INDUSTRIAL REORGANISATION CORPORATION

HC Deb 01 February 1967 vol 740 cc629-61

9.39 p.m.

Sir Harry Legge-Bourke (Isle of Ely)

It will help the House if I define at the outset the matter to which I wish to call attention. It appears on page 19 of the Supplementary Estimates, 1966–67, under Class IV, Vote 25. This is the first time that the House has ever been asked to vote under this heading because what we are asked to do here is to approve the voting of £5 million to the new Industrial Reorganisation Corporation. At the time when these Supplementary Estimates were printed and introduced, on 30th November last year, the Bill setting up the Industrial Reorganisation Corporation was still before Parliament, and we therefore have the asterisk and note on page 19 saying that, The whole of this sum is subject to the passage of the Industrial Reorganisation Corporation Bill now before Parliament. The Bill received the Royal Assent on 21st December last year. This is the first time we have had an opportunity to ask what is being done by the Corporation, how the money will be spent, for what purpose, and how the Corporation is being administered. It is therefore appropriate that, this being a new charge, we should also have a new Minister of State to reply. I shall have the whole House with me if I begin by offering my sincere congratulations to the hon. Member for Manchester, Cheetham (Mr. Harold Lever), now Joint Under-Secretary of State for Economic Affairs. I assure him straight away that I do not intend to imitate him in his great art of filibuster.

Nevertheless, I am sure that he will agree that there is a number of matters of considerable importance under this heading. Some very important statements have been made about the work of I.R.C., and I hope that this debate will give the Under-Secretary of State an opportunity of stating what the Departmene of Economic Affairs really intends by those decisions, and what will be the way ahead for the Corporation.

In dealing with this matter, the method I propose to adopt is to examine it under four different headings: first, the Ministerial responsibilities, in so far as they exist; secondly, the decision which has been announced to call for an inquiry into the telecommunications industry, particularly relating to its relationship with the General Post Office; thirdly, to deal with the statement made last month about the Rootes-Chrysler tie-up; and fourthly, to suggest one or two things we should bear in mind as to the way we encourage the I.R.C. in its work.

On the Second Reading of the Bill, when we were discussing whether or not we should have an Industrial Reorganisation Corporation at all, I had many misgivings. But it would now be more profitable if I accept that it exists; it is now under way, and what we should all seek to do is to ensure that it carries out its duties competently and with confidence.

I hope that as a matter of illustration I shall be allowed to draw one small analogy from Greek mythology. There was a time when there was a take-over bid for Europa. On that occasion Zeus disguised himself as a bull and took Europa for a ride from Phoenicia to Crete, where she became the mother of Minos, Rhadananthys and Sarpedon.

The take-over bid for the I.R.C. which has happened since the ink was hardly dry on the Royal Assent was scarcely a take-over bid—there was not much bidding about it; there was a grab of I.R.C. rather more rapid than that which Europa had to experience. Before long, poor I.R.C. had horrible visions of being strapped to a pillion, driven very fast by a "whizz kid", in the shape of the Minister of Technology, and then beetling back to Millbank Tower in an attempt to beat even the speed of the "ton-up boys" on their way back from Brands Hatch on a Sunday evening.

That has very considerably disturbed the confidence of all of us in some of the assurances given when the I.R.C. was first established. It was quite clear throughout all the stages of our debates on the Bill that the Department responsible to Parliament for the activities of the Corporation was to be the Department of Economic Affairs. Instead, we have seen one of the biggest decisions that the Corporation has become involved in—the Rootes-Chrysler takeover bid—being announced in this House by the Minister of Technology.

Why was that statement made by the Minister of Technology instead of by the Secretary of State for Economic Affairs? We have had the great pleasure of reading an interview with the Minister of Technology, reported by Mr. Ian Coulter in the Sunday Times of 22nd January. This was a most interesting report, because one of the most important things that the right hon. Gentleman had to say was: … when you are talking of I.R.C. you are not talking of the Government you are talking of a public merchant bank in a sense which is free to operate and is much more flexible in its approach than any Minister can be in his approach to industry. That statement caught my fancy. I was not a member of the Standing Committee which considered the Act but I have studied carefully what the then Minister of State, Department of Economic Affairs, the hon. Member for Edmonton (Mr. Albu) had to say about the Corporation in Committee. He said: … we have to face the fact that the purpose of the Corporation is not the same as that of a merchant bank. It is to be very active in seeking out and trying to persuade others of the desirability of rationalisation through the formation of mergers."—[OFFICIAL REPORT, Standing Committee E, 27th October, 1966; c. 164.] There has been confusion about this from the beginning, and, strangely enough, reference was made to the Corporation as though it were to be a merchant bank by the Joint Under-Secretary of State for Economic Affairs, the hon. Member for Cheetham, when, as a back bencher, he spoke on Second Reading of the Act. He said: Hon. Members opposite agree with the purposes set out in the Bill but object to our having a State merchant bank to assist in financing them."—[OFFICIAL REPORT, 19th October. 1966; Vol. 734, c. 290.] Who is right among these Ministers? Is it the Minister of Technology, supported, in advance of office, by the Joint Under-Secretary of State? Or is it the hon. Member for Edmonton, the former Minister of State, Department of Economic Affairs? They cannot all be right simultaneously. If I am any judge of this matter, I would say that any company today going to see the Corporation would probably be well advised to take its merchant bankers with it. They would not regard the Corporation as a merchant bank. If the Corporation is to be turned into a merchant bank, it will be impossible for it to organise itself on a really economic basis and keep its staff to the minimum.

I believe that it was the intention—and that it was said during Committee stage and perhaps on Report stage—to keep the Corporation within as small a limit as would enable it effectively to do the job. If we are to turn it into a merchant bank, it will need 10 times the staff that it has today, if not more. I hope we can have this matter clarified.

I sympathise to some extent with the Joint Under-Secretary of State in that this is the first time that he is replying to a debate as a Minister and he is having to defend a Minister who is not in his own Department. That is bad luck and I do not blame him for it. But the "whizz kid" in the Ministry of Technology has to be restrained and I fully support the view expressed by Mr. Patrick Hutber, in the Sunday Telegraph last weekend: One of the most distasteful practices of politicians is to react to events with a hasty expedient, and then erect it into a principle. That is what the Minister of Technology did. He erected the special need and the way it was fulfilled over the Rootes-Chrysler affair into a great principle and for a short time he reigned as the king of all principles. I gather that the reign was short-lived and that now the Secretary of State has reasserted his authority. I hope that the Minister of Technology is not going to go blundering in on this front again.

Nevertheless, we have to recognise that in the original White Paper—Cmnd. No. 2889, published in January last year—which preceded the introduction of the Industrial Reorganisation Corporation Bill, which is now an Act, on pages 3 and 4 at paragraph 9 we read: The Corporation will co-operate with the Ministry of Technology". We all expected that to happen, but we did not expect this runaway elopement, or attempted elopement, by the Minister of Technology with the Industrial Reorganisation Corporation. I hope that the good lady, in her new establishment, is now happily ensconced, and is quite confident as to who is really her master, in so far as she has a Departmental master at all. So much for the differences between Ministers on this matter.

The power of the Secretary of State over the Corporation is very clearly set out in Section 2(1,b) and subsection (5) of the Act. I think it is important that we should recollect what the Act says. Section 2 starts by saying: The Corporation may, for the purpose of promoting industrial efficiency and profitability and assisting the economy of the United Kingdom or any part of the United Kingdom,— (a) promote or assist the reorganisation or development of any industry; or "— and this is the important sub-paragraph— (b) if requested so to do by the Secretary of State, establish or develop, or promote or assist the establishment or development of any industrial enterprise. What has happened over the Rootes-Chrysler business has happened as a result of the Secretary of State's exercising those powers under Section 2(1,b). What has happened over the telecommunications issue has happened under subsection (5). In other words the Secretary of State may, according to subsection (5): … after consultation with the Corporation, give to the Corporation directions of a general character as to the exercise and performance by the Corporation of its functions, and it shall be the duty of the Corporation to give effect to any such directions ". I should like some clarification on this. In the exercise of the Secretary of State's powers, am I right in assuming that the Rootes-Chrysler exercise comes under Section 2(1,b), whereas the telecommunications exercise comes under subsection (5)? That is my understanding of the matter at the moment.

Perhaps it might be appropriate if I were to say what we know so far about the direction regarding the telecommunications. On 5th January this year the Department of Economic Affairs put out a Press notice in which it said: The First Secretary, the right honourable Michael Stewart, M.P., in consultation with the Postmaster-General, and the Minister of Technology, has invited the Industrial Reorganisation Corporation to examine the structure of the telecommunications industry and its relations with the Post Office as the major home customer, with the object of seeing whether these could be improved in the national interest". It goes on: In making this request, the Government are particularly conscious of the greatly increased demand for telecommunications equipment which the future programme of the Post Office entails and of the need to help the industry keep pace with a rapidly changing technology and to continue to service the needs of its other customers both at home and overseas. The study will be concerned with as wide a range as practicable of companies supplying communications equipment, directly or indirectly, to the Post Office. There then followed "Notes for Editors", including where to make the appropriate inquiries. This seems to be a much wider exercise than the Rootes-Chrysler matter.

I now come to the second part of my remarks. I say at once that there is far too much duplication of research and development in an industry where resources are inevitably limited. Much more could be done if there were rather more sharing of the technologies which have been devised. I am very glad that the Postmaster-General is present, because my remarks are now directly relevant to the Post Office as well as to the I.R.C.

Over the years, some of my hon. Friends and I have noticed that the relevant industries have the impression that the Dollis Hill Research Station of the Post Office tends rather to act on its own and to keep itself isolated from anything save the Post Office. In saying that, I am not in any way seeking to decry the excellent work which Dollis Hill has done, but there is no doubt that what Dollis Hill is doing could be greatly helped if there were a free flow of the technology coming out of the telecommunications industries and also a flow of information the other way, from Dollis Hill into the industries. There seems to be a certain jealousy, with Dollis Hill trying to keep all the research and development of equipment used in the G.P.O. in its own hands.

If the object of the exercise which the D.E.A. announced on 5th January be to ensure that there is a freer flow of technology between the industry and Dollis Hill, then it is an excellent exercise, but I want to make sure that the I.R.C. is the body doing it. I would like to hear why it was thought that the I.R.C. was the best body to do this work. Everybody knows that great expertise about managerial consultancy is now being built up in the private sector of industry and this could possibly advise both the industries concerned and the Post Office about the best management methods. There are many professional and scientific bodies, research councils and so on, which could advise on interflow of information and cross-fertilisation of technologies. Are we certain that the I.R.C. is the appropriate body to manage all this?

In saying that, I do not in any way decry the reputations of the splendid people who have been appointed to carry out this work—Mr. J. P. Berkin, one of the members of the Industrial Reorganisation Corporation, and Mr. John Corbet, of Peat, Marwick and Mitchell. Everyone knows that those two gentlemen have immense talent and reputation, but I seriously ask whether the sort of exercise which is visualised falls within the remit which we understood the I.R.C. was to be given.

It is unfortunate that the first two things which the I.R.C. was ever called upon to do in public were the result of the intervention of the Secretary of State himself, because throughout the Parliamentary stages of the legislation we were told that its principal purpose was to give the I.R.C. its head, to let it get on with the job, to let it use its own commercial judgment, and we were told that Ministerial direction would be kept to the absolute minimum.

There is one great value in having the Minister's power available if it is used in the right way. It could conceivably be an immense fortification for the I.R.C. in promoting what the I.R.C. itself believed to be desirable when the I.R.C. felt that by itself it could get no further and wanted Ministerial backing. That is a perfectly proper and appropriate way for the Minister's power to be used. But if the I.R.C. is to get the public reputation of being the child of the First Secretary, the very confidence which it was hoped would be built up in the I.R.C. because of the Corporation's alleged independence will be undermined. I hope that we shall have some clarification on this. It may be that I have not fully comprehended the real purpose of bringing in I.R.C. on the telecommunications front.

Can the hon. Gentleman tell us how much of the £5 million we are now being asked to vote will be devoted to this particular exercise? We know that something in the region of £3 million will be involved in the Rootes-Chrysler exercise, and that the total vote is £5 million. Presumably there is £2 million left over. How much of that £2 million will be eaten into by the telecommunications venture?

Mr. Speaker

Order. I hope that the hon. Gentleman will acquit me of being discourteous, but there are many other topics which hon. Members wish to raise.

Sir H. Legge-Bourke

I am well aware of this, but I was hoping that I would be given some indulgence tonight, because this is the first time that this subject has ever been debated. I certainly do not wish to delay the House, and I will try to draw my remarks to a conclusion as quickly as possible. Why was it that the announcement about the Rootes-Chrysler deal was made by the Minister of Technology instead of the First Secretary? To what extent has the action over Rootes-Chrysler compromised the assurance that we were given by the hon. Gentleman's predecessor in Committee when he said that there would be no question of the I.R.C. buying up shares of weak and declining companies.

If I am right the Rootes-Chrysler venture means that the I.R.C. will have a share of the equity in the new combine but will not be buying Rootes shares. I would like that confirmed. As I understand the deal, it is that if at the end of five years, about 1972, the shares are worthless, then Chrysler is under an obligation to buy them from the I.R.C. at a profit to it. On the other hand, if the I.R.C. finds that the shares have increased in value or at least kept their value, then the I.R.C. will be free to sell them on the market. We were told specifically during the course of proceedings on the Bill that the I.R.C. would not act as a holding company. It seems that for about five years it will be almost a holding company. I assume that if the value of the shares at least holds good, if not improves at the end of that time, the I.R.C. will be able to sell the shares on the market? We do not want to see it turning into the very thing that we were assured it would not become, namely, a holding company.

Why was it that the Minister of Technology was authorised to say, when he made the announcement in the House in January, that the Board of Trade had considered referring the whole business to the Monopolies Commission when, on Second Reading, the First Secretary went out of his way to say that anything that the I.R.C. came into would never be referred to the Monopolies Commission because it would not be necessary?

We have been crying out for capital investment; we have been encouraging foreign investment. Are we now moving into a position where, having encouraged foreign investment, the moment it results in a majority holding of the equity, then the Government steps in, through I.R.C.? This will be no encouragement to further foreign investment. We have to establish, once and for all, that in order to ensure that British interests are properly represented on an international Board, it is not always necessary, and hardly ever necessary for the Government to become a shareholder through one of their agencies. We must get it firmly established that if we want foreign investment in this country it must be done on true commercial and financial merit. Only in the last resort should the Government come into it. Certainly they should be extremely reluctant to put pressure on the Corporation to do something which the Corporation, given a free hand, would never have thought of doing. If the future progresses on these lines, there is great hope for international co-operation with this country.

Parliament is usually very zealous about keeping an eye on expenditure. Five million pounds is no small sum. But if the Corporation is to do its job effectively—in other words, if it is to win the confidence of companies which should merge but which have not found a way of doing so—it is absolutely essential that neither the Corporation nor the Government or Parliament should breathe down its neck. Having set up the Corporation, we have to give it a free hand. We must not expect it to be treated as though it were a Government Department subjected to the scrutiny of the Auditor Comptroller General and all the investigation which Parliament can initiate at Question Time, during Adjournment debates, and so on. If we do this, it will destroy any chance of the Corporation succeeding. If it is given its head, with the very talented Board which it has, I am convinced that it can do a useful job. Let us give it its chance.

10.7 p.m.

Mr. Peter Hordern (Horsham)

rose—

Mr. Speaker

Is the hon. Gentleman seeking to address me on the same topic?

Mr. Hordern

Yes, Mr. Speaker.

As my hon. Friend the Member for the Isle of Ely (Sir H. Legge-Bourke) said, we rather expected that the Minister of Technology would reply to this debate. In the Vote with which we are concerned, £3 million of the £5 million is concerned with the Rootes-Chrysler merger. It was the Minister of Technology who announced the details of that merger. However, may I say how delighted I am to see the Joint Under-Secretary of State at the Department of Economic Affairs on the Government Front Bench. I cannot imagine what on earth he thinks he is doing there, because he could have been on the Front Bench at any time in opposition or, I am sure, since this party came to power. It is a reflection of the disastrous view which he takes of his party's prospects that he has decided to accept office, albeit late.

There is no doubt that the main purpose behind this Supplementary Estimate is to allow the Industrial Reorganisation Corporation to invest £3 million in Rootes Motors. I find this an astonishing reversal of the Government's declared policy. The Minister of Technology, who made the announcement on 17th January, clearly could not have read the proceedings on the Industrial Reorganisation Corporation Bill in Committee where various undertakings and assurances were given. I have not the reference, but I distinctly remember it being said that no investment would be made in weak and declining companies. This was fortified, not only in the White Paper which preceded the Bill, but as lately as yesterday by the First Secretary of State for Economic Affairs, who said: Where the I.R.C. makes money available for new groupings, it will expect to receive a satisfactory return for the taxpayer". He went on to say: It will certainly not support ventures which have no prospect of becoming viable". If ever there was a venture which had no prospect whatever of becoming viable in the short time in which the Corporation was proposing to invest money, it is the investment of this £3 million in Rootes Motors. But the Minister of Technology said about this proposal: The takeover of Rootes by the British Government—which, of course, was considered "— that is in terms of takeover of the whole concern by the British Government— but would have involved massive sums of public money going into an insolvent private enterprise company without any guarantee that in this way it could remain viable—was not a practicable proposition."—[OFFICIAL REPORT, 17th January, 1967; Vol. 739, c. 38.] What on earth can the argument therefore be to invest £3 million in such a concern? Furthermore, if the Government were so convinced that this sum of £3 million was to be a satisfactory investment, why allow themselves rights to withdraw the money in 1971? What is the purpose of that provision? It certainly does not sound to me like a viable proposition.

The fact is that this £3 million will allow the I.R.C. to have 13 per cent. only of the voting share in this new concern compared with Chrysler's 68 per cent. It would be interesting to know on what basis the Government think that this 13 per cent. effectively blocks the actions of the Chrysler board in any action which it cares to take. I know about the various provisions that were announced on 17th January, but perhaps the Under-Secretary when he replies will deal with the following two specific questions.

If any undertaking given by the Chrysler Corporation in its letter of 16th January to the Minister is not carried out, what proceedings can be instituted, in what court, of what country, and how can the order of such a court be enforced against that Corporation? The hon. Gentleman—and learned too, I should add; he knows his profession well—will know that there can be no satisfactory answer to that question.

My second question is this. In view of the undertaking given by the Chrysler Corporation that a majority of British directors will be maintained on the board of Rootes Motors Ltd., what is the purpose of appointing a director of the I.R.C. at all? Was this appointment a condition imposed by Chrysler or imposed by the Treasury for its consent to that participation?

One other aspect to which I must refer is the action of what might be termed the professionals on the board of the I.R.C., and in particular Sir Frank Kearton and Mr. Grierson. It is plain—I believe that I have this right—that the board of I.R.C. is not required by the Department of Economic Affairs to make an investment in any particular concern but is requested to make it. Therefore, the professional board of the I.R.C. is exercising its professional judgment as to whether the I.R.C. will or will not invest in any undertaking.

I do not know about Sir Frank Kearton, but I feel quite certain that Mr. Grierson in the conduct of his normal commercial experience would not have considered this investment one that he could have recommended to his board outside the I.R.C. It is common knowledge that the boards of both Leyland and B.M.C. refused to take any part in this undertaking.

I cannot help but suggest that these gentlemen, in carrying out their professional duties, owe not only their duty to the Government which they consider to be proper, but a duty also to themselves in their professional capacity and, above all, a duty to their country in not wasting the taxpayer's money in this way.

10.15 p.m.

Sir John Foster (Northwich)

I have been speculating on the way in which the hon. Gentleman intends to reply to the debate, if he is going to deal with the points which have been made from this side of the House. Before going further, may I add my congratulations to him on his appearance on the Government Front Bench?

First of all, he has to face the difficulty, which I am sure he will cover with his usual skill, of the Ministry of Technology having intervened in this matter. It is quite clear that the Minister of Technology considers himself to be a Minister of Industry, and he considers that he has a policy for industry. However, that is not his sphere of activity. What he did in the Chrysler-Rootes deal was to hold up the matter, hoping to solve it according to his own policy on industry. Why the matter was referred to him is not clear. Obviously, there was an exchange control aspect which was referred to the Treasury, and one wonders whether it was the Treasury which referred it on to the Ministry of Technology.

The hon. Gentleman will have to say that the Minister of Technology had a special interest, not particularly from the point of view of technology but from the point of view of industry generally. The answers in the Sunday Times show that the Minister of Technology considers himself to have an overall responsibility for industry generally and not just confined to technology.

When the hon. Gentleman comes to the details of the Chrysler-Rootes transaction, he will probably be unable to tell the House whether the £3 million will be a profitable investment, if Chrysler loses, it will get the £3 million profit back or, if all goes well, it will have a share in the equity.

Why we on this side of the House have a certain fear is, whether it is a good investment or not, it is not the kind of thing which we were led to expect that the I.R.C. would do. If it is a profitable investment, some other branch of the Government should have taken it on. We were led to expect that the I.R.C. would not act as a merchant bank. Certainly the impression was given that the Cor- poration would act as a sort of catalyst. It would try to bring, say, all the shipbuilders together, having had an idea about a merger. Two of them might be agreeable, except that, being strong personalities, neither might want to give up his own creation. However, once a measure of agreement had been reached, the ordinary merchant banks would take over. It was not anticipated, either, that much of the £150 million would be used.

I believe that the I.R.C. will be valuable if it is properly used, acting as a conduit-pipe to the Government. Here are people who know about industry and finance. If there is any aspect of the financial or industrial policy of the Government which needs qualification, amendment or addition to, the I.R.C. can represent the City view, diluted through its own experience. The Corporation can be valuable in that way. However, there was a great deal of anxiety on this side of the House about whether it was not backdoor nationalisation, and that the Government would use it for purposes which they said they would not. The Chrysler-Rootes deal goes just over the line, and it will be the task of the hon. Gentleman to allay those anxieties. I think that he will have to say that it was an unusual transaction which will not be repeated.

The I.R.C. can be useful, provided that it is not used for the wrong purpose. The Government are rather in the habit of doing that sort of thing. They appointed a Law Commission, but one of the jobs which they have made it do is to undertake the reform of the divorce law. That again is using an independent body, about which our fears were allayed, in a manner which goes contrary to the assurance which we were given.

For those reasons, the debate has been a valuable one. These questions have been raised, and I am sure that, with his knowledge of the City and finance, the hon. Gentleman will have a great deal of personal sympathy with what we are saying. I look forward to his walking a tight-rope with his habitual skill between what he believes and what is Government policy.

10.20 p.m.

Mr. John H. Osborn (Sheffield, Hallam)

It is some time since I spoke during the Second Reading of the Industrial Reorganisation Corporation Bill. Much has happened since then, and I take this opportunity of doing no more than asking a few questions about what is happening now, and what is the Government's policy on a number of issues.

I welcome the fact that we have with us the Minister of State, Board of Trade, the hon. Member for Sheffield, Hills-borough (Mr. Darling), because from time to time I have asked Questions of the President of the Board of Trade about overseas investment, and the right hon. Gentleman has answered them. I also welcome the fact that the Postmaster-General is here. I welcome, too, the presence of the hon. Gentleman who is to reply to this debate, representing as he does the Department of Economic Affairs. What I find a little disappointing is that the Minister of Technology has not seen fit to come to this debate, because he has been very vociferous about these matters, and I think that we should have some of his views as well.

We are dealing with Class IV Vote 25 which refers to the Industrial Reorganisation Corporation. After the statement by the Minister of Technology I was rather surprised to read that this Vote came from the Department of Economic Affairs, because I had tended to read into his recent statements that the I.R.C. had been taken over by the Ministry of Technology.

This Vote is for £5 million, but in the Second Reading debate we were talking about a total sum of £150 million. We have assumed that £3 million will be taken for the Rootes-Chrysler operation. This assumption may or may not be correct, because it all depends on when the £3 million will be required this year. We are dealing with a Supplementary Estimate, so I hope we are right in assuming that £3 million out of the £5 million is for the Rootes-Chrysler exercise, and perhaps we may be told whether that assumption is correct.

Paragraph 9(1) and (2) of the Schedule to I.R.C. Act contains a reference to the employment of staff. Therefore, it is reasonable to ask what progress is being made, and how many staff are employed. I mean, of course, in addition to the chairman and the members of the Corporation. What sort of work is it doing? If it has not got a big staff, is the Corporation now delegating work to other bodies to carry out services, and is it asking merchant banks to act as consultants? If it is, is it paying them, and will the money provided in this Supplementary Estimate be used for this purpose? It will be helpful if we are given some indication of how this money is being spent, and whether we are right in reaching certain conclusions.

During the Second Reading debate I raised a variety of issues. I pointed out that over the last three or four years the whole climate for amalgamations and mergers had changed, and therefore the I.R.C. would be operating in an entirely different climate. Is the I.R.C. really necessary at this time, in view of other factors with which we are concerned?

During that debate, at column 275, I quoted some figures which were refuted by the Chief Secretary during the Third Reading of the Iron and Steel Bill. I pointed out that more steel was made in larger steel works as a percentage of total production in the United Kingdom than in Europe, and that more steel was made in smaller steel works in Europe than in the United Kingdom, which completely refutes the statement made by the Government Front Bench last week. I think that it would be out of place to ask the hon. Gentleman to answer that.

I also raised the question of the rôle of the Industrial and Commercial Finance Corporation. I stated then: I have read with interest the annual report of the Industrial and Commercial Finance Corporation, which has been referred to by my right hon. Friend. The Corporation has so far made advances of £78 million, with a further promise of £10 million…."—[OFFICIAL REPORT, 19th October, 1966; Vol. 734, c. 277.] I went further to ask to what extent it would be involved in promoting amalgamations and mergers. I now find that the I.C.F.C. has moved in the same field as the I.R.C. and has set up a division for this purpose. I should be most interested to have the Minister's comments on the value of these organisations.

I now come back to the more fundamenal issue of American and ouside investment in this country. I have been reading some Questions I asked in November of the President of the Board of Trade and the Chancellor of the Exchequer, most of which were unanswered. When I asked similar Questions as far back as May about investment from overseas in the United Kingdom I received an answer from the Minister of State, Board of Trade, giving the total return on world investment from overseas in United Kingdom industry. The figures were, £160 million in 1963; £162 million in 1964, and £161 million in 1965—

Mr. Speaker

Order. I hesitate to interrupt the hon. Member. This is a broad debate, but it is confined to the item that we are discussing, namely, the Industrial Reorganisation Corporation.

Mr. Osborn

I am about to introduce the subject of the correspondence going on with the Minister of Technology and Chrysler and am about to refer to American investment in this country and the factors involved—

Mr. Speaker

Order. The hon. Member must take note of what Mr. Speaker says. He must link what he has to say with the Estimate before us.

Mr. Osborn

Certainly. I am linking what I am going to say with the figures of American investment in this country, namely, £104 million in 1963, and £116 million in 1964. The points that I wish to raise relate to Questions raised in the House on 17th January, when the Minister of Technology referred to the whole question of the Industrial Reorganisation Corporation taking part in the Rootes-Chrysler merger and having an interest which is either 13 per cent.—

Mr. Speaker

The hon. Member can discuss what he seems to be about to discuss, but what he cannot discuss is the general question of American investment in British industry.

Mr. Osborn

In which case I will slick to the £3 million that the I.R.C. is putting into this investment. I cannot go on and deal with issues of principle, except to say that the I.R.C.'s participation could well provide a very great influence on American investment in this country.

I will move on to the exact rôle of the Ministry of Technology. Reference has been made to Ian Coulter's article in the Sunday Times on 22nd January, in which a series of questions were asked, from the long-term view, on how far we would want to duplicate the I.R.C.-Rootes situation. The reply from the Minister of Technology was: I.R.C. came into this, we came into it, and it was the first time that these two instruments, which didn't exist before 1964, had been brought into play. Then the question was asked: Do you see I.R.C.'s involvement in Rootes/Chrysler as merely a beginning? to which the answer was: I think the use of I.R.C. for this new purpose, putting a member on the board of Chrysler/Rootes in its new form, is the beginning of a technique of enormous potential… Do the Government back the Ministry of Technology in this matter? Another question was: Will you issue some sort of edict to major British industrialists that if they are approached by American or other foreign capital, or by their foreign associate with a view to takeover, then they will come to you first and let you know of these moves"? The Minister of Technology replied: … British industrial leaders are coming to see the advantage of having a department like ours which is looking at the problem in much the same way as they are". Was this the rôle originally envisaged for the I.R.C.? Do the Government agree with the views expressed by the Minister of Technology on this issue? Finally, the Minister of Technology stated: … I cannot visualise my job being done without it". He was referring to the I.R.C.

These are amazing statements and it is reasonable for my hon. Friends and I to ask exactly whether the I.R.C. is intended to be a tool of the Ministry of Technology as against a useful organisation in economic affairs. Indeed, should it not be completely allied to the Department of Economic Affairs and not be transferred to the Ministry of Technology?

A constructive article appeared in the Statist on 20th January last. It questioned the rôle of the I.R.C. from the point of view of the Post Office and purchasing and referred to the need for secrecy. If the I.R.C. is to work, industry must have confidence in it and be able to approach it with confidence. However, it is a Government agency and, as such, it has a certain amount of responsibility to Parliament. That must be stressed.

As to the rôle of the I.R.C., certain important questions must be answered. For example, do we want American investment in this country? If we do, will the I.R.C. be used to lubricate it, so to speak? If the answer is "Yes", then do we want American investment at the rate of £300 million in the current year, and am I correct in anticipating such a figure for 1967? If the answer to that is also "Yes", then do we want to encourage American capital, American technology and American management expertise into this country? Is this the policy of the Department of Economic Affairs, is it the Government's intention to use the I.R.C. for this purpose? These questions must be answered.

We go on from there to consider, if we want to encourage American capital, how we can best go about the task. I should have thought that the best encouragement would be to make foreign capital welcome by a system of low taxation for it; so that private enterprise has a fair chance of earning a proper return on capital invested. This type of financial and taxation policy should be exercised, rather than the sort of Ministerial edicts which are now emanating from Whitehall. Do we object to American majority shareholdings? If so, why do not the Government say so? It is evading the cause to follow an alternative course of placing a director on the board of a company; although it is not inappropriate to ask what such a director would be capable of doing. There is a 15 per cent. holding in Rootes-Chrysler. Is this the best way of tackling the problem?

These are a few of the questions the Government must answer if the public are to have any confidence that the Government know what they are doing.

10.34 p.m.

Mr. David Price (Eastleigh)

I, too, congratulate the hon. Member for Manchester, Cheetham (Mr. Harold Lever) on finding himself on the Government Front Bench. Seeing the hon. Gentleman in that position, I am sure that we all feel like a person who, late on a dark night having been on a poaching exercise, meets an old friend but, with pockets full after the poaching exercise, finds that it is the game keeper dressed in the uniform of a special constable.

Having recently passed the I.R.C. legislation, it is somewhat surprising that my hon. Friends should be raising this matter tonight. It has moneys up to £150 million, and this £5 million is the first instalment. The reason for our concern was made clear by the speeches of my hon. Friends the Members for the Isle of Ely (Sir H. Legge-Bourke), for Sheffield, Hallam (Mr. J. H. Osborn) and for Horsham (Mr. Hordern) and my hon. and learned Friend the Member for Northwich (Sir J. Foster).

To summarise the case, it rests on three points. First, the question of Ministerial responsibility. The Under-Secretary of State, who is very sensitive in these matters, will appreciate that it is very unfortunate that the Industrial Reorganisation Corporation's first two public actions, the investigation into telecommunications and its part in the Rootes-Chrysler affair, were both actions in which it had to have directives from the Secretary of State. This is perfectly legal, but we were led to believe that they were reserve powers to be used in extremis. I shall not bore the hon. Gentleman by going over the points put in the Standing Committee, but we were told that, perhaps, the Government might want to do something like the Fort William project again and this would be the appropriate instrument. We were told that such were the conditions in which Section 2(1,b) of the Act would be used.

The investigation into telecommunications is very different. How far are Mr. Grierson and his two colleagues who have been put on to it doing all the work themselves? How far will it be necessary for them to hire the services of a reputable industrial consultant to do what I call in the vernacular the leg work of their investigation? It lay within the competence of the General Post Office and the Postmaster-General, if so minded, to initiate such an investigation themselves. Why the I.R.C.? Is the I.R.C. to become the industrial consultant to Her Majesty's Government? If it is, this is a new purpose and quite different from what we were told so recently in the White Paper and our debates in the House and Standing Committee. We must have this clarified. The inquiry would have been a perfectly proper undertaking for the Postmaster-General himself to initiate, if necessary hiring the services of such outside help as he thought right.

We come, next, to the second great public activity, the Rootes-Chrysler merger. There are two aspects of this which affect our decision on the Vote tonight. In our debates on the Bill we were told that, broadly, the purposes of the I.R.C. were two: one, to assist in mergers and bringing people together; two, to assist in bridging finance. Clearly, the first rôle was not necessary. Rootes and Chrysler were already together. The question was whether the marriage should, as it were, be consummated financially and managerially, or whether, before ultimate consummation, there should be a divorce and the Rootes part should be "flogged" to B.M.C., hawked round to Leyland, or even, in the view of some hon. Members opposite, passed to the poor benighted British public by nationalisation. The I.R.C. was not needed to produce the merger.

We come, therefore, to the second r ôle, to assist in bridging finance. Is it suggested that Chrysler was unable to put up all the money it thought necessary both to buy complete control and to inject the extra working capital which we all agree was necessary in this enterprise? Was the I.R.C. brought in because Chrysler was unable to raise the money, and did the £3 million from the I.R.C. determine it?

I put a Question to the Minister of Technology to ask whether the I.R.C.'s intervention had been sought by either Rootes or Chrysler or had been initiated by the Board of the I.R.C., and the right hon. Gentleman, with complete sincerity, replied, No, it had been ordered by the First Secretary of State, the Under-Secretary of State's master.

This is a very unfortunate beginning to the I.R.C. The only reason for the intervention of the I.R.C. was given when I pressed the Minister of Technology about it on 17th January: It astonishes me that the hon. Gentleman"— that is myself— should not object to American control or foreign control of a British motor company, but should object to the British public being represented through I.R.C."—[OFFICIAL REPORT, 17th January, 1967; Vol. 739, c. 37.] If it is suggested that the only way we can ensure that the Rootes-Chrysler activities in the future are within the broad public interest is by putting one of Mr. Ronnie Grierson's gentlemen on the board of the I.R.C., all I can say is that if that is really the Government's view then I, too, believe in fairies. It is a most quaint metaphysical proposition that equates the British public interest with having a member of the board of I.R.C. as a minority shareholder on the board of Rootes-Chrysler, both in terms of exercise of power and of actual control. As an old poacher himself, the Under-Secretary does not believe that I would be taken in by that. I believe in fairies, along with the Minister of State, who argues like a rather elderly mediaeval theologian.

With those two cases in mind, we on this side of the House are entitled to have very grave doubts as to whether the House should tonight pass this Vote of £5 million for the I.R.C. We accepted our defeated votes on the I.R.C. with good grace, as the hon. Gentleman would expect, and if the I.R.C. had sought to do its business quietly there would not have been the fuss tonight.

I hope that the hon. Gentleman will remember that he was once a poacher, and make a more convincing special constable's reply than merely saying, "That is the law because I make it."

10.42 p.m.

The Joint Under-Secretary of State for Economic Affairs (Mr. Harold Lever)

The House will appreciate that this moment when I transfer myself from the gay irreverences of the back benches to the more seemly sobriety of the Dispatch Box is one of some trepedition. My courage is bolstered by the thought that whatever heroism will be required of me in answering this and other debates is nothing compared with the courage already displayed by my right hon. Friend the Prime Minister in placing me in the position from which I now speak. That is certainly the case if the very kind expressions by all hon. Members opposite who spoke have any resemblance to reality. I greatly appreciated the sympathetic approach to the debate made on that account by all hon. Members.

I say sincerely to the hon. Member for Isle of Ely (Sir H. Legge-Bourke) that in raising the matter he has done a public service, because he has given the House an early opportunity of removing many misconceptions which all too obviously are in the minds of hon. Members opposite and, it might be reasonably inferred, in the minds of some members of the public.

However, the hon. Member for Eastleigh (Mr. David Price) may twit me about my previous speeches—and I must say that I view with alarm the approach of the next Finance Bill if the same kind of Talmudic analysis is to be applied to what I said on previous occasions as on this occasion, happily—as will appear—there is little difference of opinion between the hon. Member for Cheetham and the Joint Under-Secretary of State for Economic Affairs.

However little change there has been in my position, there has obviously been a very great change in the attitude of the Opposition from the nostalgic escapism to which we were treated on Second Reading and in Committee. I am glad to see that the Opposition have, as I foretold in my Second Reading speech, returned to the paths of constructive sobriety which we would have expected of them.

The first genuine problem obviously troubling many hon. Members opposite, and conceivably people outside, is that of who is responsible for the policy and functioning of the I.R.C.

Let me say with unambiguous explicitness that the responsibility for the policy and functioning of the Corporation lies with my right hon. Friend the Secretary of State for Economic Affairs and his Department and with nobody else. Of course, there will be co-operation with other Departments. This was foreshadowed in the White Paper and if the hon. Member for Isle of Ely had read on when he referred to the White Paper's reference to co-operation with the Minister of Technology—interpreting this in a sinister sense—he would have seen that there was also reference to expected co-operation with the National Development Corporation—which, I gather, causes him no anxiety.

Both these co-operations are what one would expect in the circumstances. The I.R.C. does not work in a vacuum. Before hon. Members opposite seek to disturb the undoubted harmony and identity of views which prevails between members of the Government on this and other questions, they would be wise to bear in mind that this co-operation was foreshadowed and that comments by other Departments upon the work of the I.R.C. are natural, proper and relevant. But they are made in the context that they and the world understand that the sole responsibility for the policy and functioning of the I.R.C. lies with my right hon. Friend the Secretary of State and his Department. That was the position always; it is the position now and it will continue to be the position. So I think that should remove some of the doubts troubling hon. Members.

The second problem raised was to suggest that it was a pity that the Government have exercised their powers under Section 2(1,b) of the Act in both of the first cases the I.R.C. has gone into—the Rootes-Chrysler deal and the telecommunications inquiry.

Sir H. Legge-Bourke

My point was that, as I understood it, the RootesChrysler deal came under Section 2(1,b) and the telecommunications inquiry under Section 2(5). I understood this to be the I.R.C.'s own view.

Mr. Lever

It was the hon. Member for Eastleigh who supposed that both these actions were ordered by my master—as I think he was described—my right hon. Friend the Secretary of State. I think that this was due to a misunderstanding by the hon. Gentleman which should be cleared up. The RootesChrysler deal was under Section 2(1,b). The telecommunications inquiry arises from the general powers and initiatives of the Corporation under Section 2(1,a) and was not ordered by "my master". Nor was it ordered under any other Section. The action was taken under the powers and upon the initiative of the Corporation itself.

Sir H. Legge-Bourke

Oh.

Mr. Lever

The hon. Member's disturbance may be unnecessary if he will pause for a moment. The fact that the Government expressed certain views to the I.R.C. on this occasion does not amount to a directive under other parts of the Act. It was simply a request in the course of the workings of the Corporation, for which we have this responsibility to Parliament. It is natural that, from time to time, with varying degrees of formality and informality, we will communicate suggestions to the Corporation. If we did not, we should be failing in our duty. But that does not mean in every case that we are operating the specific powers contained in the Act.

The greatest importance should be attached to the fact that our powers have been exercised under Section 2(1,b) in the case of the Rootes-Chrysler deal. We did not order the I.R.C. to buy or subscribe these shares. We requested it so to do. After the Corporation had listened to us, it could—for it is a perfectly independent and highly reputable and experienced board of directors—have decided that there was no need to buy Rootes-Chrysler shares.

I gather that the hon. Member for Horsham (Mr. Hordern) would not have bought the shares and that he thinks that Warburg's would not have bought them. He cannot have it both ways. This is precisely the Government's case for bringing the I.R.C. into being—that it will act in circumstances where it is satisfied that the public interest would be served but where ordinary commercial and financial channels would not act. Instead of criticising the Government for this, the hon. Member is really reinforcing the Government's case, put on Second Reading.

Mr. Hordern

The hon. Gentleman is not defending the commercial judgment of the Government or the I.R.C. He has yet to come to the argument about defending the public interest in these ventures. But, of course, he will come to it.

Mr. Lever

I hope that the hon. Gentleman does not expect me to treat the House to a detailed analysis of the purchase by the Corporation of the Rootes-Chrysler shares from the point of view of the directors of the Corporation and speak as though I were a director of the Corporation and not a Minister in the Department responsible for the Corporation. It is sufficient to say that the commercial judgment of the directors of the Corporation was exercised and independently administered and it was affirmatively decided to buy the shares.

Hon. Members may rightly or wrongly have a different point of view, but they cannot dispute that this was the absolutely free choice of an experienced, as shrewd and as public spirited a board of directors as could be got together in any company in this land. They came to this conclusion and it is not for me to attempt to say in detail why they did. It is enough for me to say that in their free and unfettered judgment and on the basis of their vast experience they decided that this was a good thing for the I.R.C. to do, and there is every reason to expect that it will so prove.

Hon. Members have criticised this and that and the other aspect, and the hon. Member for Eastleigh said that the Government were inviting him to believe in fairy tales.

Mr. David Price

So is the hon. Gentleman.

Mr. Lever

If he does, and he has given some evidence of it already, I would be the last to want to destroy so pleasant a fantasy, but there is nothing in the nature of a fairy tale in what I have told the House. It is literally the truth that the Board of the I.R.C. was perfectly free to reject buying the Rootes-Chrysler shares had it so decided. It decided to buy and arranged the terms on which it could buy and negotiated the details. We accept its decision and we have every reason to believe that it is a satisfactory one.

I want to deal with what has been said about the director appointed. Of course it is not our intention to establish it as a principle that whenever a foreign company buys shares in a British company, by having one director on the board we shall have control or thereby safeguard the public interest. What was done here, however, was to put a voice on the board of directors which a bona fide foreign company, as we believe Chryslers to be, will respect, especially when it is as important a voice as the kind emerging from a director whom we intend—to put it more exactly, whom Corporation intends—to nominate to the board in this case. I believe that when the Corporation has nominated its director to the board, the Chrysler company will be very happy to have him there and will not regard him as an obnoxious outsider seeking to curb their proprietary interests supposedly in a desire to protect British interests, but will regard him as a useful addition to the counsels of the new company. There is nothing whatever to be said against the Corporation appointing such a director.

In the end, hon. Members opposite will be put in a very queer position, because I am confident that the Chrysler Corporation will be happy with what we have done, the I.R.C. will be happy with what they have done and the Government will be happy with what we have done, and I wonder who will be unhappy.

It is objected that in its prudence and skill the I.R.C. has obtained a "put" option on the shares. If at the end of five years it chooses to exercise it, this will have been a very advantageous negotiation, because the Corporation could not lose any money, and the Chrysler Corporation did not have a pistol put at its head to agree to this. It readily agreed to this and negotiated it freely.

Sir H. Legge-Bourke

The hon. Gentleman used a term of rather special significance, the word "option". Am I not right in saying that the Corporation has these shares already? The option is not the usual option of taking up more shares but of being able to sell the shares to Chrysler at a profit if the shares have depreciated or have been devalued, or, if they are standing at a premium, being able to sell them in the market to anyone it likes.

Mr. Lever

That is exactly correct, and that is what I said, only I said it in perhaps too shorthand a form for the hon. Gentleman. I said that the I.R.C. had obtained a "put" option on the shares that it subscribed, which enables it to take a profit if it wishes in five years, or, on the other hand, if it envisages a larger profit, it can retain the shares and merchant them thereafter. I do not pledge the Corporation to precipitate action, which would not be pledged from any private concern that had subscribed this money. I cannot pledge the Corporation, the moment that the five years is up, to make a decision to put the shares of Chrysler or keep them. It will not sell them helter-skelter, but it will not retain them in the manner of a holding company.

If it does not "put" the shares on Chrysler it will be because it sees a more advantageous prospect ahead and will dispose of them in a more profitable way.

Mr. Hordern

Will the hon. Gentleman deal with the point about the legal protection that the public interest will be afforded by this investment of £3 million?

Mr. Lever

I take it that the hon. Gentleman is referring to the point he was making about the undertakings. He asked me first what value can be given to the undertakings if they are broken, in what court will we sue. These undertakings were not obtained in order that we could sue or enforce them in a court. They were obtained so that the Chrysler Company should know what the British Government expected of it, and it would be unwise and undesirable to make guesses about what would happen in the most unlikely event of these undertakings being broken.

We were anxious to ensure that the Chrysler company knew exactly how we stood and what we required of it. It freely agreed to these requirements taking the form of an undertaking, not an undertaking on which we would sue, but an undertaking which we will expect the Chrysler company to honour, and which we have not the slightest doubt it will honour. It would not be desirable for me even to envisage the prospect of it dishonouring its undertakings. It is a very reputable and large American company and we welcome it taking an interest in our motor industry.

It would be undesirable in the highest degree for me to speculate on the basis that it dishonours its undertaking. It is enough to say that by obtaining it the Government have made plain what they expect from the company and the company has made it plain what it proposes to do. These questions as to whether we will sue are not very relevant, nor is the argument that we are a minority shareholder and cannot out-vote the company on the Board. It was not our intention in acquiring the shares to out-vote anyone on the Board. It was our intention to see the Government represented at this crucial period in the company's life and to see if we could obtain some share in the profitability of the company which we hope will be achieved.

Hon. Members have dogmatically asserted that in obtaining these shares from Chrysler we have been guilty of a breach of our undertaking that we would not invest in failing and bankrupt industries. We are doing nothing of the kind. When we obtained these shares we did not subscribe to a failing company. We took shares on the basis of a total reorganisation of the company, overwhelmingly financed by Chrysler money. In those circumstances the company was no longer a failing or bankrupt company, it was a company in which Chrysler had shown, in the most tangible way, that it was confident of its ultimate success. So are we and that is why we hope to participate in the success.

There is no breach whatever of our undertaking that we would not finance bankrupt ventures. This is by no means a bankrupt venture and the Corporation is very happy about the investment made, and we are very happy that it decided to make it.

I was asked to deal with the telecommunications inquiry, and by a little irrelevant arithmetic, the hon. Member for the Isle of Ely said that we are to vote £5 million of which £3 million is for the Rootes-Chrysler deal. Is the other £2 million for the telecommunications inquiry he asked? No such extravagance is contemplated. The cost of the inquiry is to be in terms of thousands of £s not millions and the £2 million is simply to put the Corporation in funds and give it an agreeable "kitty" to reinforce its enthusiasm for the rôle it has to play.

I want to say something about the functions of the I.R.C. I will summarise in a sentence what has been said before. Its functions are to play a part in modernising the structure of British industry and to increase its competitiveness and efficiency. It is to be what my right hon. Friend the First Secretary of State yesterday called the professional entrepreneur of reorganisation. It will seek to aid and promote activities designed to increase our export competitiveness or to bring about import substitution. These are laudable objectives that every hon. Member, on both sides, will support.

What troubles some people is whether the I.R.C. has other objectives which have not been disclosed. I was asked whether it was a merchant bank. The hon. Member for the Isle of Ely was rather unwise in inflicting upon the House for a second time part of a speech I made some time ago. He quoted me as saying: Hon. Members opposite agree with the purposes set out in the Bill but object to our having a State merchant bank to assist in financing them."—[OFFICIAL REPORT, 19th October, 1966; Vol. 734, c. 290.] I was dealing then not with my argument, but with that of hon. Members opposite. I have never asserted, I hope, on Second Reading or at any other time, that this was to be a State merchant bank. [An HON. MEMBER: "What about the Minister of Technology?"]

I must say in all candour that the expression "merchant bank" covers and dignifies a wide range of financial and commercial operations these days. Nobody is quite sure what a merchant bank is. I am bound to say, speaking, perhaps, with more technical experience of these matters than my right hon. Friend the Minister of Technology—[Laughter.] I am not in the least criticising my right hon. Friend because it is difficult these days to pin down with any exactitude what is or is not a merchant bank. I would not myself have particularly chosen that description. [Laughter.] That does not mean that it is an inaccurate one or that any complaint can be made against my right hon. Friend or that there was any misunderstanding in what he said in using that term.

At all events, in so far as the Minister of Technology has excited any anxieties on this score in any minds on the benches opposite about whether it is or is not a merchant bank, one thing which it is not is a competitor of any existing merchant bank. This is one of the reasons why I would not particularly have chosen that description, because it seems to me that if it is not the competitor of any existing merchant bank, it is unlikely that that description will be accurately comprehensive of its functions.

At no point is the Corporation in competition with merchant bankers, or, indeed, any other financial or commercial institution, more particularly because merchant bankers normally act as an agent for some individual or person whereas this Corporation normally acts as an agent only for the public interest and the promotion of the public purposes that I have indicated. It is not an investment trust, which is another thing that some people might think it to be.

It is not an industrial holding company and it is not a vehicle for the extension of public ownership.

There was, I think, anxiety on this score when the Bill was passed. The right hon. Member for Altrincham and Sale (Mr. Barber) talked about "creeping" Socialism. Hon. Members will have gathered from what I have said that the purposes of the Corporation are rather not to encourage Socialism to creep but to encourage private enterprise to gallop. That, I would have thought, would be a purpose that would commend itself to both sides.

The Corporation competes with nobody. It threatens nobody. It compels nobody. It offers its connections, knowledge, advice and access to information to serve the purposes which I have outlined. There is no compulsion in its working. All this talk of threats or anything of that kind is quite beside the point. The Corporation must have for its functioning the co-operation and the good will of industry. It must win the confidence of industry. Without this it cannot succeed, it cannot operate. It can hardly do a deal except on the basis of winning the confidence and the good will of industry.

No transaction of any kind can be entered into by the Corporation except upon the independent judgment and will of the board. That also covers the point which has been raised about independence. This is an independent board of directors free to refuse any transaction that does not appeal to them. This also covers the point of confidentiality raised by the hon. Member for Eastleigh. The board can preserve confidentiality. It is not a tool of the Government or a tool of the Minister of Technology. In its workings, it goes to elaborate lengths to maintain confidentiality and to justify the belief of the people with whom it deals that it does not pass on automatically to the Government what is confided to it.

Now, on the telecommunications issue, it has been asked, why bring in the I.R.C. at all; why not let the Post Office do it? The short answer is that the I.R.C. has a wider range of connections and contacts than the Post Office has.

The I.R.C. will not merely investigate the telecommunications aspects of Post Office buying; it will look at all the ancillary and similar activities of the electronics industry to see where mergers, increased efficiency and added export effectiveness can result. That, it seems to me, more than justifies the Corporation in preparing this inquiry into the telecommunications industry.

There have also been one or two questions from the hon. and learned Member for Northwich (Sir John Foster) which I think require an answer. The complaint is made that the Minister of Technology has made statements in this House on these questions rather than the First Secretary, but I think it was entirely appropriate that he should have done so. He is the sponsoring Minister for the industries concerned. It was in that capacity that he made these statements to the House, and indeed made very useful and constructive comments which from time to time have been reported in the Press.

Attempts to take a sentence here and there out of context, or place undue emphasis on a particular phrase or sentence, seem to me very much beside the point. The co-operation of the Minister with the I.R.C. is taken for granted. It is essential for the Corporation's working, and is ever more essential for the Minister as well.

The hon. and learned Member for Northwich said he envisaged something in the nature of transactions in which the Corporation would act as a conduit pipe for the Government. I think that is a splendid judgment, and exactly what will happen. Increasingly the Corporation will play a rôle in which they interpret the purposes and feelings of Government to industry and the financial world. The reverse process would not be entirely unwelcome in which it also interpreted the purposes and feelings of the business and financial world sympathetically and persuasively to the Government. Only good can result from this flow to and fro, using the Corporation as a conduit pipe.

I think the hon. Member is mistaken in supposing that anything that has occurred so far detracts from that particular aspect of the Corporation's work.

I hope that I have covered the points that were troubling hon. Members. To summarise, the Corporation's task is to lead in the modernisation of industry, to promote the export competitiveness of private firms and import substitution by?private enterprise.

I do not think that the anxieties expressed on the Second Reading—happily not very evident today—can be effectively sustained in argument. The rôle of the Corporation as an organisation increasing good will and understanding between business and Government will grow as confidence in the Corporation grows. I am very happy at the very responsible note struck tonight by the Opposition in their general purposes, even if some of the details are open to criticism.

I think that the purposes of the Corporation will increasingly commend themselves to both sides of the House; that the Corporation, when it comes to report its activities, will receive a warm welcome for its first year of activity, and that the distinguished gentlemen who have undertaken this very onerous task will earn the gratitude of the House for he work they will have done in the public interest.