INDUSTRIAL REORGANISATION CORPORATION

HC Deb 30 October 1970 vol 805 cc617-36

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Speed.]

1.38 p.m.

Mr. Ray Carter (Birmingham, Northfield)

The path that has led to this Adjournment debate has been extremely long and tortuous. I attempted before the recess to initiate a debate on the Industrial Reorganisation Corporation, but I was unfortunate. It is something of a tragedy that the debate now takes the form of a post-mortem rather than of a critical examination of the worthiness of the Corporation as an economic instrument.

I hope that even at this late stage the Government will think again, although, judging by what the Secretary of State said this morning, it seems that their minds are firmly made up. In putting my case to the Minister, I do not simply want to deal with the I.R.C. as a body and with its function, but initially with the background of the industrial state of the nation when the Labour Government took office in 1964.

The setting up of the I.R.C. and all the other economic measures taken by the Labour Government from 1964 onwards were embarked upon in the light of circumstances as they found them. Indeed, they were circumstances which had existed for many years and which demanded that the Government of the day should take action.

I should like initially to look at the industrial structure of Britain in 1964 when the Labour Government took office. In many respects our industrial problems are still much the same today even though the I.R.C. and the industrial expansion legislation and various other Labour Measures were tremendously successful not only in putting our economy on a new base but in channelling it into new avenues. In that period we tried to get to grips with the basic weaknesses of our industrial structure. Therefore, we must look at history to find out why Britain, as it approaches the last quarter of the twentieth century, is faced with such tremendous industrial and economic problems.

All our industrial problems stem from the latter half of the nineteenth century. In 1964 we faced, and still face today, an outdated industrial structure—extremely diverse, many parts of it badly managed and with problems of investment of critical importance. It is probably in this latter sphere that the bulk of our problems lie.

Every American worker is backed up by twice the amount of capital that is behind the British worker, and the amount of capital backing a German worker is something like 50 per cent. more. Even in France and Italy, both of which industrialised at a far later date than did Britain, industrial workers are paid as well as, if not slightly better than, our own workpeople. It is the critical problem of capital investment that bedevils our nation, and our management is pretty weak. We do not always utilise in the right way, as the Prime Minister said yesterday, the capital assets we possess.

The past 30 years have witnessed a rather haphazard decline in our traditional industries, industries upon which Britain relied for a century to provide the basis of its standard of living and hopes for improvements. Even more important, in the last 20 years or so there has been an invasion of foreign capital into the British economy which not only takes the economic power out of our hands, but also to some extent limits political manoeuvrability. The introduction of the I.R.C. and all the other measures introduced by the Labour Government could still only make a dent in all these traditional historic problems. But the Labour Government did make a try and in many areas they succeeded, as I will indicate later.

The answer of the Conservative Party then, as now, was that competition was the only means by which we could solve our industrial and economic problems. I have studied a good deal of economic and industrial history and have discovered that competition by itself has never solved the nation's economic difficulties. Inevitably—and we can go back 150 years—Governments have had to step in either to supplement or to control the market. Railways are a classic example of this fact, and a further example was provided by the lengthy and important debate on the coal industry in the House yesterday. Therefore in 1964 when Labour took office it had to devise new methods, new ideas and new policies to tackle the underlying weaknesses in our economy.

It was against this background that the I.R.C. was formed. I do not then recall any great outcry from the City, the financial Press or any other group of economic experts telling the Government that they were wrong to do so. On the contrary, there was a welcome given to its formation, though in some sections a guarded one. I had some reservations about the way in which the I.R.C. acted and, on occasions, I did not like the social implications of its work. Nevertheless, as a new instrument of economic control, I supported it, and it is for that reason I appeal today to the Government to think once again about the decision to abolish the Corporation.

Surely the biggest irony is to be found in the fact that if the present Secretary of State were still in his former position as Director-General of the C.B.I. he would be coming to the Government of the day appealing, as Mr. Anderson has appealed to the Government, to retain the Corporation. I am convinced that Mr. Davies would have listened to industry and would have acted as their spokesman in asking the Government to keep the Corporation in being. It is difficult even at this stage, with the threat of execution hanging over the Corporation, to find any bitter opponent of it. I quote that hot-gospeller of competition and of the capitalist method of economic enterprise, the Financial Times: The Industrial Reorganisation Corporation has made a considerable impact on British industrial life. Without its support it is doubtful, to say the least, that G.E.C. would have absorbed A.E.I. and English Electric. The creation of British Leyland owes much to its activities. In the ball bearing field it thwarted the plans of the Swedish SKF, and in a good many industries I.R.C. intervention has been decisive in determining the shape of changes that have taken place. I could quote from many other sources—people who support not only the actions of the I.R.C. but would continue to support its existence.

While the I.R.C. functioned, it acted as a merchant bank, as a number of people have observed. From my point of view, it was far more important in another way. It acted as a catalyst for ideas. A group of people wanting to find what was best in British industry in terms of, say, management control and build on it found the I.R.C. ready to assist. It is a tragedy that this competent and dedicated body of men devoted to the proposition that we should modernise and improve British industry should be thrown on to the scrap heap. I can only observe that the scrapping of the I.R.C. is a piece of sheer political dogmatism.

I have a peculiar interest in the I.R.C. because I represent the constituency of Birmingham, Northfield, which has within its borders the largest single car manufacturing plant in Europe. I refer to what was formerly B.M.C. but which is now part of the British Leyland group. Had it not been for the existence of the I.R.C., B.M.C., as it then was, finding itself £8 million in the red, would either have gone bankrupt or fallen into the hands of the United States car manufacturing industry.

I do not think that any hon. Member would want to see the bulk of British car manufacturing go over to American ownership and control. I well remember that in about 1962 Chrysler acquired a large stake in Rootes. So concerned were politicians and economic interests about the possibility of the British car manufacturing industry gradually falling into American hands that the present Home Secretary, then Chancellor of the Exchequer, went on to the television screens of the nation and gave the assurance that it would never be possible for Chrysler completely to take over Rootes. He said that it was enshrined in the agreement, and he gave his word that it would not be possible for Rootes to be taken over completely. However, the net result was that eventually Chrysler virtually took over that section of British motor manufacturing, and we are now in a situation where we see that almost half of British car manufacturing is in the hands of the Americans.

I would have thought that any Government would try to retain within British hands the ownership and control of such a vital section of our industry. What would the present Government have done in 1965, therefore, when B.M.C. fell upon such hard times? Would they have stepped in and assisted the company? Certainly their present mood indicates that they would not have done. I would have hoped that, being concerned for the national interest, the Government would have done what the Labour Government did and ensured that the largest single component company of British car manufacturing stayed in British hands. The I.R.C. played a very positive rôle in that case, and £35 million from the I.R.C. is now locked up in British Leyland.

If one considers computers, in this country we now have the second largest computer manufacturing company in the world. That would not have been possible but for the action of the I.R.C. Then, as the Financial Times says, in the ball bearing industry we have ensured that a very strategic part of our economy is retained in British hands.

When one looks at the record of the I.R.C., one cannot help coming to the concluusion that it has not only acted in the economic interests of the nation but also, in a way, to protect British industry from foreign domination. I hope that the Government will give further consideration to this very important part of the I.R.C.'s activities and think again not only about their rather doctrinaire attitudes towards the economic activities of the I.R.C. but about its great contribution towards maintaining British control over vital sections of our industry.

The truth is that we needed the I.R.C. 30 years ago. If we had had it then, it may be that our aircraft and machine tool industries and our shipyards would have been saved. Having created the I.R.C. and saved large parts of British industry, it surely is foolish to chuck out the baby with the bath water now.

At a time when the Government are negotiating British entry into the European Economic Community, it is pertinent to look at what the Community is doing by way of industrial restructuring. It is now actively pursuing the possibility of setting up a European I.R.C. If Her Majesty's Government eventually sign the Treaty of Rome, it may be that they will have to become part of a wider I.R.C. within Europe.

I repeat that the Government should look again at the decision that they propose to take. From my standpoint and from that of many other people who are well away from me politically, it would appear that the Government are wander- ing in a political desert and that when they come upon the sort of oasis which I see the I.R.C. representing they are only too ready to fill it in.

History will recall one day that the I.R.C. and other such developments were sacrificed on the altar of ignorance and blind obstinacy. The record of the I.R.C. is proven. In the years to come, I am sure that we will need the 1.R.C. even more than we do today. The debate yesterday on the coal industry serves to prove that large sections of British industry are traditionally based and highly localised. At some time in the future, the Government will have to step in to assist the development of our economy. We cannot rely on competition. History has proved that.

I urge the Government to re-examine the record and prospects of the I.R.C. If they do that impartially and objectively. I am sure that they will come to the same conclusion as most other people outside the framework of politics who are interested in the industrial and economic life of the economy and who feel that the I.R.C. should be retained and strengthened. I sincerely hope that the Minister will look again at the possibility.

2.0 p.m.

Mr. Eric Ogden (Liverpool, West Derby)

The Minister will be aware, because he has been in the House for some time, that he is not only responsible to his senior Ministers, his party colleagues, his Cabinet and his Prime Minister, but he is also responsible and accountable to the House of Commons.

Whilst there may not be many Members in their places this afternoon, the matter that my hon. Friend the Member for Birmingham, Northfield (Mr. Carter) has made it possible for us to discuss is of great interest and concern to many people not only in the South and the prosperous regions of the Midlands, but also to even more people in the development areas and parts of the intermediate areas.

In the past, the Conservative Opposition were united with Members of the Labour Party in the demand that Parliament should have the right to be consulted, to be informed, to be able to express its view, and to offer advice before decisions were made. That has not happened in this instance. A decision has been taken on this important topic without consultation with Parliament. The Minister has obviously had a great deal of consultation with many people involved; but my point is that, whilst in Opposition right hon. and hon. Gentlemen opposite were keen to claim the right to be consulted before decisions were made, that has not taken place on this occasion.

I am no great believer in eleventh hour appeals to Ministers to change their minds. It may happen when the Government have a majority of two, three, or four; but it is unlikely that it will happen in this case. Therefore, I am not putting forward my plea in that way—not that the Minister is any less sympathetic than anyone else. I hope that the Minister will persuade his colleagues to take another look at this decision, but I have no great hope of that. Therefore, I suggest that we should have more information than has been given about the reasons for this decision.

It was no surprise to anyone when the information came through. However, I am a little disappointed—I say this with no disrespect to the hon. Gentleman—that, bearing in mind the importance of this matter to people outside the House, the butcher is not here as well as the block. That is not perhaps the most appropriate phrase, because the hon. Gentleman is no one's fool. However, the Secretary of State certainly is the butcher, and an unnecessary butcher at that.

The Minister's statement this morning and the Chancellor's statement on Tuesday about the I.R.C. was not unexpected. The technique of the informed leak has been much in operation by the Government over the last few months. On 11th October, the headline in the Business Observer ran, "Tories to axe I.R.C.…", and it stated: The Industrial Reorganisation Corporation is to be abolished. The decision has now been finally made by the Government … The announcement will he made by John Davies, Minister of Technology, shortly after Parliament reassembles at the end of the month. The decision is in line with the general non-interventionist philosophy for industry which Davies announced in forthright terms at last week's Conservative Conference. It takes the point made by my hon. Friend: But it represents a major shift in his personal thinking. Before his election, as Director General of the Confederation of British Industry, Davies reflected industry's desire to perhaps clip the I.R.C.'s wings but to keep it in a watered down form. The Business Guardian, on 13th October, inspired no doubt in the usual way, states, The abolition of the Industrial Reorganisation Corporation—it seems to have been killed off by Mintech more in sorrow than in anger", and offers the suggestion that it indeed is being done simply because this Government have taken as their overriding priority their desire, their wish, to reduce Government expenditure. This is based on the fact that the Government, in their overall priorities, will reduce Government expenditure. Every Department must follow it through and this is one way to cut Government expenditure. I suggest that it is a bookkeeping exercise; a short-term saving at long-term expense. It is a short-sighted decision which will deny to industry one important way of making British industry more effective, more profitable, and more productive.

The Minister may have some information about the cost saving, but there is a contradiction. In one statement the Government said that they hoped to save £40 million. In earlier information it was suggested that at least this year the I.R.C. has committed £147 million of the £150 million available to it. We can all make savings. If I do not spend anything outside the House I have saved a lot of money. But it is not the usual way of making and taking savings into account.

I should now like to mention the work of the I.R.C., which has been a much under-estimated body. I remember the debates and the divisions that took place on this subject. Indeed, the Conservative Opposition at that time were dividing the House against the proposals to create the I.R.C. and to provide it with funds. But whilst they were going through the lobbies in opposition to the Government's idea of being able to help industry in this way, the industrialists were queueing up outside to get their share of the money that was to be made available.

The best of British industry is as good as, and probably better than, any in the world. But the more I get to know about some sections of British industry the more I am convinced that some could not run a chip shop. In many cases they are 20, 30 and 40 years out of date.

The great work of the I.R.C. has not been just making money available when normal market operations could not make it available. Its work has been the finding of managers, the suggesting of mergers, reorganisation, and making use of new methods. This has been the real work of the I.R.C., and it has not been praised enough.

Cammell Lairds in Birkenhead was about the only rescue operation in which it was involved. Everyone was most grateful. That operation seems to have been successful and we hope that it will continue. That was essentially a reorganisation operation with the introduction of new management methods rather than finding money, because it was not the only place from which money could be made available.

The Minister is part of a Government which have denied themselves the opportunity of considering the application of the Merseyside Docks and Harbour Board, which, with no disrespect to the management of that board, is in a difficult position. The Government are saying, "What we did for Cammell Laird through the I.R.C. we cannot do for the Mersey Docks and Harbour Board."

We are grateful for the opportunity that we had to meet the Minister for Transport Industries. He seems convinced of the importance of the Port of Liverpool, but the Government are confirming that the one way they could help that port is to be denied. The Port of Liverpool is important both for Liverpool and for Merseyside. Can anyone imagine what would happen to the Lancashire cotton industry, the petroleum and oil industry and the chemical industry, which stretch along the Ship Canal, if the port were to close? In this instance what happened on one side of the Mersey regarding Cammell Laird six months ago cannot now be done.

Perhaps the Minister will give some indication about the alternatives, the legislation, and the aid or assistance which will come to take part of the work that has been done by the I.R.C. Cammell Laird was the only rescue operation. My hon. Friend has mentioned the machine tool industry, British Leyland, the ball bearing industry, General Electric, and others.

I ask the Minister to be more generous to the chairman and members of the I.R.C. than his right hon. Friend and other Ministers have so far been. I do not know of any case where the I.R.C. has forced anything down the throat of British industry. It has been a matter of suggestion, co-operation and working together all the way through. It is, therefore, strange that the Secretary of State should come to the Dispatch Box and say, in none too glowing terms, that the I.R.C. has done a good job but it will have its head chopped off anyway. I think some better words should come from the Minister today.

I understand that at this moment there is a meeting of the I.R.C. Board going on. It might be appropriate to say some real word of encouragement and thanks. They could have done much more profitable things for themselves over the past years than serving a public authority. I would hope—while I ask questions about reasons and costs and the legislation and proposals that the Government have in mind—that this is just an interruption in the work of the I.R.C. There is a place for an organisation like this.

I hope that, in due time, when places in this House are exchanged once again and the Government are back in their rightful places over there and the Opposition back in their places on this side, we wiil—[Laughter.] I mean the old Opposition back on this side of the House. One of the first things that we will do when that happens is see what help British industry should receive from the Government. It is ironic that, whereas it is normally suggested that the Conservatives help private enterprise, in fact it had more help from a Labour Government than ever before. The work of the I.R.C. has been interrupted, not ended.

2.11 p.m.

The Under-Secretary of State for Trade and Industry (Mr. Nicholas Ridley)

I am very glad that the hon. Member for Birmingham, Northfield (Mr. Carter) was successful in getting this opportunity to debate again the question of the I.R.C., which he failed to secure in July. I should not like him to feel that the Government or the then Ministry of Technology wished to frustrate him in his attempt to do this. I apologise for the fact that, due to the extremely short notice, no Minister was available on that occasion, but I assure him that we welcome this debate. I believe that he has performed a useful function in raising it at this time.

The hon. Member is fortunate that there was no hurry to get through the Adjournment, because we have plenty of time. I am a little disappointed that so few hon. Members seem to wish to take part in a debate on what has been described as "this tragically wrong" decision by the Government. That does not lend great weight to some of his points.

The hon. Member mentioned one matter about when my right hon. Friend made his statement. He, of course, got in touch with my right hon. Friend's office on Tuesday morning. My right hon. Friend was very busy trying to get the statement prepared, so that it could be made before the hon. Member's debate, because it was obviously relevant to that debate, and we wished that the full information should be made available in time for it. So my right hon. Friend could not give him a substantive reply until that statement had been cleared and agreed. However, his office left two messages in the House for the hon. Gentleman to get in touch. I gather that it was not possible for him to do so until yesterday evening. Although that meant that he did not know about the events of this morning until last night, I would only comment that this was much longer notice than we had about his July attempt to raise the matter before.

Both hon. Members who have spoken want me to give a little of the background to this decision and to the Government's reasons for reaching it. My right hon. Friend opened up the subject this morning quite considerably, but the hon. Member for Northfield, in an attractive and restrained speech, wished, I think, to take the debate a little wider than just the rôle of the I.R.C.: he wanted to talk about our general industrial problems and difficulties.

Before that, however, I should like to join both hon. Members in their tributes to the board and the staff of the I.R.C. Particularly, I should like to pay a fulsome tribute to Lord Kearton and Sir Joseph Lockwood, the two Chair- men of the Corporation, and perhaps it would not be wrong to mention Mr. Grierson and Mr. Villiers, the two directors. There is no implied criticism whatever of any individuals in the Government's decision to do away with the Corporation; indeed, quite the reverse. It has been run by able and industrially knowledgeable people who I believe have shown both leadership and zeal, as well as panache, in the execution of the rôle allotted to them. The fact that we question and disagree with that rôle does not mean that we criticise their fulfilment of it.

It is perhaps an earnest of the good relations which exist between the members of the board and the Government that the board has made the very public-spirited decision to stay on until present commitments have been discharged. We warmly welcome that action and thank them for it.

Turning to the general industrial situation, the hon. Gentleman is, of course, right that we face serious problems of low investment. No figure that one looks at in comparison with our industrial competitors gives one much confidence about the performance of British industrial investment over decades. One has to be very careful to ascribe credit or blame to any Government or any Government policy. Investment grants have not had the desired effect on investment. Indeed, there has been precious little increase, if any, in real terms since they were introduced. Although we can argue about all these general matters in relation to investment, I shall be touching on some of the thoughts in the Government's mind which have helped them to reach the conclusion that the I.R.C. has not stimulated investment and, indeed, could have had the reverse effect in some instances.

Matters of management and of the general way in which our industry is run will all be appropriate to later stages, and I do not think that the hon. Gentleman would wish me to make a long statement of Conservative industrial policy. This is well enough known and we shall have later opportunity to debate these things. I would just take issue with him on one small point. Competition is, of course, vital. We intend to pursue a forceful competition policy, but it would be misleading to say that competition is the only policy which this Government have. That is totally untrue. There are all sorts of mechanisms which operate in the City which have moved towards causing mergers and take-overs. There is a whole series of pressures which affect investment and management and the raising of capital, and they are all relevant. Competition is but one facet of our industrial policy, and, of course, not the only one.

I can illustrate this in relation to mergers. In 1964 there were 939 acquisitions by one company of another, with a total value of £502 million. This had grown by 1968 to 598 acquisitions—that is, fewer acquisitions—but involving £1,653 million worth of assets. These are big figures both in numbers and in terms of total assets acquired. But within that huge total only some 20 to 25 mergers per annum were inspired by the I.R.C.

It is not possible to claim that the almost feverish take-over activity of the last few years has been due to the I.R.C.; it has been going on despite it. Further, it is true that many mergers which it claims to have brought about may have been facilitated by it, but in many cases they would have taken place despite it—if it had not existed. That is the basic deficiency in the argument put forward by hon. Members opposite. They say that certain things have happened as a result of the I.R.C. and seem to assume that if it had not existed or done what it did totally catastrophic results would have been bound to occur instead.

No one can prove that that would have been so, but I do not believe that it can be proved that marvellous results would have flowed otherwise. One cannot sustain an argument on the basis of what might have happened if the I.R.C. had not been there, because none of us will ever know. The British Leyland and the B.M.C. merger might well have taken place without the I.R.C. being there. So might other mergers. Equally, some mergers which the I.R.C. did bring into existence might have been better not to have taken place. All these things are imponderables, and have no precise answers, because it is impossible to say what would have happened in the alternative.

The Government do not object to the I.R.C. in its rôle of marriage broker—this is quite a responsible activity, which implies no use of public funds—but we have some suspicion how wise it is to use public funds to promote mergers and we have definite objection to the use of public funds to upset a market decision and to change the result of a takeover bid by buying into the shares with public money.

My right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), who dealt with these matters, made the position quite clear on 8th July, 1968, when he said: A facilitating I.R.C.—that is, facilitating the market mechanism—is one thing and may be useful. A fighting I.R.C. is another animal altogether, because it uses the taxpayers' purse to back its judgment on what, in almost every case, can only be a hypothetical and marginal difference in the national interest."—[OFFICIAL REPORT., 8th July, 1968; Vol. 768, c. 67.] That is one of the Government's objections—that money has been used for purposes such as that.

It is not a strong point, and I do not want to put much weight on it, but it is interesting to record that the total cost of the investments in equity shares which the I.R.C. has made is £20.4 million. The equity valuation of those investments last Friday was £16.4 million. Stock market values have gone down, but there is no clear evidence there that these restructurings have led to shiningly successful firms which are able to justify the intervention in the market which the original investments represented.

Mr. Ogden

Can the Minister, from his own knowledge of Cammell Laird—and he has visited the area and has seen the operation—contrast the cost of the drop in share value with the loss both in capital and opportunity of new earnings if Cammell Laird should close?

Mr. Ridley

I shall say a word about Cammell Laird later. The success of a merger or a take-over is represented in due course by whether the value of the assets is enhanced. It is early to say what the eventual value of the assets in the merged companies with which we are dealing will be in the future; I merely make the point that so far they have gone down. It may be that in the future they will go up—but that is not a shining piece of evidence in favour of what has happened.

I come now to the use of public money for this purpose. That is the second of the Government's objections to what has happened in the past. It has been expensive, and by taking money out of the system there has been less money available for general industrial investment. It might be said that this was extra money raised by extra taxation, but if there had not been that extra taxation there would have been more money in the economy available for savings and investment, which probably would have found its way into industrial investment. Therefore, what has been happening is that a portion of the nation's capital has been directed discriminately into certain firms and industries to the detriment of others, and this could have had some small part to play in the difficulty that other companies have found in finding capital, and the high rates of interest. If we distort the pattern of capital investment in this way it must be expected that there will be marginal consequences upon those not fortunate enough to obtain loans of this sort.

It is natural that if we make this sort of capital available many firms will wish to participate in it. It would be surprising if that were not so. That is the reason why many industrial companies have wanted to see the continuation of this money. But the more that participate in loans of this sort the less money there is in the system to extend to those who are not so fortunate. This discriminatory effect is one of the Government's objections to the I.R.C.

The Government prefer to leave the restructuring of industry to market forces. I should like to say a word about the foreign experiences of the hon. Member. The I.R.E. in Italy has been quoted, but it would be agreed by most people that this was a bad example and that it does not mirror the I.R.C. The proposed German body, the V.I.A.G., and the French body, the I.D.I., are both rather different from the I.R.C. in pattern. The German body has 33 per cent. private capital and the French body 60 per cent. private capital, the balance being State money, and this puts them much nearer the content of the normal merchant bank, and to comment on these organisations is not for me. I merely draw attention to the differences between them and the wide powers of large State investment that the I.R.C. represents.

The European Investment Bank was created not to restructure companies in the first place. It was to contribute to the balanced and stable position of the Common Market. This was an instrument of regional policy in the building of the infrastructure and matters of that sort. An I.R.C.-type rôle was proposed for the E.I.B., but this was principally to facilitate the construction of trans-national companies. The Commission has not had its proposal accepted by all the countries of Europe; indeed, there are fairly strong differences of view within the Six whether the Bank should be allowed to undertake this rôle. There is no certainty that the project will come to fruition. Even if it were to do so, it would fall far short of the sort of I.R.C. that we have had. The main obstacles to trans-national companies in Europe are fiscal, and to do with the different company laws in each country. These are the sort of obstacles that need much more to be got over, and the problem, as I think the hon. Gentleman will agree, is an entirely different and dissimilar one from the question of industrial restructuring within the nation State which we have been discussing in relation to the I.R.C.

We shall be happy to play our part in the development of the European Investment Bank if it goes forward and if we are members of the Common Market, but this is not only a different approach but is to serve a different purpose, and it is has not yet even got off the ground. I therefore do not think that there is any conflict between what the Government are doing and their desire to become members of the E.E.C.

The two hon. Gentlemen referred to another rôle of the I.R.C., that of making loans to firms in difficulties. The hon. Member quoted Cammell Laird. I think it is fair to say that there is also the second British Leyland loan which the I.R.C. made, and these two are examples of the different type of intervention which the I.R.C. undertook.

I think that they are political acts if it is decided to save Cammell Laird and not to save Beagle, to save firm X and not save firm Y. This is a highly charged political decision. The Government have made it clear that they are not, in general, going to save companies where they believe that the prospects of long-term viability to do not exist. That is a political decision, and if the Government make political decisions it is for them to carry them out, to be responsible for them, and to be answerable for them to this House. We believe that if situations such as those arose in the future it would be right not to get an agency, so to speak, to take the decision but to be responsible for it ourselves and to make sure that it is quite clear where that responsibility lies.

The hon. Member for Liverpool, West Derby (Mr. Ogden) asked how we would help. This is a hypothetical question. There is no case for help before us, and we shall be straight with the House and make it clear that if there is such a request we shall deal with it as we think fit and be responsible to the House for our decision.

Mr. Ogden

I apologise for taking up so much time in someone else's Adjournment debate, but the I.R.C. was interested not only in giving financial aid but in the management and prosperity of the company thereafter. The hon. Gentleman says that the Government have abolished the I.R.C., and that there is no case for help before them. The hon. Gentleman has visited Merseyside. He knows that the case of the Merseyside Docks and Harbour Board is before the Government. He cannot now, on 30th October, say that there is no case before the Government. This case has been before them since July.

Mr. Ridley

I shall come to the case of the Merseyside Docks and Harbour Board. This is a matter for my right hon. Friend the Minister for Transport Industries, and, as the hon. Gentleman knows, my right hon. Friend has been to Merseyside and had public discussions and is taking full political responsibility for his action. I do not want to say what he will do, or in any way trespass on his ground in relation to that problem, but I think I have made it clear that in a case such as this it is the Government's responsibility, and the Government intend to shoulder it and find what means they think appropriate to provide a solution in every case.

I think that it falls to me to give the hon. Gentleman the figures for which he asked. The I.R.C. Act gives the Corporation power to lend up to £150 million. To date the total of its lending, plus its commitment to lend, which the Government have said will be honoured, amounts to about £140 million, so that it is, as it were, within £10 million spent up. By abolishing the Corporation we shall, I believe, relieve ourselves of a liability for perhaps £20 million this year, maybe £30 million, and if the Corporation had been allowed to go on at the rate of spending of the past we estimate that it would have incurred expenditure of about £40 million a year. My right hon. Friend the Chancellor of the Exchequer said in his statement that that amount of money would be saved by winding up the Corporation.

The total of the investments will, of course, in due course be realised as they come to fruition or maturity or are sold, and that will add to the savings by bringing more money into the Exchequer, but it is impossible to forecast the timetable under which that money will be realised. Much depends on proper management of the investments and the industrial and economic situation at that time.

The hon. Gentleman also asked about legislation. I can only tell him that my right hon. Friend will legislate in due course on the lines announced by the Secretary of State this morning. I do not know when the legislation will come forward, but my right hon. Friend hopes that it will not be too long delayed, and I can only ask the hon. Gentleman to be patient until it is possible to give a firm date. I can tell him, however, that the Government wish to press on with this legislation as soon as time can be found for it.

I think that I have given some of the reasons why the Government decided to abolish the Corporation. It arises partly out of our general industrial policy of not intervening and leaving the market to take its own decisions.

Mr. Carter

Do the Government accept that there may be a case for intervening, to go outside the normal bounds of economic criteria, to protect a section of British industry for purely strategic reasons against foreign invasion and domination?

Mr. Ridley

In general we welcome foreign inward investment, as did our predecessors, the Labour Government, who went to great lengths to encourage it. I think that the hon. Member for West Derby will agree with me when I say that if it had not been for foreign inward investment the pattern of regional prosperity would have been much more unhappy than it is, because in many cases these international and foreign companies are much more mobile than our own.

There are, of course, ultimate security and political reasons why some take-overs by foreign firms might be resisted, but it would be impossible to lay down criteria or try to deal with any hypothetical situations. So long as there is no reason why, along the lines that I have indicated, we should not do so, we would welcome foreign investment in this country, just as I hope our overseas partners would welcome British investment overseas. I believe that by these swappings in investment we increase understanding of each other's problems. We increase our dependence upon each other, and we increase technical know-how and trade and the exchange of people between one country and another. All this is highly desirable. But I accept, as the hon. Gentleman says, that there may be ultimate strategic and commercial reasons why one would not want to give a complete assurance that no foreign take-over would be resisted. This must be a matter for day-to-day decisions.

I hope that I have given the reasons for the Government's decision. It has not been taken in a doctrinaire fashion, just as I accept that the Corporation was not set up originally for doctrinaire reasons. It has been the result of a careful and considered review after much consultation. I believe it to be the right decision, and I hope that in due course it will commend itself to both sides of the House.

Question put and agreed to.

Adjourned accordingly at twenty minutes to Three o'clock.