INDUSTRIAL REORGANISATION CORPORATION (Hansard, 30 October 1970)

§ The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. John Davies)
With permission, Mr. Speaker, I wish to make a statement about the Government's decision to wind up the Industrial Reorganisation Corporation. This was announced by my right hon. Friend the Chancellor of the Exchequer on 27th October, and I think it would be helpful to the House and to all concerned if I set out briefly the Government's intentions in more detail.
I shall be introducing legislation in due course to implement the Government's decision. This will provide for the transfer to the Government of the I.R.C.'s assets and liabilities. These, of 565 course, derive wholly from public money provided under existing legislation.
The total investments and commitments of the I.R.C. amount to well over £100m. From now on the Corporation will undertake no new commitments, but existing commitments will be honoured by the Corporation up to its dissolution and thereafter by the Government, except where otherwise agreed between the parties concerned. On taking over the investments, it will be the Government's policy to recover the loans in accordance with the terms of the various agreements, and to realise the equity investments as opportunity offers and prudence and commonsense dictate, due regard being had to the industrial and other factors involved in each case.
The Government's intentions do not imply criticism of the board and executives of the I.R.C. who have ably and with public spirit carried out the duties placed upon them by the legislation introduced by the previous Government, and I should like to take this opportunity of paying tribute to Sir Joseph Lockwood and his colleagues.
The I.R.C. will continue in being until legislation to wind it up has been enacted. I have asked the present board whether it would be prepared to continue in office for a further period to assist with the transitional arrangements, and I am glad to be able to tell the House that it is willing to do so.
Finally, and this is a related matter, the Government intend, as we made clear in our election manifesto, that the powers conferred by Sections 1–7 of the Industrial Expansion Act, 1968, will no longer be exercised and appropriate legislation will be introduced. There will be appropriate provision for existing schemes under the Act, namely, the Aluminium Smelters and Computers Merger Schemes. Existing commitments under these schemes will be honoured, but no further schemes will be introduced.

§ Mr. Harold Lever
Does not the right hon. Gentleman think it most reprehensible that he should have chosen this way of announcing this decision to the House, on a Friday morning, having given only the briefest notice to the Opposition? Could he explain why this has been done, particularly as he has known for well 566 over a week that one of my hon. Friends has an Adjournment debate today on this very subject? I do not want him to think that we are lacking compassion. I well understand that he wants the minimum amount of public witness and attention for what is an act of wanton and ritual slaughter done to please the narrowest-minded supporters of the right hon. Gentleman's party. While taking the opportunity of wishing the right hon. Gentleman well in his tasks on personal grounds, I urge him to be more cautious in his treatment of the House on matters of this kind than to make on a Friday morning, with unnecessarily brief notice, a statement of this kind.
May I ask the right hon. Gentleman whether the decision to abolish the Industrial Reorganisation Corporation was reached on purely doctrinal grounds without regard to the practicalities of the matter and the interests affected, or whether he consulted the C.B.I. and other City interests in relation to the possibility of the continued functioning of the Corporation? I am not suggesting that a change of Government could not reasonably result in some modification of the rôle of the Corporation, but has the right hon. Gentleman consulted the C.B.I. and other City and business interests to see whether they welcome the total destruction of a machine which has played a very useful part in assisting the Government in their economic activities?
Has the right hon. Gentleman studied the actions of other Governments abroad in instituting at this time instruments like the I.R.C. at the very moment when he announces the public abandonment of the Corporation?
Would he make clear what he intends to do with the assets? He has announced that he intends to realise the loans in accordance with their terms. Does that mean that he will be a particularly brutal creditor with automatic reflexes in relation to the loans or that he will act as any ordinary, prudent and common sense banker would act in relation to them? That is not to say that I anticipate that any of them will have any difficulty in meeting the terms of their obligations, but does he think it right in advance to announce that the loans will be enforced strictly in accordance with their terms? Does he not think that it would be more appropriate if the Government announced that they intended to act as any ordinary, 567 reasonable and understanding banker would act in these circumstances?
Will the right hon. Gentleman say what he proposes to do with the substantial quantity of national assets in the form of equities held by the Corporation? Has he given thought to the possibility that he is damaging the realisation price of the assets by his statement this morning, intending to indicate that he is a ready and almost reflex-action seller of any of the assets, not on the grounds of their worth or usefulness to the community, but because of the doctrinal motivation which runs throughout the statement? Does he think that he has done his duty by the public purse in devaluing in part the assets he has under his control? For example, will he say why he thinks it desirable, automatically and in blanket form, to dispose of these equities any more than it is desirable to dispose of the Government's British Petroleum holding?

§ Mr. Davies
I thank the right hon. Member for Manchester, Cheetham (Mr. Harold Lever) for his good wishes, but for little else that he has said. The period of notice given for the statement was, I think, appropriate, and I would hope the fact that I made it will facilitate the debate which is to take place this afternoon on the Adjournment.

§ Mr. Harold Lever
Why did not the right hon. Gentleman—

§ Mr. Speaker
Order. If the Minister does not give way, the right hon. Gentleman must resume his seat.

§ Mr. Davies
The right hon. Gentleman asked me whether I had consultations with the interested parties: I can assure him that I had very wide consultation with the main interests involved. My decision was taken in the light of those consultations.
The right hon. Gentleman asked whether I have taken note of what other Governments are doing. Other Governments have done things in the past; one, if not two, to my knowledge, are doing something now, but that is not the same as the creation of an identical body to the Corporation.
The right hon. Gentleman asked what I planned regarding the realisation of the 568 assets of the Corporation. He asked whether I should be a brutal creditor and unthinking in the realisation of the assets. In my statement, I clearly stated that due regard would be had to the industrial and other factors involved in each case. I hope that that reassures the right hon. Gentleman.

§ Mr. Grimond
May I join in the good wishes which have been offered to the Secretary of State? I should like to ask him three questions.
First, will these measures, particularly the repeal of certain Sections of the 1968 Act, have any effect on the Highlands and Islands Development Board? Secondly, does the statement mean that the Government will not only wind up the Corporation but drop any active and positive interest in the reorganisation of industry, other than in the Monopolies Commission, and in take-overs and such like? Thirdly, while the Government remain substantial shareholders in certain companies, which situation may continue, I understand, for quite a long time, do they intend to behave as active shareholders or merely as sleeping partners? It is a matter of some concern to the firms that a considerable proportion of their equity may be transferred to a new holder. I trust that they will be told a little more about the general principles upon which that holder will act until the shares are disposed of.

§ Mr. Davies
I do not imagine, nor do I understand, that the repeal of Sections 1 to 7 of the Industrial Expansion Act, 1968, will have any impact on the attitude of the Government to the Highlands and Islands Development Board.
The Government take, and will continue to take, an active interest in the reorganisation and restructuring of industry. They will be in close consultation with industry. They will seek, in their own way, to assist industry to do what industry wishes. They will not seek to force down the throat of industry measures that industry does not want.
As regards the Government's position as a shareholder, the right hon. Gentleman will know that the Corporation, in acquiring these interests, undertook certain responsibilities towards the companies involved. The Government will diligently seek to respect those responsibilities.

§ Mr. Harold Lever
The right hon. Gentleman has failed to answer two points which I raised. First, why did he notify my hon. Friend the Member for Birmingham, Northfield (Mr. Carter) of this statement last night, having known for a week that there was to be an Adjournment debate on this subject today, and why did he not at the same time notify the Opposition? Also, since he wrote to my hon. Friend, the right hon. Gentleman might, out of courtesy, have sent a copy of the letter to the Opposition.
The right hon. Gentleman has not answered my inquiry why he made a blanket decision to realise all the equity assets. Would he enlighten the House as to why he came to the conclusion that he should sell every equity asset of the Corporation?

§ Mr. Davies
Although I am a novice in these matters, I understand that the notification of the intention to make the statement was fully in accord with the usual practice and was reasonable. Therefore, I do not feel it incumbent upon me to apologise.
My statement did not refer in any way to a blanket decision, so I do not readily recognise the phrase. I have said and repeated, and I now repeat once more, that it will be my intention to have due regard to industrial common sense in realising the assets. I would have hoped that that would give the right hon. Gentleman all the reassurance he needed.

§ Mr. Kenneth Lewis
Can my right hon. Friend say what the Government's plans are for the disposal of staffs concerned? How much redundancy will be involved and will any redundancy payments be made?

§ Mr. Davies
No redundancy payments will be involved. The staff, under arrangements entirely amicably arrived at, are finding other appointments. Clearly a nucleus will need to be retained until such time as the Corporation is finally wound up. This again gives rise to no redundancy problem.

§ Mr. Shore
This is a petty, vindictive, doctrinaire statement. Is the right hon. Gentleman really telling us that he envisages no circumstances in future in which it would be beneficial for British 570 industry and for Britain as a whole to have available the resources, managerial and financial, of this great institution? Would he, even at this late stage, think again about this thoroughly bad decision?

§ Mr. Davies
I am not prepared to think again about this sensible decision. The right hon. Gentleman fails to include in his catalogue the fact that the Corporation was an activity of Government, and also the extraction of £150 million of taxpayers' money for the support of an activity in which the participation of Government is strictly doubtful.

§ Mr. Wingfield Digby
While I am not sorry to see the Industrial Reorganisation Corporation going quickly, may I ask my right hon. Friend whether, with regard to equities held, I believe, in one or two shipbuilding concerns, any attempt will be made to find a buyer for them, and whether this may not be rather difficult?

§ Mr. Davies
I am conscious of the problem this may cause, but all these matters will certainly be dealt with, having due regard to the interests involved.

§ Mr. Carter
On a point of order, Mr. Speaker. You will recall that I started from the very first weeks of this Parliament to try to raise this subject of the Industrial Reorganisation Corporation, and the point I wish to put to you is this. I rang up on Tuesday of this week, the earliest opportunity I had of doing so, the Secretary of State's office to ask what the Minister would want to do in this matter of the Adjournment debate this Friday, and it was not until 9.30 last night that I was informed of the statement to be made today. In view of the fact that previously the four Ministers then at the Ministry of Technology held this House in contempt one Friday afternoon in refusing to attend a debate on this subject, does the Secretary of State not feel that he should have behaved in a rather more civilised way when arriving at this subject this Friday? It appears that it is less than coincidental that the Adjournment debate has been pre-empted by the Minister with his statement.

§ Mr. Speaker
That is not a point of order for me. It is a point of criticism 571 which, no doubt, the hon. Member will make when he introduces the Adjournment debate.

§ Mr. Ogden
The right hon. Gentleman said his decision had been taken in the light of consultations he had had with interested parties. Would it not be more accurate to say that the decision was taken in spite of the consultations, and of the advice which he received during the consultations? He speaks of legislation. When may we expect it? Could he not be a little more generous in the tribute he has paid to an organisation, which, while admittedly introduced by a Labour Government, to help, in the main, private capitalist organisations and free enterprise, has had a real, effective rôle, an efficient, productive rôle, a profitable rôle for industry? Why does he think he may still not need it? What alternative method will he suggest to fulfil this Important rôle?

§ Mr. Davies
As regards consultation, I received mixed advice. I think, however, that the decision I have taken conforms broadly with the weight of the advice given. The balance of view, to my mind, lies squarely in the direction I have taken. As regards the means of bringing about similar activities, it should be borne in mind that the vast bulk of the restructuring of the operation of British industry has not been achieved by the Industrial Reorganisation Corporation but has been based, as for a countless period of years in the past, upon the normal market mechanisms.