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Sir Michael Spicer: The Minister mentioned the special share, which he said would be only a temporary measure to ensure that finances were properly sorted out and that any benefits went to the taxpayer. However, the

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special share is given much greater emphasis in the consultation document than the Minister implied. The document states:

The document details a whole list of considerations that have nothing to do with the innocent explanations given today by the Minister, but everything to do with keeping DERA in the semi-public sector--which will create not only distortions, but great concerns for our United States allies. I hope that he will deal with that matter, which was a very important aspect of my speech.

Dr. Moonie: The hon. Gentleman makes a perfectly fair point. As the previous Government--and I, as an Opposition Front Bencher--learned very well in the other privatisations, special shares are difficult to operate in practice. Particularly in the case of AEA Technology, however, special shares operated perfectly adequately. Special shares are intended to be a means of facilitating the transition from the public sector to the private sector, to give the organisation time to bed in and to ensure that the Government's interests are properly protected. I am quite happy to examine the issue that he has raised and to write to him more fully--whereupon I hope that I shall be able fully to alleviate his concerns.

Special shares have to be constructed quite carefully, but I see no difficulty in doing that. That has been done very frequently in the past, although, I accept, with varying success. In the best circumstances, and certainly in the short term, special shares have worked very well in protecting the Government's interests.

There has also certainly been debate in Europe on the validity of special shares. I can tell the hon. Gentleman that discussions have already been held with the European Commission on the special share, and that there has been no indication that they are regarded as unacceptable. Although we would obviously explore the issues in more detail following any decision by Ministers, the provision of such shares has been effectively enforced in the past. Quite honestly, I think that they could be enforced perfectly adequately for new DERA.

I accept that the hon. Gentleman is concerned about the matter, but I think that his concerns are unfounded, and that there has been adequate experience in the operation of special shares to allow us to do it adequately in this case.

Mr. Alasdair Morgan (Galloway and Upper Nithsdale): What would happen once the assets were transferred to new DERA? Recently, at the DERA establishment at West Freugh, in Wigtownshire, live cluster bombs were dropped in Luce bay. I believe that the

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West Freugh establishment is destined to be transferred to new DERA. Once DERA is transferred to the private sector, who would undertake the continuing responsibility for looking after ordnance that has been dropped and will be cemented in Luce bay?

Dr. Moonie: That is a good point. The matter is part of my responsibilities but, frankly, I cannot give the hon. Gentleman an adequate answer at present. I will be happy to write to him to explain the position more fully. It would be improper of me to give him an off-the-cuff answer that might well be, at best, a half truth. I will certainly look into the matter and write to him about it.

In conclusion, as the time is marching on, the proposals put forward in April represent an imaginative way ahead.

Sir Michael Spicer: I am sorry, but I must press the Minister on relations with America. Do these proposals meet with the approval of the Americans? That is central to the issue that I was trying to raise.

Dr. Moonie: The hon. Gentleman is right. As far as the Ministry of Defence is aware, our proposals meet the concerns of our partners. They have been discussed with them--that includes the United States.

The MOD will be able to form effective partnerships in the future, to draw on the best scientific capability from the public sector, the private sector, academic interests and our international allies. New DERA, along with the rest of industry, will be a key part of those partnerships, but it will also provide wider benefits to the United Kingdom by spinning out new technology to be exploited commercially and to contribute to wealth creation in the UK. Those partnerships offer the best way forward for the organisation, they give us the best of both worlds and I certainly think that they will be a success.

Sir Michael Spicer: The Minister must give some evidence about the American relationship. All the evidence that I have produced and that has come through from America--both anecdotally and from people coming back from DERA--shows that at desk level there is serious concern about the massively important issue of co-operation on technology and about scientists getting together. The Government cannot blandly state that the Americans are happy. The Minister must give some further indication--some evidence.

Dr. Moonie: It is not normal for a Minister to have to give an assurance that the information that he is giving is truthful. On this occasion, that is exactly what I am saying. If the hon. Gentleman wishes me to reply more fully, I will do so, but I do not have time tonight.

Question put and agreed to.

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