Consultation' rules for £50m Leyland loans
21 March 1975
By Anthony Rowley
There must be consultations with the Government before British Leyland negotiates any "major" pay awards in future. This condition is included in the terms announced yesterday of the £50m of bank loans which the Government is guaranteeing to the motor corporation. Conditions attaching to the guarantee also include the need for consultation with Mr Wedgewood Benn, the Secretary of State for Industry, before BLMC declares or pays any dividends and before the board approves capital spending of over £1m.
Moreover, Mr Benn's approval will be needed before British Leyland undertakes anv " substantial " further borrowing, substantial means around £5m to £7m in this context, or before any material part of the business is disposed of. The corporation also cannot create mortgages or charges on existing assets without official consent.
Lord Stokes, the BLMC chairman, said yesterday that though the corporation had not yet drawn upon any of the government guaranteed bank facilities it expected to do so within the next few weeks, to help to finance its capital expansion programme. At this point the Government conditions would come into force, Lord Stokes said, adding that he did not consider them to be particularly restrictive. With public money coming into the business it was natural that the Government should require "consultation" on factors affecting the group's financial situation.
It was too early yet for British Leyland to know what trade union reactions would be on the clause stipulating the need for government consultation on major pay negotiations, Lord Stokes said. Small, local. level settlements would be excluded from this requirement. BLMC was free to "walk away" from the agreement over bank guarantees any time it liked, provided it was in a position to repay any part of the loans drawn down under the guarantee. However, these guarantees, which are valid up to July 31, are very much a "holding operation" before the Government's making known its longer term intentions.
Lord Stokes said yesterday that the government-commissioned Ryder Report on the corporation should be ready by next week. A letter outlining the terms of the Government bank guarantees to Leyland was sent to the corporation's shareholders and unsecured loan stockholders yesterday after release to the Stock Exchange.
Lord Stokes said: "We have not found any unwarranted interference."
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