|Previous Section||Home Page|
Mr. Stephen Byers (Wallsend): I congratulate my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) on securing this debate. He has understandably concentrated on the effect of RJB (Mining) on the Tinsley site in Sheffield and also raised some wider issues about the role of Richard Budge and the part that RJB (Mining) will play now that it has control of what remains of the English coalfield. I want to address those wider issues.
The House will be aware that on 12 October 1994 RJB (Mining) was named by the Government as the preferred bidder for the remains of the English coalfield. As my hon. Friend the Member for Attercliffe said, the chairman of that company is Mr. Richard Budge. Based on information in my possession, I have to say that there must be serious doubts about whether it was appropriate for the Government, in view of what they knew about the conduct of Richard Budge as a former director of A. F. Budge, to name his company as the preferred bidder.
I understand that Richard Budge was named by Coopers and Lybrand in its report and also in the first report by the official receiver. As I shall later show, there were two reports by the official receiver. The first report named Richard Budge as a person whose conduct was such that an application should be made to the court for him to be disqualified from holding a future directorship in any company. These are serious allegations, which I shall seek to support in my contribution.
We need to be aware that at the time of these events two issues were effectively running in parallel. One was the investigation into the collapse of the A. F. Budge group of companies. In addition, the Government's political imperative was to secure the privatisation of the coal industry. In December 1992, administrative receivers were appointed to the A. F. Budge group of companies and Coopers and Lybrand was appointed to report to the
Column 234insolvency service, which is part of the Department of Trade and Industry. It was to report on the events surrounding the collapse of A. F. Budge and in particular on the liabilities, responsibilities and conduct of individual directors of the A. F. Budge group. The Coopers and Lybrand report was submitted to the insolvency service on 28 September 1993. I understand that that report highlights the conduct of, in particular, three former directors of A. F. Budge and questions their fitness to be directors. One of the three named was Mr. Richard Budge. The insolvency service took time to consider the Coopers and Lybrand report and the official receiver reported on 25 July 1994.
I understand that on that date the official receiver recommended that a report be made to the court under the Company Directors Disqualification Act 1986 applying for three former directors of A. F. Budge, one of whom was Mr. Richard Budge, to be disqualified from holding office as directors of any company. That report was not acted upon. Word had begun to circulate in the Department of Trade and Industry and to set alarm bells ringing in the special unit which had been set up to oversee the privatisation of the coal industry. Everything was put on hold until a decision was taken about who the preferred bidder for the coal industry was to be.
Tenders were submitted in September 1994 and, as we know, on 12 October 1994 RJB (Mining) was named as the preferred bidder for the English coalfield. It is of particular interest that no fallback position was announced at the time. It was agreed that RJB (Mining) should be the one and only company to form the substantive part of the preferred bidder. The Government, however, had a problem: what should they do with the official receiver's report of 25 July? The official receiver was asked to reconsider the position. On 11 November, 14 November and 15 November 1994, he interviewed the three directors named in his original report for disqualification, no doubt to try to find out whether new evidence existed of which he had not been aware before his original report. Mr. Richard Budge was interviewed on the first of those dates. Following those interviews, advice was given by the official receiver to Ministers. On 21 November 1994, the decision was taken to bring disqualification proceedings against just two of those interviewed, and Mr. Richard Budge escaped liability and responsibility. Following that recommendation, on 7 December 1994 a report against the remaining two directors was made to a court for their disqualification as company directors. With one bound, Mr. Richard Budge was free.
Given the Government's commitments to the privatisation of the coal industry, Labour Members will understand why it was so important that some quick solution was found to get Mr. Richard Budge off the hook. In addition to the political imperative, however, he clearly had friends in high places. On no less than seven separate occasions, he met the Minister for Industry and Energy, who is responsible for coal privatisation, to discuss matters relating to that privatisation. Those meetings were all held at important and strategic times: 17 June 1992, 29 June 1992, 1 March 1993, 26 March 1993, 15 April 1993, 15 June 1993 and 7 July 1994. He had access to a Minister that even many Labour Members do not have.
Of course, Mr. Budge has other friends in high places. I am told that people attending Doncaster races on 10 September 1993--I do not know whether you were there,
Column 235Mr. Deputy Speaker--were surprised to see a helicopter emblazoned with the RJB (Mining) logo land in the centre of the race track. Mr. Richard Budge got out, which was not unexpected, given that it was his helicopter, but who was he accompanied by? He was with Lord Wakeham, at that time Leader of the House of Lords and a member of the Cabinet, who was out for a day at the races.
Mr. Paddy Tipping (Sherwood): Does my hon. Friend recall that the noble Lord was called in during the coal crisis, when the Government wanted to close pits, to sort out the problem, and that he chaired a Cabinet committee to resolve the issue? Was he not therefore a man with real influence?
Mr. Byers: My hon. Friend makes an important point. Hon. Members should never forget that it was Lord Wakeham who, when he was a Member of this House and Minister with responsibility for energy, awarded a contract to Rothschild to advise the Government on coal industry privatisation. I shall not discuss the fact that he is now a Rothschild director as that would not be appropriate for this debate.
Clearly, therefore, Mr. Richard Budge is a man with friends in high places. He knows how to operate the system on behalf of RJB (Mining). I was interested to learn that in 1993 he took over Clipstone colliery in Nottinghamshire, that he made a deal, that he effectively reopened it after it had been closed for a fairly short time, and that, as the new owner, he entered into an arrangement with North Nottinghamshire training and enterprise council whereby for every miner he re-employed he would receive a grant of £1,000 for retraining purposes.
In total, in 1993-94, he obtained £150,000 for RJB (Mining) from that TEC. What is of particular interest is that the House of Commons Library informs me that in 1993-94, the same year in which Mr. Budge's company received £150,000 from North Nottinghamshire TEC, he was a director of that TEC.
Many questions need to be answered. The Minister will be pleased to learn that I have just two to add to the list submitted by my hon. Friend the Member for Attercliffe. Will the Minister now publish the Coopers and Lybrand report into the conduct of the former directors of A. F. Budge? Secondly, will he publish the official receiver's initial report of 25 July 1994? Refusal to do so will lead all reasonable people to believe that there is a cover-up and that the Government have something to hide.
All the available information points to this being a shameful and shoddy affair. The issue will not go away. Labour Members will continue to pursue it until we receive some straight answers to those important questions.
Mr. Paddy Tipping (Sherwood): I congratulate my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) on securing the debate. I should like to put on the record my thanks to the Minister for allowing me to take part and for his helpful attitude to questions since he became a Minister at the Department of Trade and Industry only a few weeks ago. His openness contrasts with the difficulties that we have had in obtaining information.
Column 236I wish the people who have bought the newly privatised industry no harm. I regret the passing of the coal industry into the private sector, but I wish the new coal owners well because they have a monstrous task before them. You, Mr. Deputy Speaker, will recall perhaps better than anyone that contracts with the generators run until 1998. Some of us are have real concerns about what the coal industry faces after that. In view of that, I wish the people who own the industry, and more particularly the people who work in it, well and a good future.
I want to raise issues that some of my colleagues have not dealt with and to extend the debate. I remind the Minister that on 12 October 1994 Mr. Richard Budge was named as the preferred bidder in a blaze of glory at the Tory party conference. We also know that in November 1994 he made a bid of £914 million for the three English coal regions. We know that because I have a copy of the presentation that he took round the City.
At the end of November 1994 I wrote to the Chairman of the Public Accounts Committee to say that I was extremely concerned about the bid. It was far in excess of anybody else's bid and I suspected that there would be negotiations to knock the bid down. A few days later I was proved right because the deal concluded for the sale of the coal industry in England to Mr. Budge was £815 million. My hon. Friend the Member for Bolsover (Mr. Skinner) has already asked the relevant question, but I want to reinforce it: how is it that, in only a few days, the value of the coal industry fell by £99 million? Clear questions need to be asked and clear answers need to be given. That is not the end of the matter. We know that the deal that Mr. Budge did with the Department of Trade and Industry through all the brokers was to buy the industry, as miners in Nottinghamshire say, on the never-never. All the other bidders were told that they had to pay cash up front. The deal that was eventually concluded allowed RJB (Mining) to buy the industry over three years with deferred payments. So, as well as the £99 million loss, I calculate that the deferred payments over three years will result in a further loss of £116 million.
Some of my hon. Friends have already pointed out that the preferred bidder was named in October. I find it staggering that the other bidders--a wide range of other people could have bought the English coal industry--were told between October and December to go away and not to keep their financing in place. So, from a very early day, the Government were committed to Mr. Budge. Part of the problem now is that the Government walked down the gangplank with Mr. Budge and, when the going got tough and the sea got stormy, they had no alternative but to jump into the water with him.
These are significant issues and I am delighted that the Public Accounts Committee is looking at these matters. I hope that things will be clarified when the Public Accounts Committee receives the report. My only sadness is that it will be the autumn before we know about this. Many of us were raising concerns about the proposed sale in the autumn of last year and it is bizarre that we can examine the matter only in retrospect. That is one of the reasons why I welcome the debate. I hope that the Minister will be open and honest about the dealings and the relationships with RJB (Mining).
There are other issues that concern me. I have looked carefully at the documents that RJB (Mining) has produced over the years. I was interested to see that in its
Column 237"Pathfinder" prospectus, which was published in November 1994, it says that the company's chief executive, Mr. Richard Budge, received an annual salary of £235,000. For the year after the purchase of British Coal--the present year--his salary will increase to £290,000 plus a £50,000 acquisition bonus. Put another way, that reflects a salary increase of 45 per cent. The prospectus also shows that the remuneration committee of RJB (Mining) will have a discretionary power to pay a performance-related bonus of up to 100 per cent. at the end of 1995 if the company performs well. In the space of just over a year Mr. Budge's salary could increase to £630,000--an increase of 168 per cent. from November 1994.
What galls the miners in Nottinghamshire, Yorkshire and throughout the country--all those who work for Mr. Budge and RJB (Mining)--is the letter that they received in February. Mr. Budge wrote to the work force saying that there would not be a base rate adjustment in pay until March 1998. He justified that in the letter by saying that, because of the alleged difficult and competitive economic climate, the company could not afford to pay more.
It is staggering that miners throughout England who have worked hard and raised productivity by 150 per cent. in recent years as well as producing coal at half the cost of Germany should be told by their new chief executive, "Times are tough, lads, and you will take a pay freeze until March 1998. However, if things go well for me, my salary will increase to £630,000--an increase of 168 per cent."
RJB (Mining) was purchased by Mr. Budge out of A. F. Budge in a management buy-out in February 1992. It is clear that, even before the buy-out A. F. Budge was facing major financial difficulties. One of the things that concerns me as a taxpayer--I hope that the Minister will pursue this point with the chairman of British Coal--is how in 1991 British Coal could make advance payments of £10.5 million to A. F. Budge for an opencast site at Eastpit near Swansea. That is an unprecedented interest-free loan. It has not been possible at this stage to get to the bottom of the matter with British Coal.
Mr. Michael Clapham (Barnsley, West and Penistone): In his research into A. F. Budge, has my hon. Friend come across any contributions to the Conservative party? If so, can he quantify the contributions that have been made over recent years?
We ought to acknowledge that the payment of £10.5 million to A. F. Budge in 1991, according to its then chairman and chief executive, Mr. Tony Budge, kept the company afloat for an extra year. There is no doubt about that. In a sense, A. F. Budge was being looked after by the taxpayer. As my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) has just suggested, we need to examine the relationship between A. F. Budge, Mr. Tony Budge and the Conservative party.
There is no doubt that there are clear links. I understand that, despite his difficulties, Mr. Tony Budge is still the vice-president of the Newark Conservative party. I know from experience that Mr. Tony Budge has raised a great deal of money for the Conservative party through fund-raising events and that he was chairman of an east midlands group of industrialists which also raised money
Column 238for the Conservative party. Although his company was looked after with £10.5 million, it is clear that he had previously been looking after the Conservatives.
My hon. Friend the Member for Wallsend (Mr. Byers) talked about the process of A. F. Budge going into liquidation and asked a number of specific questions about the timetable of events. When did Ministers receive reports from Coopers and Lybrand and then from the Official Receiver and when were decisions taken to prosecute former directors of A. F. Budge? I find it very difficult to understand why three directors of A. F. Budge--Mr. Tony Budge, his wife, Janet Budge, and a finance director, face court action whereas Mr. Richard Budge does not.
My principal concern relates to the loans that Richard Budge had from the companies with which he has been associated. I have no doubt--indeed, it is documented in the reports that Ministers have received from Coopers and Lybrand--that Mr. Richard Budge had a loan account of £400 million with A. F. Budge.
People like me wanted to know what a loan account is. In simple terms, it means borrowings from a company. One of Mr. Richard Budge's borrowings from A. F. Budge was £12,500 for the hire of a marquee for a family party. In addition, on 30 March 1991, a payment of £10,000 in petty cash was made to him. That is extremely disturbing behaviour, and I believe that Coopers and Lybrand and the liquidators found such payments distressing. As my hon. Friend the Member for Wallsend said, Mr. Richard Budge was criticised in the reports. On a D2 form, it was said that Mr. Richard Budge's behaviour made him unfit to be concerned in the management of a company.
The prospectus issued by RJB Mining in the autumn of last year contains a paragraph which states that Mr. Richard Budge paid back £325,000 to the liquidators, without admitting any liability, in order to pay the loans that he had had with the company. I believe that that payment is in breach of the Companies Acts and that Coopers and Lybrand and the draft report produced by the Insolvency Service took the same view.
There appears to be a record of pathological behaviour because, having bitten once, Mr. Richard Budge bit again. The prospectus also contains the following phrase:
"During the financial period ended 31 December 1992, the company entered into credit transactions with R. J. Budge. In so doing, the company did not comply with the provisions of the Companies Act. The maximum aggregate value of these transactions was £70,442". Mr. Richard Budge had a loan account of £400,000 with A. F. Budge. He cleared it at the insistence of the liquidators but, as his own company prospectus makes clear, he went on to have a further loan account with his new company amounting to £70,000 in breach of the Companies Acts.
Ministers cannot say that they were unaware of such behaviour as the documents are a matter of public record. Indeed, I would go further and remind the Minister that, in December last year, I wrote to his colleague, the President of the Board of Trade, pointing out a raft of issues that led me to be concerned about the fitness of Mr. Richard Budge to run the deep coal industry.
I wrote to the President of the Board of Trade before the contract to buy the industry was signed on 24 December. I have now written again, asking him to produce a detailed timetable of when reports were
Column 239received from the liquidators, who was involved in making decisions, what advice Ministers received from their civil servants and whether it is true that the DTI unit involved in selling the coal industry was holding meetings in another part of the building with the Insolvency Service to consider what might happen to Mr. Richard Budge?
My hon. Friend the Member for Sheffield, Attercliffe talked about the ingenious financing that enabled the good to be cherry-picked by Mr. Richard Budge's company and the liabilities to be left elsewhere. Let me draw the Minister's attention to a company called Moira Pottery based in Leicester. It was a loss-making company acquired by A. F. Budge which was interested not in pottery but in the opencast reserves that lay underneath the company's premises. We now know, because the record is at Companies house, that when RJB Mining was bought out of A. F. Budge, Moira Pottery was acquired for £1. It was subsequently valued at £1 million. Accusations are being made that there were attempts to transfer A. F. Budge's prime assets out of the company and into a new company, RJB Mining.
People are extremely concerned about those issues. The time has now come for the Minister and his colleagues who were there before him to come clean. I am delighted that the Public Accounts Committee is looking at the matter. I regret that it will take time to report. Many of us want to see a strong, deep coal industry in this country. The men who work in the industry deserve that. For that industry to succeed, it is important that the whole tale is told and that all the secrets are let out of the cupboard so that the coal industry can go forward, into a new future without skeletons. There are enough skeletons in the history of the coal industry without there being more holding it back.
The Parliamentary Under-Secretary of State for Industry and Energy (Mr. Richard Page): May I start by congratulating the hon. Member for Sheffield, Attercliffe (Mr. Betts) on not only his skill in securing this Adjournment debate, but on somehow managing to get it into a time frame in which half an hour has extended to something like two and a half hours? I think that that is only right, however. It is a complicated subject and it is only right that we discuss it and try to clear up some of the misunderstandings and dispel some of the conspiracy theories that seem to be puzzling and worrying Opposition Members.
May I say right at the start that I well understand the concern of the hon. Member for Attercliffe over the failure of the Sheffield city airport project to go ahead. I do not want to damage his political standing in Sheffield. Indeed, the hon. Gentleman and I sat side by side and watched the "Panorama" programme on which he appeared. I thought that he gave a splendid presentation in which he represented, quite justifiably, the concerns of his constituents. Of course the "Panorama" programme had been so edited that it was as jerky as a silent first world war film. But that is by the by. Before I address the questions raised, I would like to make one or two general points regarding coal privatisation. The Labour party continues to suggest that coal privatisation has been a mistake and a failure. The hon. Member for Bolsover (Mr. Skinner) is not present at
Column 240the moment. He came into the House, issued one of his usual rants and has since disappeared. I regret to say that he, among others, will not accept the reality that privatisation has been a considerable success. We set out a clear objective to achieve the largest economically viable coal industry in the long term and to ensure value for money for the taxpayer. As the House knows, the sale was successfully concluded in December, and it was far from being the failure predicted by so many Opposition Members.
Mr. Clapham: The Minister must realise that, in 1993, before the coal closure programme was enacted, there were 50 collieries. At the present time, there are some 28 collieries, which were previously part of British Coal, and there are a number of other smaller collieries, which have always been outside the public sector. Those 50 collieries employed 50,000 men. At the present time, around 6,000 men are employed in the industry. In other words, we have seen the loss of 44,000 jobs since 1993. How can he justify that as a success? The other thing that the Minister must remember is that the remaining 28 collieries are high-technology collieries, which were transformed by the public purse. Of course productivity in those collieries is high--purely and simply because of the mining technology which was paid for by the taxpayer.
Mr. Page: I do not want to get diverted too far down that route. Otherwise, we would have to be here, if we were allowed, until about 12 o'clock. I must delicately point out to the hon. Gentleman that, if he looks at the history of the coal industry, he would find that his party has closed more mines and put more miners out of work than any other. I commend his courage in allowing me to draw attention to that point.
We have, as I say, created a successful industry and in creating that successful industry, we have received proceeds just short of £1 billion, which is a significant boost for public finances. Competition has been increased, with the transfer of former British Coal mines to a number of companies. RJB (Mining) now operates or is developing a total of 20 collieries, as the hon. Member for Barnsley, West and Penistone (Mr. Clapham) said, across central and northern England--more than British Coal operated or was developing at the time of privatisation. Coal Investments is operating or developing half a dozen collieries. Scottish Coal operates another significant deep-mine complex, and there are management and employee buy-out teams at Tower colliery in south Wales and Hatfield in Yorkshire. Between them, those companies have some 29 former British Coal collieries, twice the number that it had been claimed would survive. In the new private sector, companies are making a success of their business. New customers are being found. British Steel has bought British-mined coal from Tower colliery in place of imports for the first time for many years. Tower colliery is even selling coal to France. New employment opportunities are opening up with the re-opening of collieries that have been on care and maintenance and the new apprenticeship schemes offer by RJB (Mining). Productivity is improving and costs are coming down.
I shall now talk about the case of RBJ (Mining), and I shall start with Sheffield airport, on which the hon. Gentleman legitimately spent so much of his time. As I said earlier, he has been assiduous in pursuing the matter
Column 241on behalf of his constituents, and I already understand the acute disappointment that he must feel because the Sheffield airport project has not gone ahead.
The hon. Gentleman started by expressing concern about the splitting of the responsibility for providing the infrastructure for an airport at Tinsley, Sheffield, and about the Government's role. I shall outline some of the essential facts, and do my best to answer as many as I can of the questions that have been asked. But at one stage in the debate the questions were coming like machine-gun bullets, and I shall certainly not be able to answer all of those. However, I assure the hon. Gentleman that I shall read the Official Report of the debate afterwards. I hope that Hansard has faithfully recorded all the points that he made, and I shall return to him and let him have the details about all the questions that I do not cover tonight.
In May 1990 A. F. Budge (Mining) Ltd.--which subsequently became RJB (Mining) Ltd.--and A. F. Budge Ltd. contracted with Sheffield development corporation for the construction and running of an airport at Tinsley Park, Sheffield, part of which was then being worked as an opencast coal mine by A. F. Budge (Mining) Ltd. under a contract from British Coal.
Such a disposal of a large area of land for what might be described as an unusual use required the consent of the Secretary of State for the Environment. As the hon. Gentleman will know from the answer given to him on 9 May--he has already referred to it--such approval was given. Subsequently several variations in the terms and time scales provided for in the contract were agreed between the parties. During 1991 discussions took place to separate the Budge mining operations run by Mr. R. J. Budge from the principal Budge construction and other companies run by his brother, Mr. A. F. Budge. That involved, among other things, the formation of a new company--Sheffield Airport Ltd., a subsidiary of A. F. Budge Ltd., the holding company of the Budge Group of companies. Those discussions were concluded in February 1992, when there was a management buy-out, led by Mr. R. J. Budge, of the coal mining operations.
The terms of the airport contract for Tinsley Park were varied, releasing A. F. Budge (Mining) Ltd. and bringing in Sheffield Airport Ltd., which, with A. F. Budge Ltd. as surety, was to undertake the development--although it was my understanding that the intention remained that A. F. Budge (Contractors) Ltd., another A. F. Budge Group company, would carry out the work.
Let us be clear about three things. First, the restructuring of the A. F. Budge Group and the disposal of the coal mining operations were the subject of detailed consideration and reports by solicitors and accountants acting for the parties. The agreements were crawled over by accountants and solicitors.
Secondly, the variation of the Tinsley Park airport contract, releasing A. F. Budge (Mining) Ltd., was agreed to by the Sheffield development corporation. The hon. Member for Attercliffe asked many questions about who had agreed to this and who had agreed to that. I must remind him that Sheffield development corporation was not an innocent party standing on one side. It was in a position to make many of those inquiries and to find out many of the answers before going ahead.
Thirdly, as the hon. Gentleman will also know from the answer given to him on 9 May, although the Department of the Environment was aware of the variations of the
Column 242contract, it was not necessary for it to give its approval or otherwise to be involved, as the holding company, A. F. Budge Ltd., continued as surety for the performance of the contract. I am not aware that the administrative receivers or the liquidators for the A. F. Budge Group of companies have sought to challenge the transaction itself.
To complete the history--
Mr. Betts: The Minister referred to the fact that theA. F. Budge Group had a surety for Sheffield Airport Ltd. and the provision of the airport. That does not answer the question about the splitting of responsibilities for mining and making a profit and building the airport and incurring expense. The letter from the office of the chairman of British Coal which I read out said that those two matters were linked and that agreements were drawn up.
Mr. Page: I am unaware of the contents of the letter that the hon. Gentleman received from British Coal, but the information which he has given suggests that these agreements were not linked and that the Sheffield development corporation agreed to the particular splits which took place. A degree of responsibility for this matter must lie with the Sheffield development corporation.
I wish to complete the history of Tinsley Park, which I recognise is most disappointing to the Sheffield development corporation and the people of Sheffield. The administrative receivers were appointed in relation toA. F. Budge Ltd. in December 1992, and subsequently in relation to other A. F. Budge Group companies.
Clearly the A. F. Budge Group was not in a position to undertake any construction on the site. In March 1993, Sheffield Airport Ltd.--which had no other business assets--formally notified the Sheffield development corporation that it was not able to proceed with the development. Discussions took place between the corporation and the administrative receivers to try to find a solution, but none could be found. The site was eventually handed back to the corporation. Sheffield Airport Ltd. was wound up by the courts in October 1993, with the corporation claiming payments under the contract relating to the purchaser of an area of land adjoining Tinsley Park which the A. F. Budge Group intended to develop as a business complex.
I am told that the notified liabilities of that company total some £407,000, although further claims could come under the contract. The minimal assets of £10,000 are likely to be absorbed by the costs of winding up. The hon. Member for Attercliffe has asked for some form of inquiry, but he will know from the answer given to him by the Under- Secretary of State for the Environment on 9 May that that Department has no plans for a public inquiry into the contract relating to the Tinsley Park airport development.
With regard to the A. F. Budge Group, detailed consideration was given to the restructuring which took place in February 1992, including the disposal of the mining operation by that group, the administrative receivers and the official receivers. That consideration was taken into account in their reports to the Insolvency Service under the Company Directors Disqualification Act 1986. It was also taken into consideration in the service's decision in relation to disqualification proceedings.
Column 243A few points were raised over the compaction of the site at Tinsley Park. The hon. Gentleman is concerned about what happened to the £1 million paid by British Coal for compaction once the mining had finished and the site had been prepared for the construction of the airport. It is my understanding that the payment to A. F. Budge (Mining) Ltd. went into the A. F. Budge Group account, and was used with other group funds, to finance on-going group operations. The hon. Gentleman asked what checks were carried out on financial liability, but that is a commercial matter for British Coal. For accounting purposes, A. F. Budge (Mining) Ltd. was thus shown as owing the £1 million by A. F. Budge Ltd. on an inter-company account.
When the A. F. Budge Group was restructured and its mining operations were bought out in February 1992, Sheffield Airport Ltd. took over some of the obligations of A. F. Budge (Mining) Ltd. in relation to the airport development contract. The inter-company account of £1 million shown as due to A. F. Budge (Mining) Ltd. byA. F. Budge Ltd. was transferred to Sheffield Airport Ltd. As far as I am aware, no cash changed hands. I am sure that the administrative receivers of the A. F. Budge Group and the liquidators of Sheffield Airport Ltd. considered any questions raised about the use of those moneys.
One of the questions raised in the debate dealt with the tender price.
Mr. Betts: I have been listening with interest to what the Minister had to say about compaction. He has not said why the obligations to guarantee putting right the defects in compaction work five years after that work had been completed were novated to Sheffield airport, which seems a strange company to take on that responsibility, and not transferred with the novation of the contracts on opencasting to RJB (Mining), which would have seemed a more logical and legitimate place for them to rest.
Mr. Page: I cannot say why it went that way. I have had no evidence to suggest that the compacting has not been done correctly. If it has not, in the first instance, it will be a matter for British Coal.
The reduction in the bid by RJB (Mining) was made out to be some sort of back-door deal, but it was not. The tender price was adjusted as envisaged in the information memorandum issued by Rothschilds. The adjustments reflected developments since tenders were submitted in September 1994--or information that was not available to bidders when they submitted their tenders. The adjustments would have been available to any other preferred bidder. As I said, even after those adjustments, RJB's bid was considerably higher than the others. The hon. Member for Wallsend (Mr. Byers), beguilingly, tried to suggest that, if I could release the reports of the official receivers and Coopers and Lybrand, I would be a decent, open and honest sort of fellow. I am afraid that this is where I am going to be a constant disappointment to the House because those reports are confidential and come under the Company Directors Disqualification Act 1986. If they were not confidential, in future many people would be reluctant to give
Column 244information in such cases and the truth of the operations of one or two companies would not, therefore, come to hand and the correct decisions might not be made.
Mr. Page: The straight answer is that I do not know. I served for seven years on the Public Accounts Committee and we were most assiduous in trying to get information out of aspects of Government when we thought that we could find out where money had been wasted or spent incorrectly. I am afraid that that is a question that the hon. Gentleman will have to direct to the Comptroller and Auditor General.
The hon. Member for Wallsend tried to work up some sort of conspiracy theory, suggesting that the Government were trying to help one of their friends--all that about secret meetings and Ministers getting involved with people who are involved in the industry. It would have been a peculiar way of doing it and an expensive form of conspiracy if, after one of those conspiratorial meetings, the gentlemen involved paid £200 million plus more than the nearest bidder. The hon. Gentleman also asked me about a timetable and perhaps I can help him a little.
On 9 December 1992, the first A. F. Budge Group company was put into administrative receivership. On 28 September 1993, administrative receivers submitted conduct reports on directors. On 25 July 1994, the official receiver submitted reports of initial investigations, including considerations of administrative receivers' conduct reports. The Treasury solicitors were instructed and counsel was engaged to advise on preparation of the case. Administrative receivers were employed to undertake further inquiries at the direction of the official receiver.
On 12 October, RJB (Mining) was told that it was the preferred bidder. On 21 November, the Insolvency Service decided to instigate proceedings against the three directors, who have already been mentioned, and the decision was endorsed by the Minister. But, as has been made perfectly clear, proceedings were not taken against Mr. Richard Budge and other directors. On 7 December, summonses were served against those three directors and, on 8 February this year, the first hearing of application in the case was outlined to the court. The hearing was then adjourned to a second formal hearing.
Mr. Tipping: It is helpful to know that timetable. I thought that I heard the Minister say a few seconds ago that counsel was instructed to take the prosecution forward. Was legal advice taken from just one counsel, or was it taken from a variety of sources?
Mr. Byers: The timetable reflects the sequence of events that I outlined. However, the important point is that we had the report from the official receiver on 25 July. Will the Minister confirm that that report recommended that disqualification proceedings should be taken against Mr. Richard Budge because he was not a fit person? On
Column 24512 October, he was then declared to be the preferred bidder. He was re-interviewed on 11 November and, lo and behold, on 21 November he was suddenly free and disqualification proceedings were not to be taken against him. That is my interpretation of events. What recommendations did the official receiver make on 25 July concerning Mr. Richard Budge?
Mr. Page: As I mentioned earlier, the report is confidential and I cannot reveal its contents. As I was saying, the hon. Gentleman could draw one or two conclusions from the timetable and details that I have given, which any prudent politician would deduce.
Mr. Betts: May I help the Minister on that point? He may be trying to tell Opposition Members that if the official receiver's report in July did not recommend that action should be taken against Mr. Richard Budge, there would be no need for further interviews.
Mr. Page: Obviously, the hon. Gentleman can deduce things. That is entirely up to him. It is his privilege. I see nothing peculiar in the various representatives in this matter undertaking a series of interviews with a number of people who have been involved in this matter. In no way does it imply a crime, irresponsible act or shortcoming.
The Department started out with a clear objective to return the British coal mining industry to the private sector to secure the largest economically viable coal industry in the long term while ensuring value for money for taxpayers. That has brought significant improvements. One or two Opposition Members conveniently forget that, since 1979, the coal industry has had stuffed down its throat £19 billion of taxpayers' money. I look forward to the day when it starts to pay some tax back to the people of this country.
Question put and agreed to.
Adjourned accordingly at twenty-four minutes past Nine o'clock.
|Written Answers Section