Oral Answers to Questions

Michael Fallon Excerpts

Thursday 24th October 2013 Commons Chamber

[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

Our overarching objective is to put Royal Mail in a position to be able to deliver the universal service on a long-term and sustainable basis. When considering value for money, we will assess the sale proceeds together with the long-term value of the taxpayers’ retained stake in the business and the reduced risk to the taxpayer of a stable company with access to private sources of capital.

[Clive Efford]

The shares were sold at £3.30 each and this morning they are selling at £5.32. Does the Minister agree that the taxpayer got a raw deal in the share sale, and does he accept full responsibility?

[Michael Fallon]

It is not unusual to see some share price volatility in the immediate aftermath of a sale. Let us be clear: this sale was popular, oversubscribed and successful. When the Labour Government tried to sell Royal Mail, they failed.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

Will the Minister tell us how much money was paid to Lazard for so comprehensively undervaluing Royal Mail?

[Michael Fallon]

The fees paid to the Government’s advisers will be disclosed in the normal way to the National Audit Office, which is of course looking at this sale as they looked at the Northern Rock sale, but they compare favourably to the fees paid to advisers by the Labour Government in the sale of QinetiQ 10 years ago, when 10 senior managers were allowed to walk away with £107 million and no shares were sold to the public.

[Ian Murray (Edinburgh South) (Lab)]

The Minister claimed that value for money for the taxpayer was central to the Government’s fire sale strategy for the national institution that is Royal Mail. Given that many investment banks valued the company at £1.7 billion more than the sale price, that the sale was oversubscribed 20 times over and that the share price has steadily risen to more than 60% of its initial value, why did the Minister reject raising the price range when he knew the offer was oversubscribed? Does the Minister agree with the Secretary of State that the loss of more than £750 million to the taxpayer is froth and ill-informed?

[Michael Fallon]

It is far too early to judge the long-term performance of the Royal Mail share price. With any initial public offering there will be volatility in the price and it is too early to make a judgment. As far as the banks are concerned, a whole number of banks were consulted on the value of Royal Mail. The value established was, I think, around the mid-point of the range of the advice we received.

[Peter Aldous (Waveney) (Con)]

15. What steps his Department is taking to promote regional growth.

[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

The Government believe that local businesses and civic leaders are best placed to understand what drives growth in their area. Resources available to local enterprise partnerships have been increased to at least £20 billion until 2020-21, and LEPs will be able to access funding and powers to support growth through local growth deals. Furthermore, the regional growth fund is projected to deliver more than 500,000 private sector jobs, leveraging in more than £14 billion of private sector investment.

[Peter Aldous]

The Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Great Yarmouth (Brandon Lewis), and I, along with 12 other colleagues from Suffolk and Norfolk, wrote to the Minister earlier this week emphasising the advantages for promoting growth that assisted area status for Lowestoft and Great Yarmouth will bring to the two counties. Will my right hon. Friend give full consideration to the strong and compelling bid submitted by the New Anglia local enterprise partnership?

[Michael Fallon]

I certainly undertake to do that. I have seen my hon. Friend’s letter, signed by several colleagues, and I have also written this week to all Members setting out the benefits of assisted area status and explaining the process and timetable for revising the map for the period 2014-2020.

[Caroline Lucas (Brighton, Pavilion) (Green)]

16. What steps he is taking to promote provision of apprenticeships.

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[Julie Hilling (Bolton West) (Lab)]

The Secretary of State has spoken proudly about the new businesses that have started up, but can he tell us how many businesses closed last year, and how many jobs were lost as a result of those closures?

[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

I shall be happy to write to the hon. Lady with the number of deregistrations, but overall there are more businesses being created than are being closed. We have, I think, 400,000 more new businesses than we started with two and half years ago.

[Fiona Bruce (Congleton) (Con)]

T8. What steps are the Government taking to address skills gaps, create jobs and increase productivity by improving the information given in schools about vocational job opportunities, particularly local ones?

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[Mr Mark Prisk (Hertford and Stortford) (Con)]

In the past three years, the UK car industry has gone from strength to strength, but there is always more to do. Will the Secretary of State tell the House what further work is planned, in conjunction with the Automotive Council, particularly with regard to new engine and powertrain technologies?

[Michael Fallon]

Let me first pay tribute to my hon. Friend, who had responsibility for this industry in the Department for three years. The automotive strategy, published earlier this summer, included a focus on the new automotive investment organisation to attract more suppliers into the UK, work to tackle the skills base by recruiting nearly 2,000 additional graduates into engineering, and further work to strengthen the supply chain throughout the industry.

[Paul Blomfield (Sheffield Central) (Lab)]

The Secretary of State will know that there is serious concern among our universities about many of the provisions of the Immigration Bill and their impact on international student recruitment. What discussions has he had with universities on the issue and what representations has he made to the Home Office?

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

I understand that in 2014-15 the local LEP is going to have a sizeable budget to distribute for infrastructure. Will the relevant Minister explain how we can access that budget and what the criteria will be?

[Michael Fallon]

Local enterprise partnerships have been invited to submit their growth plans not simply for the first year of devolved budgets, which is 2015-16, but for the expenditure of structural funds—both regional funds and social funds—from July next year for the next seven-year period. We will examine each of the local growth funds and work with individual LEPs on particular growth deals to suit each area.

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[Ian Swales (Redcar) (LD)]

As the chemical industry is Britain’s leading exporter, I warmly welcome this week’s launch of the chemicals growth partnership. Will the partnership convene specially to discuss the issues presented by Grangemouth?

[Michael Fallon]

Despite the serious news about Grangemouth, the sector as a whole remains optimistic about, in particular, the potential for future growth. The launch this week focused on energy costs, innovation and supply-chain development, and the partnership has published an action plan, which I know my hon. Friend has seen.