitment from the Government to allow an
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employee-management buy-out. Other types of sale should go ahead only when employee-management buy-outs are not an option.Mr. Bell : Does my hon. Friend agree that, in essence, it is clear from the guidelines that there is no firm Government commitment to the management buy-out option? We are committed to that option. Does my hon. Friend agree that, unless we have a firm assurance from the Minister that the Government will show a preference for such buy-outs, we may yet divide the House on this amendment?
Ms. Walley : My hon. Friend has said it far better than I could. This issue is of great concern to us.
If the Government are so in favour of employee-management buy-outs why was that commitment not included in the Bill in the first place? As time has gone on, we have attempted to clarify the position. We still do not believe that the clauses are perfect. However, I know that time is pressing and that it is important for the House to have an opportunity to discuss other important amendments.
Although we welcome the improvements that have been made, we do not believe that they go far enough. However, I do not believe that it will be necessary to divide the House as my hon. Friend the Member for Middlesbrough has suggested, but I shall look to my hon. Friend for guidance on that.
Mr. McLoughlin : This has been an interesting debate. I wonder what the Opposition's attitude would have been if the Government had given an absolute commitment to management-employee buy-outs which therefore substantially reduced the price of the ports? Let us then suppose that, at a later stage, the ports were sold. I am sure that the Opposition would have been the first to complain that we had not attracted sufficient revenue to the Exchequer. They would have been the first to complain about the taxpayer being ripped off. I cannot understand why the Opposition argue that we should give an outright commitment to management-employee buy -outs without testing the market. The hon. Member for Greenock and Port Glasgow (Dr. Godman) said that he was impressed by some of the buy-outs relating to Scottish buses, but I doubt whether they met with the universal support of the Labour party at the time when they were announced.
Mr. Tim Janman (Thurrock) : Does my hon. Friend agree that it is hypocritical and richly ironic for the Labour party to argue so hard for management-employee buy-outs? If we had a Labour Government today, we would not have this Bill, and not one set of managers or employees would have the right to buy anything in our ports.
Mr. McLoughlin : My hon. Friend makes the very point that I was about to make.
In the main, I want management-employee buy-outs to be successful. Paragraph 5 of the guidance notes states :
"a statement of objectives need to be agreed on a port-by-port basis with the Secretary of State. In framing their draft objectives ports should have regard to the desirability of encouraging the disposal of the whole or a substantial part of the successor company's equity share capital to managers or other employees of the port. A limited price preference for a management and employee buy-out may be appropriate, as described in paragraph 15 below."
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Paragraph 15 says :"In particular a trust port may wish to recommend that a price preference should be applied to a bid from a management-employee buy-out team. The Secretary of State will be prepared to consider a limited price preference of this kind in individual cases and will have regard to the particular circumstances of each case." We believe that the right way forward is to consider the ports case by case, and I think that the Opposition agree. The trust ports are not all the same, and we must take into consideration the conditions in each one.
7.30 pm
My hon. Friend the Member for Southend, East (Sir T. Taylor) spoke of the Port of London authority police. We can deal with that point when we debate Lords amendment No. 35, which relates to the PLA. I recognise my hon. Friend's interest in this matter and I congratulate him on the way in which he has, on a number of occasions, vigorously raised with me both this issue and that of pensions, which has also been raised by a number of other hon. Friends, including my hon. Friend the Member for Thurrock (Mr. Janman).
Parity of the PLA police with the Metropolitan police was never guaranteed. The PLA endeavours to match the Metropolitan police within its means. The conditions and contracts of employment will transfer with the transfer of the scheme. However, the new owners will be able to make changes, but only through the negotiated process, as would need to be the case with any employees. It would be a dangerous precedent to set out what should happen in five or 10 years. I take the point made by my hon. Friend the Member for Southend, East. We shall be watching the situation and shall take the point on board when the PLA comes to us about the sale of Tilbury. My hon. Friend the Member for Thurrock made the point well. We are keen to see management- employee buy-outs. If the Opposition had their way, these would not be an option, because the Bill would not be before the House.
Mr. Bell : I am sorry to take up more of the Minister's time, but we said earlier that, if we were not satisfied with his explanation, we would divide the House. If he gave me an assurance that, although the guidelines talk of "limited preference" being appropriate, he will knock out "limited" and simply leave it as a "preference", we might be able to avoid a Division.
Mr. McLoughlin : We are not discussing the guidelines. The wording enables the Government to have discretion between port and port. I should have thought that that would be welcome. I would not want to declare in advance what the position would be for each and every port, because decisions will be made in due course. It would not be practicable to say that, come what may, management-employee buy-outs will be successful. I hope that, in the vast majority of cases, such buy-outs are successful.
Sir Teddy Taylor : I am sorry to interrupt my hon. Friend, but this is terribly important. Has he the approval of the EEC Commission for his important statement that preference will be given to a management buy-out, even at a lower cost? My understanding is that what he said is contrary to European Community law and that he will get hammered by the European Commission if he tries to insist on it.
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Mr. McLoughlin : One always takes seriously my hon. Friend's cautions about our position within the Community and about what the Community law says. This is in line with what we did when we privatised the Scottish Bus Company. The same words were used in that case, so I am content that we are not breaking any treaty obligations in the way my hon. Friend fears.
Dr. Godman : I hope that what the Minister has said is borne out by the events. He was the Minister who had to change the Merchant Shipping Act 1988. That change was inflicted on the Government by the president of the European Court of Justice. Is he completely confident that a similar change will not be imposed on him as a result of these amendments?
Mr. McLoughlin : That is going rather wide of the amendments. I remember the incident because it was my first appearance at the Dispatch Box. However, I have no doubt that what the Bill sets out is acceptable to the Commission.
Mr. Bell : On competition, the situation under these amendments would not be dissimilar to the television franchises. As the Minister has been so frank and forthright on this issue, and given the assurances that he has made about management buy-outs, it does not appear necessary for us to divide the House.
Mr. McLoughlin : I am grateful to the hon. Gentleman. If anybody wishes to give me any similar assurances when we debate other amendments, I shall be only too pleased to give way. I can hear my Whip telling me not to be too generous. I commend the amendments to the House.
Question put and agreed to.
Clause 10
Schemes initiated by the Secretary of State
Lords amendment : No. 4, in page 7, line 1, after "authority" insert
"who have not formed a company in pursuance of section 1 above and"
Mr. McLoughlin : I beg to move, That this House doth agree with the Lords in the said amendment.
Mr. Deputy Speaker : With this it will be convenient to take Lords amendments Nos. 5 and 6.
Mr. McLoughlin : These amendments should be called the Ward amendments because they are the result of the well-constructed case made by my hon. Friend the Member for Poole (Mr. Ward). They mean that, once the Government have looked at a port after the two-year period and have decided not to privatise at that stage, they will not look at that port again for another five years. My hon. Friend argued his case well on Report and I gave him the commitment that we would make this amendment in the other place, and we have done so.
Mr. John Ward (Poole) : It would be churlish not to thank my hon. Friend the Minister for the amendments. He knows that we do not wish the port of Poole to be privatised. The five-year moratorium gives it the opportunity to carry on its business in a sensible businesslike way which will prove, in five or seven years' time, that there is still no need to privatise. My hon. Friend the Minister listened with courtesy to the representations made to him rather noisily in my constituency, and I thank
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him for that. We obviously did not entirely convince him, but half a cake is better than none and I am grateful to my hon. Friend for what we have.Ms. Walley : We are glad of some further clarifications on the Secretary of State's powers of compulsion. We are totally against any compulsion. If there is to be privatisation, it must be done voluntarily and on the merits of the argument. We are concerned about the position of Poole trust port, but other ports are in a similar position and do not want these powers compulsorily attached to them. We are therefore glad of that clarification.
Question put and agreed to.
Lords amendments Nos. 5 and 6 agreed to.
Clause 17
Levy on disposals of land, etc.
Lords Amendment : No. 7, in page 13, line 2, leave out "land or any interest in land belonging to a relevant port authority is"
and insert
"property, rights, liabilities and functions of a relevant port authority are".
Mr. McLoughlin : I beg to move, That this House doth agree with the Lords in the said amendment.
Mr. Deputy Speaker : The amendment involves privilege.
With this it will be convenient to consider Lords amendments Nos. 8, 10, 16 and 36.
Mr. McLoughlin : Amendments Nos. 7, 8 and 16, and the amendment to the Bill's title are all in one way or another paving or consequential amendments of amendment No. 10, which is designed to close a serious potential loophole in the arrangements for a clawback levy contained in clauses 17 and 18 of the Bill. In its present form, that levy applies only to land which is transferred directly from a port authority to its successor company. But some of the larger trust ports own subsidiary companies and, even if they do not, may well have the power to establish them. These companies perform a variety of functions, including, in some cases, the owning of land. It is therefore clearly necessary that the Bill should provide for the levy on onward land disposals to apply not just to land owned by the successor company itself but to land owned by the port authority's subsidiaries, which after the transfer will become subsidiaries of the successor company.
The amendments tighten up a possible loophole. I commend them to the House.
Ms. Walley : Suffice it to say that this is just one more example of how in reality we are dealing with a finance Bill rather than a transport Bill. The fact that the Treasury did not understand the difference between the successor companies and the subsidiary companies at the outset of the proceedings of the Bill means that at this late stage this has had to be done to achieve consistency. Nevertheless, we agree that the amendments tighten up the loopholes. Question put and agreed to. [Special Entry.]
Subsequent Lords amendment agreed to. [Special Entry.]
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Lords amendment : No. 9, in page 13, line 13, at end insert "("the levy period")."Mr. McLoughlin : I beg to move, That this House doth agree with the Lords in the said amendment.
Mr. Deputy Speaker : The amendment involves privilege.
With this, it will be convenient to consider Lords amendments Nos. 11, 12, 13, and 15.
Mr. McLoughlin : The principal amendment in this group of five amendments is amendment No. 12, which is intended to close a technical but not insignificant gap in the provisions of the Bill relating to the clawbreak levy. The amendment refers to the meaning of the word "disposal" in the context of clause 17, and it is made necessary because of a discrepancy between the time factor in clause 17 of the Bill--specifically, the levy period of 10 years--and a time factor which is sometimes relevant for determining whether there has been a disposal for the purposes of the Capital Gains Tax Act 1979. This latter time factor may be referred to as the six-year time limit.
The Government have accepted that "disposal" should have the same meaning for clawback purposes as it has for the purposes of the 1979 Act--that is, the Capital Gains Tax Act--and this is expressed in subsection (4) of clause 17. One of the cases where there is a disposal for the purposes of the 1979 Act could, however, have anomalous effects if applied without modifications for the purpose of clause 17. The case in question would be where land or an interest in land was transferred by a successor company to another company within the same group--or, indeed, by a relevant port authority to a subsidiary company at some time before the property of the authority is transferred to a successor company under clause 2 of the Bill- -and then, during the levy period, the company owning the land or interest in land leaves the group.
Question put and agreed to. [Special Entry.]
Subsequent Lords amendments agreed to. [Special Entry.] Lords amendment : No. 14, in page 14, line 13, after "order" insert--
Service centre location |Areas Covered
------------------------------------------------------------------------------------------------------------------------------
Bristol |Avon, Dorset, Somerset, Wiltshire
Cambridge |Bedfordshire, Cambridgeshire, Essex,
| Hertfordshire, Norfolk, Suffolk
Carlisle |Cumbria, Lancashire, Northumberland,
| Tyne and Wear
Crewe |Cheshire, Merseyside, Greater
| Manchester, Shropshire,
| Staffordshire
Nottingham |Derbyshire, Leicestershire, Lincolnshire,
| Northamptonshire, Nottinghamshire
Northallerton |Cleveland, Durham, Humberside,
| Yorkshire (North, South and West)
Reading |Berkshire, Buckinghamshire, East
| Sussex, Hampshire, Isle of Wight,
| Kent, Greater London, Oxfordshire,
| Surrey, West Sussex
Worcester |Hereford and Worcester,
| Gloucestershire, Warwickshire, West
| Midlands
Mr. McLoughlin : I beg to move, That this House doth agree with the Lords in the said amendment.
Mr. Deputy Speaker : The amendment involves privilege. With this, it will be convenient to consider Lords amendments Nos. 17 and 18.
Mr. McLoughlin : This amendment makes it possible for penalties to be imposed where the provisions concerning the clawback levy on subsequent disposals of land are not complied with. I am sure that it will be welcomed by the House.
Ms. Walley : I place on record the fact that this will be subject to affirmative orders in both Houses. We pressed for that in Committee and we very much welcome the amendment.
Question put and agreed to. [Special Entry.]
Subsequent Lords amendments agreed to. [Special Entry.]
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Clause 19
Financial assistance for proposals to maximise employee participation in equity of successor companies
Lords amendment : No. 19, in page 16, line 4, leave out from second "to" to end of line 5 and insert
"have a reasonable prospect of securing that the objective of the proposal is achieved."
7.45 pm
Mr. McLoughlin : I beg to move, That this House doth agree with the Lords in the said amendment.
Mr. Deputy Speaker : With this, it will be convenient to consider Lords amendments Nos. 20, 24 and 25.
Mr. McLoughlin : These amendments are intended to clarify the drafting of one aspect of the provision that the Bill makes enabling port authorities to repay the costs incurred by their management and employees in attempting to buy out the authority's successor company.
It may perhaps be the case that more than one group of a port's management and employees attempt to buy the company and, if that were so, it would clearly be unsatisfactory if the authority ended up providing financial support for several competing bids, one or more of which would, inevitably, be unsuccessful.
Ms. Walley : I do not wish to detain the House any longer on this issue. However, it is important for me to point out that the Opposition would have preferred the option of some involvement of independent advisers. Nevertheless, the amendments represent a tightening up of the measure. We therefore do not intend to oppose the amendments.
Question put and agreed to.
Subsequent Lords amendments agreed to. [Some with Special Entry.]
Clause 40
General interpretation
Lords amendment : No. 31, in page 29, line 44, at end insert-- ("(3) For the purposes of any provision of this Act to which this subsection applies a person employed by a company which is a wholly-owned subsidiary of any company or other body mentioned in that provision shall be regarded as employed by the company or other body so mentioned.
(4) Subsection (3) above applies to the following provisions of this Act--
section 2(3)(c) ;
section 5(3) ;
section 13(3)(b) ;
section 19(3)(b) and (5) ;
section 26(5) ;
section 28(2)(b) and (4) ; and
subsection (2)(a) above ;
(all of which are concerned with participation by employees of a company in ownership of its equity share capital or related matters).")
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