REPEAL OF INDUSTRIAL REORGANISATION CORPORATION ACT 1966 AND DISSOLUTION OF THE CORPORATION

HC Deb 09 March 1971 vol 813 cc257-327

3.56 p.m.

Mr. Dick Douglas (Clackmannan and East Stirlingshire)

I beg to move Amendment No. 1, in page 2, line 22, at end insert: (5) Before the appointed day the Members of the Corporation shall report as to the valuation of securities and/or assets owned by the Corporation and subject to acquisition by any company which is publicly owned. The Amendment seeks to go a little further than the indications given by the Government in Committee that information would be available regarding the future of investments made by the Industrial Reorganisation Corporation in various companies. However, during Committee stage there were certain eventualities in respect of one particular investment by I.R.C. involving a sum of £10 million in Rolls-Royce.

The I.R.C. report for the year ended 31st March, 1970, on page 11, contains the statement: 'With the full co-operation of Rolls-Royce and the Ministry of Technology I.R.C. carried out an investigation into the financial position of Rolls-Royce with particular reference to assessing the company's medium and long-term capital requirements. As a result of this investigation, I.R.C. made proposals to provide additional finance, and these proposals were agreed by Rolls-Royce and the Minister of Technology and were announced on 19th May, 1970. They involved the advance of £10 million by I.R.C. in 1970, with an indication that a further £10 million might be made available in 1971. The £10 million was advanced to Rolls-Royce, and the I.R.C. did not enter into this arrangement flippantly or with any disregard for financial probity. The report on page 12 states: The Board of I.R.C. has more than a banker's responsibility in respect of its investments. It is not enough to know that an investment is secure. I.R.C. must also concern itself with the purpose for which the invest- ment was made and the rate at which exports and the productivity of capital and labour are rising as a result of it. 4.0 p.m.

It is clearly stated in the report that certain follow-up investigations are made of those companies in which the Corporation has made investments. As a result, I suggest that an organisation in which the Corporation has made investments will receive a certain degree of credibility and financial stability in the eyes of the general public. I do not argue that it is necessarily on all fours with the type of investment which might be made by the Industrial and Commercial Finance Corporation, but there is a degree of similiarity. Therefore, any investment made by the I.R.C. would carry the suggestion that it was done after an investigation of the finances of Rolls-Royce, and it might have induced certain individuals to place a greater degree of credence in the long-term profitability of the company than might otherwise have been the case.

The purpose of my Amendment is to indicate to the Government that it is not sufficient to put down a guillotine, so to speak and say that we must wait for the obligations of the I.R.C. under the 1966 Act to be fulfilled in a particular report.

This investment of £10 million is quite unique and distinct. In view of that, the Amendment suggests that, before the appointed day, this House has a responsibility to look into the reasons why this £10 million investment was made. I say that having in mind the promise to produce a White Paper looking into the whole background of the Rolls-Royce collapse. It will not be sufficient for the Minister to assure us that some of the personalities involved are still associated with the new Rolls-Royce (1971) Ltd. We must have some indication from the Minister that he is willing to look after this investment and to give the House proper information about it. So much cloud and difficulty surrounds the whole issue, and that is why we on this side have been pressing in genaral terms for a Select Committee to look into these affairs.

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

I want to try and help the hon. Gentleman with this Amendment early in the debate, though I have no intention of precluding any other hon. Gentleman from contributing to it. I wish merely to direct the House on to the right lines in terms of the relationship between this Bill and the subject which the hon. Gentleman has raised.

I make no point about the strange wording of the Amendment, because no asset of the Corporation is subject to acquisition by any company which is publicly owned. Even if the Rolls-Royce loan is what the hon. Gentleman has in mind, the asset that the I.R.C. possesses is the £10 million of loan, and no one will acquire that asset because if the Government were to acquire parts of Rolls-Royce they would not acquire the loan that the Corporation has already lent to the old company which virtually ceased to exist with the appointment of the receiver. I do not rest any case on that, but it may have coloured the hon. Gentleman's view of the relevance to the Bill of the point that he has raised.

The I.R.C. made a loan of £10 million to Rolls-Royce in May, 1970, and that was possibly to be followed by a further transfer of £10 million though, in the event, it was never made. I think that subsequent events have demonstrated the unsuitability of a body like the I.R.C. to handle a major matter of the sort that Rolls-Royce was. It did not detect the dangers into which Rolls-Royce was running, though I do not blame it for that. However, clearly its scope and ability to cope with such a major problem is a weakness in an organisation of this type for dealing with situations like this.

Mr. Edmund Dell (Birkenhead)

The hon. Gentleman has just made certain statements about the inability of the I.R.C. to deal with this situation which are prejudicial to those gentlemen who were members of the Board of the I.R.C. at the time. But is not it rather strange that the Government refuse to publish the Report made by the I.R.C. on the Rolls-Royce situation?

Mr. Ridley

The right hon. Gentleman knows that the Corporation was able to proceed confidentially as it wished and that it would be wrong for us to publish reports of any sort which it made confidentially. I was not referring to the competence of the I.R.C. I was saying merely that the sort of situation which finally overtook Rolls-Royce, in which large sums and major political decisions were involved, was far beyond the capability of the Corporation to handle—

Mr. Anthony Wedgwood Benn (Bristol, South-East)

Before the hon. Gentleman leaves the subject of the report, of course the reason for confidentiality in reports of this kind is that those giving and receiving the information must know that it will be used only for the purpose intended. In this case, Rolls-Royce has gone bankrupt, and there is no company which could possibly be affected by what the Corporation said, in addition to which the Government propose to wind up the Corporation. This report is now a historical document which is of great value not only in connection with this debate but more widely. Will the hon. Gentleman undertake to look again at the possibility of publishing it?

Mr. Ridley

I am always happy to look again at any suggestion. However, it was the right hon. Gentleman's own Act which set up the Corporation. In his wisdom, the right hon. Gentleman provided in that Act for the complete independence of the Corporation and lack of accountability to Parliament for what it did. It was contrary to what his colleagues urged me to do in Committee, which was to be certain that information not intended for the Government or for publication came to the Government at the time that the Corporation came to an end.

Certainly I shall look into the point that the right hon. Gentleman makes, but he has only himself to blame if the confidentiality under which the Corporation operated is enforced because of his own Act.

Mr. Austen Albu (Edmonton)

I do not understand this continual reference to the non-accountability of the I.R.C. It is clear in the Act that the Corporation has to present reports. What a report has to contain is specified under five headings in the Act. Any report will be debated in Parliament. In addition, the Minister responsible for the I.R.C. can be held accountable for what the Corporation has done. That is an extraordinary definition of "non-accountability".

Mr. Ridley

Perhaps I might rephrase what I said. The Corporation was empowered to carry on negotiations and to enter into agreements which were based on a large amount of confidential information that it did not have to divulge either to the Government or to the public. It was on that basis that the negotiations were carried on, and it would be quite wrong for me now to break that confidentiality. To that extent, the Corporation is not accountable to Parliament for its detailed actions. However, hon. Members can probe any of those actions and ask questions of the Government. But it would not be right for the Government to release any of that information unless the most careful consideration had been given to it and the agreement of all concerned to its publication had been obtained.

I have undertaken to look into the possibility of publishing the Report. But I do not want hon. Members opposite to have too high hopes that it will be possible.

The £10 million loan which was made by the Corporation was an unsecured loan. In the bankruptcy of Rolls-Royce, therefore, the Corporation ranks as an unsecured creditor to the extent of that £10 million loan. This is where the hon. Gentleman was in some difficulty with the Amendment. We are not participating in the new Rolls-Royce which may be set up under the Rolls-Royce (Purchase) Act, 1971. Nor do we have any priority over other creditors with this loan which is entirely unsecured. It is impossible to forecast what the Government will get back. It depends on a whole series of major decisions, such as the future of the RB211, the price which is paid for the assets of Rolls-Royce in the new State-owned company, and the reaction of Lockheed and the American Government to all these decisions. Therefore, the value of the return which unsecured creditors will receive is impossible to predict now. I should be misleading the House if I attempted to predict it now. It is clear that we shall not get back 100 per cent. necessarily; it will have to take its share of the shortfall of assets.

We shall be interested to hear the hon. Gentleman's views on this matter, but I do not think that it would be right to write into the Bill a matter of this kind, because we cannot say what the value of the loan will be on the appointed day and any report would merely say that the I.R.C. was owed £10 million in unsecured credits. Therefore, that would be the only matter to be reported on the appointed day.

Mr. Douglas

Will the hon. Gentleman indicate whether, if the Board of Trade investigators called for a report from the I.R.C. on its holding in the company, that report would have to be given?

Mr. Ridley

I am not clear to what the hon. Gentleman is referring. The Board of Trade investigators are possibly going to look into the whole of the affairs of the Rolls-Royce company. This would not be in relation to the £10 million loan which was obtained from the I.R.C.; this would be in relation to the conduct of the company. It would have no special bearing on the fact that the I.R.C., rather than anybody else, had made a loan of £10 million.

Mr. Douglas

The statement from Rolls-Royce on 21st July, 1970, clearly stated: It would not be the intention of the I.R.C. to retain any ordinary shares acquired upon conversion but while I.R.C. continue to hold a substantial interest in the company the Board will agree with I.R.C. on the appointment of a director to represent its interests. The Board is satisfied that with the banking facilities available, the company has sufficient working capital. Perhaps I am drawing too close a correlation, but here is a statement on the financial viability and probity of the company. If the Board of Trade investigators press the I.R.C. to look into the background, would the I.R.C.'s report on the viability of the company have to be made available to them? That may be a difficult question. However, will the hon. Gentleman at least look into it?

Mr. Ridley

I shall look at that. I take the hon. Gentleman's point. It is a tricky legal point which I should like to look into before giving an answer. I shall certainly try to ascertain the answer. In general, the Board of Trade inspectors are their own masters to decide what they have to look into, and the confidentiality or otherwise of documents depends on the nature of the documents. I should not like to try to pre-judge or discuss these matters, because they are beyond my competence.

I advise the House not to accept the Amendment for the technical reasons which I have given. However, we would be interested to hear other contributions which hon. Gentlemen may wish to make to the debate.

4.15 p.m.

Mr. Ted Leadbitter (The Hartlepools)

In Committee we spent some time dealing with the portfolio. We had great difficulty in getting from the Under-Secretary specific answers to specific questions. We were rather surprised at this, because the Secretary of State, on Second Reading, in his usual generous manner, gave some very forthright undertakings to the House. The right hon. Gentleman, on 26th January, said: …we should submit ourselves to the full discipline of Parliament and not be prepared to have the means at our disposal of acting virtually in the ignorance of Parliament, only submitting ourselves to it subsequently and not previously."—[OFFICIAL REPORT, 26th January, 1971; Vol. 810, c. 353.] I wonder why the Secretary of State, in his insistence on the principle of accountability to Parliament, could not appear and clear up this matter in Committee. In justification of the stand which the Under-Secretary made, which I felt was a commendable piece of work, nevertheless, he did not deviate from his natural obduracy and his insistence on not giving more information than he wanted us to have. The hon. Gentleman seemed to have a liking for spending a lot of time talking about nothing. In fact, the hon. Gentleman even went to his Department and obtained copies of the I.R.C.'s annual reports and had them handed out to us. This is the document. We could all do our simple arithmetic quite well before the hon. Gentleman exercised his officials with this arithmetical process. Therefore, we could only thank the hon. Gentleman for duplication.

By moving an Amendment such as this on Report, we are saying in effect that we know before we start that the Secretary of State will not have any of it. Therefore, its only function can be of a probing nature. We would like to know the extent to which the Secretary of State will keep Parliament informed about the very complex portfolio of investments.

My hon. Friend the Member for Clackmannan and East Stirlingshire (Mr. Douglas) mentioned Rolls-Royce and my right hon. Friend the Member for Birkenhead (Mr. Dell) made reference to it both here and in Committee. It need not be developed further. We do not want to embarrass the Secretary of State. Why should we? The right hon. Gentleman has his own personal embarrassment. I do not want to take it further. I know that the right hon. Gentleman is unhappy about it because it is a short day since the halcyon honeymoon period of the Blackpool conference. But we are entitled to know how we are to interpret what the Under-Secretary in Committee said is prudent management of the portfolio. What does "prudent management" mean? If it is a continuation of the past experiences of management, we shall be in quite a pickle. Indeed, the advice which has been given to the Under-Secretary and to his right hon. Friend is often at times neglected. However, we are very concerned not only for the portfolio, but about their future. It does not seem as though it will be very long; it would seem to be short-lived.

When looking at this portfolio we are dealing with securities and a considerable amount of equity approaching £120 million. I should think that in the beginning that was taxpayers' money given to the I.R.C. to invest prudently and, according to its terms of reference, to invest only when no other source of investment was available. That was one of the criteria.

Having provided the taxpayers' money to finance the I.R.C. to do a job of work in this sphere which industry welcomed, is it not proper that when the Government terminate I.R.C. we should have some kind of accountability? If the Secretary of State is not prepared to accept the Amendment—no sensible politician would want to force through an Amendment if by chance there was doubt whether the wording was as precise as the intention would be—but will give us an assurance about some accountability and tell us that the embarrassing silence regarding Rolls-Royce will not be repeated concerning some of these securities—for example, if any row evolves about subsequent share dealings in the British Nuclear Design Group and the Nuclear Power Group, in which there is a substantial holding—and that the House will be confided in, we shall be reasonably happy. If, on the other hand, we are to have silence, arising from an unfortunate instruction from the Secretary of State on the subject of motor insurance, then we are unhappy.

If the Secretary of State is not prepared to accept the Amendment, will he at least say that he meant what he said on 26th January and that he will keep the House informed. Will he also consider what he said later in the same debate: Provision is not made in the Bill for specific management arrangements for the portfolio, though I assure the House that I shall have recourse to expert professional advice in the management of those assets."—[OFFICIAL REPORT, 26th January, 1971; Vol. 810, c. 355.] Can we be told the nature of that professional advice and whether the policies of the Government will be relaxed sufficiently for them to take account of that advice? Which will be predominant—the advice, or the policy of the Government?

Is the Minister willing to keep the House informed, will he tell us about the policies of the Government which will determine the future of the portfolio, and will he tell us of the impartial professional advice that is given to him?

Mr. Eric Ogden (Liverpool, West Derby)

It may have been the intention of the Under-Secretary of State when he intervened in the early part of this discussion to help the House and provide it with information. If so, he chose an unfortunate phrase when he said that it was his intention to direct the House on to a certain path of information and a certain path of advice. The word "direct" is perhaps not the best word to use in an intervention by a Minister, whether he be a senior or a junior Minister. I hope that he will be able to help the House, if he has your leave, Mr. Speaker, to intervene briefly at the conclusion of this part of the debate.

It seems that the I.R.C. has the right to make a report and has in fact made a number of reports. Presumably after the passing of this Bill it will have the right to make a final report. In that final report presumably the I.R.C. can include whatever it wishes to include. Will the Minister give an undertaking that he will not attempt to dissuade the I.R.C. from including in its final report all the information that it wishes to include about the reasons why it made certain investments, either in Rolls-Royce or anywhere else?

Mr. Charles Simeons (Luton)

The Amendment, which seeks a report before the appointed day as to the valuation of securities, seems to miss the point. What we are interested in is not the valuation on that day but the progression after the appointed day. It is this aspect which causes the employees of certain companies in which investments have been made a small amount of concern. Judgment which cannot be laid down by an Act of Parliament will be needed as to the timing of the disposal of these securities. The investment made by the I.R.C. in a company which was forced into a marriage was probably made at a higher market value than the value at which the shares stand today. In other words, the value of the shares has fallen considerably, probably because the marriage was not a good one. In the meantime, management is having to make amends for what took place. I am not saying this in criticism of the I.R.C.; it could have happened anyway, but it so happens that the I.R.C. has money in the company and that the Secretary of State in due course will have power over it.

If such companies are given an opportunity to recover, to put their houses in order and to show that their profits are rising, they will be in a much happier position than if Parliament lays down a procedure which has to be followed whereby they are sold off and thrown on to the market. If the shares were offered to the market and a bidder in a completely different line came along, because of the strength of his own shares he might be in a position to take over the company. The employees in some of these companies—and I have one in my constituency—are concerned about the timing. They are concerned that the share capital will be carved up and that they will become redundant.

The Secretary of State should be given flexibility so that he can choose the time when the shares are rising after the companies have been given an opportunity to report and to show how they are doing, rather than that he should be tied down to a specific day, which might be to the detriment of many companies. I hope the Minister will give us an assurance that he will bear this in mind.

Mr. Douglas

The points raised by the hon. Member for Luton (Mr. Simeons) were points that we endeavoured to cover in Committee. The Amendment calls for something which is already taking place, not something which will take place in the future. We are therefore pressing the Government to give an indication about an historical event and not a future event.

Mr. Simeons

I accept that, although I still think that the value before the appointed day is relatively irrelevant.

Mr. Ridley

With the leave of the House, and briefly, I should like to reply to the points which have been made. I have been asked about the I.R.C. report on Rolls-Royce. The report which was made available to the Government of the day was not the full report, but only a summary of the conclusions and recommendations, so the Government are in possession only of the summary and not of the detail. Whether this may be made available to the inspectors under the Companies Acts I am not yet in a position to tell the House. There is a Parliamentary Question down, the answer to which will be given when the question is due to be answered, and the House will be informed in that way. I regret that I am unable to give an answer off the cuff for fear of giving the wrong one.

The hon. Member for The Hartlepools (Mr. Leadbitter) asked about my right hon. Friend's statement in relation to informing the House. The question of parliamentary accountability was fully discussed in Committee, and my right hon. Friend has said that, if on any future occasion public money is to be put into an industry, he will make sure that the House is informed in the proper way. The intention is the same as under the Industrial Expansion Act for the matter to be brought before Parliament. We have acknowledged that this is the right way to do it.

If the hon. Member for The Hartle-pools looks at the record, he will find that my right hon. Friend spoke these words in answer to an interjection which was dealing with the Industrial Expansion Act.

Mr. Leadbitter

I do not want to deal with the Secretary of State, I want to deal with the question which is important to us and which we discussed upstairs, where the Secretary of State never paid a visit. I understand that orders relating to the Industrial Expansion Bill follow the affirmative procedure whereas orders under the Industry Bill follow the negative procedure. I am in doubt over the procedural element, which I regard as important, and I should be grateful for the Minister's comments on the subject.

4.30 p.m.

Mr. Ridley

I was coming to that. The position of the Government, therefore, is to agree with the general proposition of the Industrial Expansion Act; that before new undertakings are entered into to invest in or lend public money for new concerns, Parliament should be informed and consulted in advance. This is the principle on which hon. Members on both sides are in agreement, and this was done in that Act.

There is no suggestion of more public money being put into any industry under this Measure, and the only power which remains is either to vary or revoke an existing scheme under the Industrial Expansion Act, and this will, in any event, be subject to the affirmative Resolution procedure, as allowed for under that Measure.

The rest of this Bill deals entirely with the disposal of existing I.R.C. shareholdings. We had long debates in Committee about parliamentary accountability for these disposals, and hon. Members will recall that I gave certain undertakings, which I will repeat so that there will be no doubt about the way in which the Government intend to discharge that responsibility.

I said that detailed accounts of any transactions would appear in the annual appropriation account for the year. I recognised, however, that they would be considerably out of date because of the time it takes for those accounts to be prepared. I therefore said that we would make a half-yearly statement of the list of shares and stock still in the possession of the portfolio, so that the House would be informed at half-yearly intervals of the exact state of the portfolio, enabling hon. Members to have full knowledge of what was held.

I went on to say that, wherever possible, we would announce major sales by some convenient means so that the House would be aware if any major sale had been made. I said, in particular, that we would draw attention to any major sale which could cause a monopoly situation or a situation leading to some sort of concern on grounds other than straightforward industrial considerations.

The Committee upstairs accepted those undertakings as being in full discharge of our responsibilities, with the Government making all the information available to hon. Members to enable them to decide whether any action of the Government was one which they would wish to resist in debate and, therefore, challenge. We stand by those undertakings, and I believe that they meet the point mentioned by the hon. Member for The Hartlepools (Mr. Leadbitter).

The hon. Member for Liverpool, West Derby (Mr. Ogden) asked about a further report from the I.R.C. The Bill provides that there will be a report at the end of the current year. If the appointed day is after the end of the current year, it is provided that it may make a further report for the period that lies between the end of the current year and the appointed day. The Government would, of course, in no sense try to interfere with any report that it might want to print, and I assure the hon. Gentleman that free speech is a virtue in which we believe as much as he does.

My hon. Friend the Member for Luton (Mr. Simeons) asked whether we would have regard to the possible awkward industrial consequences that sales of shares might have if we were to choose an unpropitious moment or if an unpropitious bidder were to enter the market for shares. We discussed this matter at some length in Committee, as the hon. Member for East Stirlingshire (Mr. Douglas) pointed out.

I then made it clear—my right hon. Friend also made it clear on Second Reading—that we would have regard to the industrial effects of realising the portfolio. I asked the Committee to give us the maximum flexibility in disposing of shares so that we could achieve the best possible effect in any sale.

The House need not fear on this score of accountability. Ample information will be made available on all the matters which hon. Members have raised today. I therefore do not believe that it is necessary for us to accept the Amendment.

Amendment negatived.

Motion made, and Question proposed, That the Bill be now read the Third time.

4.35 p.m.

The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. John Davies)

I am conscious of the fact that the matters covered by the Bill have already been extensively discussed, both on the Floor of the House and upstairs in Committee.

I am also aware of the relatively narrow confines within which the Bill may be debated at this stage. I will, therefore, be brief, and, in doing so, I will deal only with issues which seem strictly appropriate to the Measure, as amended in Committee.

One of the primary issues which came out in Committee was clearly that which related to accountability to Parliament. This has already been discussed at considerable length, but I wish to reaffirm some of the remarks of the Under-Secretary, my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley). I wholly concur with the easements and assurances which have been given. These assurances have been primarily in regard to the fact that Departmental estimates will have within them details of forecast expenditure and receipts in respect of transactions concerned with the activities to which this Measure gives rise.

Moreover, these will, in due course, be dealt with in terms of figures in the appropriation accounts, which are published. Individual transactions will be shown in an appendix to these appropriation accounts so that hon. Members will be able to see precisely what has taken place with regard to investments made by the I.R.C. It has been undertaken that a six-monthly statement will be made to Parliament in a suitable form regarding such holdings as are retained from those taken over from the I.R.C.

A second matter which has clearly evoked a great deal of interest has been that of parliamentary authority. There was strong discussion about the desirability of requiring every order to be subject to the affirmative Resolution procedure in relation to the realisation of assets and rights and the fulfilment of obligations which the Government inherited from the I.R.C.

I understand the purposes which were sought to be achieved by these proposals, but it is clear that to undertake realisations in that way would not be to do them in circumstances which would allow for the most satisfactory form of realisation. In fact, to have to publish all proposals of sales in such an extensive way would, in relation to assets and equity holdings and the like, be liable to cause adverse conditions in which such realisations could take place. With a view to meeting some of the wishes which have been expressed by hon. Members, it has been undertaken that announcements of major sales will be made whenever possible.

Another matter which has been extensively debated is the need for the maintenance of the regional implications of any realisation procedures which take place under the Bill. We understood the purposes which were sought to be fulfilled by those proposals. I would simply comment that in giving the assurances which I have given on various occasions, I have always sought to make it clear that the whole range of the industrial considerations which surrounded any particular acquisition by the I.R.C. would be taken fully into account in realising these interests.

This must be taken as inferring that if, in a particular case, there was a strong regional concomitant to an undertaking investment or interest of any kind held by the I.R.C., that would clearly not be ignored in relation to any action that might subsequently be taken. So I think that some broad reassurance can be given to those who are concerned about this issue.

There was considerable discussion about the possibility of the Industrial Expansion Act being maintained in some form as a vehicle for the implementation of a policy in favour of the shipbuilding industry. The conclusion reached, with which I entirely concur, was that this Act would be an exceedingly unsuitable vehicle for the implementation of a policy in this industry in any case. Indeed, it is worth commenting that it was not used for that purpose. We have presented a Bill on shipbuilding matters and when we come to debate it the whole of this matter will clearly be further discussed.

Finally, I refer briefly to the rather difficult question of the sanctity of documents acquired by the I.R.C. in the course of its relationships with different companies and the risk that the mere passage of them to the Government might induce revelations which the companies never contemplated in their earlier discussions with the Corporation and which might be vexatious to the companies.

My hon. Friend the Under-Secretary has made it clear that great care will be taken to ensure that this does not happen. The companies concerned are being contacted to ensure that they have no objection; and, should they have a strong objection in relation to any document which to their knowledge lies in the Corporation's hands, that clearly will have to be respected.

The outcome of this is that we have a Bill on Third Reading which is somewhat amended from that which was originally presented, but it is substantially the same. It seeks, as was the original intention, to discontinue the work of the I.R.C. and to cancel the effect of Sections 1 to 7 of the Industrial Expansion Act. The purposes of the Bill have been very fully discussed. I do not wish to add further to the discussion. I commend the Bill, as amended, to the House.

4.42 p.m.

Mr. Dell

May I first welcome the Secretary of State back to our discussions on the Bill. We missed him in Committee, for a number of reasons. We did not always feel that there was necessarily an identity of view between himself and his ministerial representative on the Committee. After his advocacy of the Bill on Third Reading it may be that the Secretary of State was well advised to leave it to the Under-Secretary, because I do not think that in his speech today the Secretary of State added much to the arguments as to why the House should support this simple act of childish destruction.

The Bill may have been amended in Committee in one technical respect. However, it has certainly not been improved. Indeed, it would have been impossible to improve it. Because it is the same act of doctrinaire destruction as it was in the beginning, we shall vote against it.

In Committee we received certain assurances. The right hon. Gentleman and the Under-Secretary have referred to them. The first was that where possible—we understand that this will normally be possible—a statement will be made about major sales.

The second was that sales which create or intensify monopolies will be notified. I understood the assurance in this case to mean that they will be notified in advance. I take that to be the implication of the Under-Secretary's remarks in Committee as reported in column 179 of the OFFICIAL REPORT. The hon. Gentleman did not make it clear today, nor did the Secretary of State. I take it that that was the assurance that was given on the grounds that it would be impossible for the Government to take action to create or intensify monopoly without giving previous notice of their intention.

The third assurance given in Committee related to paragraph 5 of Schedule 1, where the issue of confidentiality of private information passed by companies to an independent agency was involved. It was agreed on both sides, and as I understood it accepted by the Under-Secretary, that it would be far better if the assurances which have been given that administratively this point would be taken care of were converted into Statute. Although the right hon. Gentleman has told us that this administrative assurance will stand, he has given us no reason at all why there is not a Government Amendment on the Notice Paper converting this assurance into Statute form. It was agreed on both sides that it would be preferable that that should be done. The Under-Secretary indicated that, if he was unable to do that, he would tell the House why it could not be done. We have not been told why this could not be done. I hope that in answering the debate the Under-Secretary will not merely repeat the assurances which have been given in this respect but will say why this cannot be done in legislative form.

Since Second Reading the Government's industrial policy has developed beyond recognition. There has been the nationalisation of Rolls-Royce, a matter to which I at any rate do not intend to refer. There has been the loan to Yarrow from the Ministry of Defence, a loan made by the Ministry despite the doubts that it might throw on the Ministry's traditional policy of fair tendering and made by that Ministry rather than by the right hon. Gentleman's department. There has been the announcement of assistance to Harland and Wolff, which was not made by way of oral statement in the House. When I raised this point with the Leader of the House last Thursday I was told that this was primarily a matter for the Northern Ireland Government though clearly the right hon. Gentleman's Department is involved and must be the main decision-maker.

In other words, we have had a series of examples, not of disengagement but of involvement. Many of them have been done and announced to the House in a way intended to diminish the prime responsibility of the right hon. Gentleman and his Department. This presumably is intended to preserve the lingering legend of disengagement which, as The Times said editorially this morning, is a policy already in a state of some disrepair.

At any rate, over the period since Second Reading it is clear that there has been recognition by the Government that in industrial policy political and social considerations as well as economic considerations count. Though I tell the right hon. Gentleman that there is not merely a serious unemployment problem in Northern Ireland and Scotland.

The second issue which has clearly emerged since Second Reading is that what we are concerned with in industrial policy is not just principle but is also method. Clearly the Government have decided that in many cases they must intervene. What we are discussing in the Bill is method as well as principle. The Government's policy expressed by the Bill and expressed by the abolition of these two instruments is that where they intend to intervene it should be done, not by independent agencies, but by Government Departments direct.

I have three comments on that. First, this policy has not been very successful so far. There has been a series of very doubtful decisions, to put it at its mildest. The Mersey Docks and Harbour Board is one case where the only victims of disengagement have been the bond holders, who had no conceivable responsibility for the situation that arose there.

My second comment—this is a comment I convey to the right hon. Gentleman because it has been made to me on a number of occasions by industrialists who have had contact with civil servants in the right hon. Gentleman's Department—is that the right hon. Gentleman's civil servants are not clear as to what the right hon. Gentleman's policy is. Perhaps this is not surprising, because the right hon. Gentleman certainly has not made clear to the House what his policy is. His civil servants do not know the criteria by which his policy is supposed to be conducted. Again, this is not surprising, because, despite repeated requests to the right hon. Gentleman—my right hon. Friend the Member for Bristol, South-East (Mr. Benn) and I made them on Second Reading—the House has been given no indication of the criteria which the Government have in mind.

Third, the Secretary of State's civil servants have no idea as to what sorts of decision in matters of industrial policy are likely to be approved by the Cabinet. There have been repeated examples, we understand, of decisions worked out carefully over a period of weeks in Departments which have been turned down by the Cabinet after half an hour or an hour's discussion without proper consideration of the consequences of so doing.

Out of the "lame duck" policy which the right hon. Gentleman so eloquently announced to the House some months ago there is now developing a policy of government by ineffectual threat. Statements are made in the House and elsewhere along these lines—"We will help you this time but never again, whatever the circumstances"—"We will not finance inflationary wage settlements"—"This is your last chance". Statements of that sort are being made as indicating the spirit behind the various decisions to which I have referred.

When I say that this is a policy of ineffectual threat, I do not mean that the Government may not carry out the threats. I do not say that the Government might not, in a spirit of "derring do," let some major company collapse, whatever the social and economic consequencies, in order to encourage the others. There is some evidence to the contrary in action taken by the Government in certain matters. Leaving aside the Rolls-Royce case, the only victim of this policy so far has been Palmers Yard at Hebburn and the bond holders of the Mersey Docks and Harbour Board. But I cannot say that the Government do not intend to carry out these threats.

The policy is ineffectual because it has no effect in producing the results which the Government evidently wish. It does not work. There are ceremonies of rededication on these occasions, but the policy does not work, for a number of reasons.

First, the problems which many of these companies have to deal with are problems which go far beyond anything within the capacity of management and workers to handle. This is true, for example, of the shipbuilding industry in its particular international competitive situation.

The policy does not work because people do not respond to threats. I do not know why the right hon. Gentleman and the Government imagine that people in this country are likely to respond to that peculiar form of leadership. Third, it does not work because what is mainly involved in these situations, when competitive circumstances permit, is management capacity.

In the debates on the Industrial Relations Bill, the Government were prepared to admit that responsibility for the condition of industrial relations lay mainly on management. The same is true in the industrial situations with which the right hon. Gentleman has to deal. Again, therefore, this policy of threat, which is rapidly converted into a policy of government by whining and blaming and government by wringing hands at the iniquities of employees, does not work because what is necessary in these situations is new management, good management, but even new and good management can only have its effect slowly.

The good management or the new management which the right hon. Gentleman may wish to put in in a number of situations may well need further encouragement. For perfectly good reasons, it may need further assistance. It may need oversight by people who have less concern with the detail and more with the general policy of the company with which they are connected. Occasionally, management may need stiffening in the conduct of its policy in order to revive and make competitive a firm in which the Government have taken a financial interest. This is true particularly in the difficult situations with which the Government often have to deal. After all, firms normally come to the Government only when the situation they confront is one of great difficulty.

There has been much debate in this country about what sort of action can be taken or should be taken to improve management. I wish that the right hon. Gentleman would listen. I am addressing the House about the effects of the abolition of the Industrial Reorganisation Corporation and of the powers under the Industrial Expansion Act on actions which his Government have to take in this field.

Mr. Ridley

Perhaps the right hon. Gentleman would speak to what is in the Bill rather than what will happen as a result of the Bill.

Mr. Dell

I am sure that you would intervene, Mr. Deputy Speaker, if I went out of order at any point. What is in the Bill is the abolition of the Industrial Reorganisation Corporation and the repeal of certain powers under the Industrial Expansion Act. I am explaining what the effect is likely to be on his Department when these organisations and powers have gone, as they will go under the Bill.

I was about to point out that the sorts of pressure on management which have frequently been discussed in this country as contributing to the better performance of management—such ideas as the reactivation of shareholders, which I regard as a forlorn hope, such ideas as giving special responsibility to outside directors, and such ideas as the creation of supervisory boards—were available to the right hon. Gentleman in the form of the Industrial Reorganisation Corporation and the boards which could have been set up in those cases in which he might give assistance to sections of industry for reasons which he would on occasion find good.

The Industrial Reorganisation Corporation, particularly a strengthened Indus- trial Reorganisation Corporation, could have exercised exactly that supervision over the Government's investment and assistance to companies which has so frequently been discussed in this country in the context of what could be done by shareholders but is not, and what might be done if, by changes in company law, we established supervisory boards or that type of instrument.

All this the right hon. Gentleman is throwing away. He is throwing away a valuable instrument now in his hands, and he says that Government Departments will do it instead of the I.R.C. and instead of boards established under the Industrial Expansion Act.

Government Departments cannot do the job. They may be able to negotiate an agreement in the first place, but what Departments cannot conceivably do is the supervisory task, because they have neither the resources nor the experience. The most recent evidence of that—the right hon. Gentleman has not fully explained the circumstances to the House—is the collapse of the Vehicle and General Insurance Company. The right hon. Gentleman's Department had specific supervisory powers but they did not avoid disaster in that case.

It is a major tragedy that, instead of being developed and modified in a way which would have enabled it to act in this way on behalf of the Government, the Industrial Reorganisation Corporation is to be abolished. I say that for another reason. The Government have shown in the conduct of their industrial policy that they need advice. That is shown by the quality of the decisions they have taken in the absence of such advice. Businessmen have been brought into government, with much fanfare. What has happened to them since? No one knows. They have been forgotten. No one knows what they are doing. As so often happens, they have evidently been absorbed into the machine. I should not be surprised if many of them were disillusioned about the situation in which they find themselves. In an organisation like the I.R.C., where the people concerned have their existing functions and companies, senior positions of authority, and are not cut off from the movement of industrial affairs by being absorbed into the government machine, they would have been able to give the Government advice. The Government sorely need that advice, as the experience of their conduct of industrial policy over the past few months has shown, but they evidently have no use for that sort of independent advice.

The principal reason for setting up the Corporation was to stimulate mergers, though its nature changed with experience and the change in the industrial situation over the years of its existence. What is the Government's policy on mergers? We had a policy. The I.R.C. was to forward a few sensible, well-thought-out mergers. The Monopolies Commission was to examine certain mergers against the measure of the public interest, whether they reduced competition without adequate compensation in increased efficiency, and whether they would lead to a misuse of resources. But what is the Government's policy on mergers? The Under-Secretary has told us that a great number of mergers brought about by market forces have had disastrous results. The right hon. Gentleman has told us, as I reminded the House on Second Reading, that the Government will encourage restructuring, and believe in the necessity of size in many instances.

What is their policy, between those contradictory statements? Will they stop mergers or encourage them? Is the decision of the Government in the case of Bowater-Reed merely an example of the reconciliation of those contrary views of the right hon. Gentleman and his Under-Secretary? To encourage size they were going to allow the merger to go through, but because it would perhaps result in a disaster they referred it to the Monopolies Commission. It was an extraordinary decision, born simply of confusion of purpose, from which fortunately they have been rescued simply by the decision of the two companies not to go ahead.

Mr. Douglas

Does my right hon. Friend agree that the reference to the Monopolies Commission would have been futile, because the merger, if the companies had agreed, would have been well under way before the Commission could possibly have reported to the Secretary of State?

Mr. Dell

Exactly. It was a policy of confusion without any conceivable desirable outcome. The Government should have let the merger go through, or stopped it and waited for the Commission's report. That type of decision shows that the Government have no merger policy, just as they have no competition policy.

I asked the Secretary of State at Question Time just over a month ago when he intended to make a reference of a monopoly to the Commission. He said. "Very shortly", but it has not been made yet.

There have been other changes since 26th January. The economic situation is even more critical. There is higher unemployment and lower investment, mainly owing to lack of confidence in the Government, the change from the investment grant system to tax allowances, the cut in the differential in favour of the development areas, and the cut in cash flow to the development areas. Here we have had a series of extraordinary, contradictory statements from the Government. On Friday, fortunately, we shall have an opportunity to debate them. The right hon. Gentleman added to them yesterday by saying that although no forecast could be made he could make a forecast, and could give an assurance, which shows that he is learning quickly to make politically convenient statements.

Although the calculations which make the Government think that they can get away with contradictory statements may be very complex, the facts are very clear. There is rising unemployment and declining investment. These are facts of which people are aware; the boot is pinching. Despite all the assurances the right hon. Gentleman may give the House, those are the facts in the development areas.

I am not claiming that the Industrial Reorganisation Corporation or the Industrial Expansion Act could have operated to reverse the downward trend for which the Government are responsible, but they could at least have introduced some amelioration into the situation by selective investment projects.

Mr. Ridley

Can the right hon. Gentleman point to one thing the Government have done which could have had any effect upon regional employment so far, leaving aside the future? The right hon. Gentleman is complaining about the present situation. What action of the Government is he complaining about that has brought about this state of affairs?

Mr. Dell

I am sorry the hon. Gentleman was not listening. I suspected that he was not, because of the chatter going on between him and his right hon. Friend. He may find it more difficult to answer what I have said because he was not listening. I spoke of the decisions the Government have taken which have affected employment in the development areas, decisions which have shaken confidence in those areas. There was the decision to abolish the regional employment premium, which is therefore no longer being taken into account by industry in development areas, because it is not something upon which it can rely. The decision to change from investment grants to tax allowances has already led to the postponement or even abandonment of major investment projects in the development areas, or has contributed to that result.

Mr. Ridley

The right hon. must not talk nonsense. Neither of those things could conceivably have contributed to the present situation, though they may contribute to the future. The right hon. Gentleman has not answered the question I put to him.

Mr. Dell

Of course they have contributed to the present situation. For example, construction projects that could have been going on at Carrington, near my constituency, which have been deferred, would now have been employing my constituents and constituents of my hon. Friends on Merseyside. Does the hon. Gentleman imagine that the Government's decisions have not had a current impact on the employment situation? Of course they have. What has been made clear to the whole of industry is that the Government intend to prevent expansion. This has led to people being cast out of employment who might have been in employment now. There is no question but that the Government's actions are having an effect on the current employment situation.

One thing we were not told in Committee is what the Government intend to do about certain industrial problems which have been presented to them in the form of reports such as that on the machine tool industry. Under the Industrial Expansion Act they would have had powers to assist in dealing with the problems of that industry, as revealed to them by the Committee under the chairmanship of Sir Richard Way. What will they do in that sort of situation, or is disengagement to involve that industry whatever the consequences?

I will not refer further—we referred to it on Second Reading—to the fact that the abolition of the Corporation is a breach of an election promise.

I hope that the I.R.C. in some form will be revived, if not by this Government then at any rate by a future Labour Government. I would expect—and I am obviously speaking personally—that, if it were revived, it would not be a reorganisation corporation specifically, because I do not think that restructuring would be its only or its primary function. I would expect, on the basis of experience with the I.R.C.—very valuable experience from which a lot was to be learnt by a Government which decided to review its operations instead of abolishing it—that such an organisation might be less independent of the Government, or at any rate while no less independent in the conduct of policy, more subject to policy directives from the Government.

I would expect it to be an advisory body of high status on specific industrial situations, a protection against the sort of political intervention which I think this Government will turn their hands to in due course. I would also expect that it would not be run on a shoestring, because if it was to have the sort of functions I have indicated and which such an organisation could valuably have on behalf of the Government, it could not be run on a shoestring. But the Government, instead of modifying or learning from experience and improving the organisation we have set up, are throwing it away. It is an act of senseless childish destruction committed in the early days of a Government who manifestly lack experience and judgment. It is a decision which they and the country will regret. Perhaps they regret it already.

5.12 p.m.

Mr. Albu

This is a sad occasion. I do not intend to spend a great deal of time because most of the things I wanted to say have been said by my right hon. Friend the Member for Birkenhead (Mr. Dell). We shall vote against the Third Reading of this entirely destructive Bill. It is a tragedy when a new Government's first legislation is destructive and contains nothing constructive. But the Government have their majority and they will have their way. That, of course, is not the end of the matter. It does not solve the problems raised by modern industrial society.

As my right hon. Friend said, the Government could have waited a little longer. Even if they doubted the value of the I.R.C., even if they were opposed to some of the principles on which it was set up, they could have kept it at work with a minimum capital. There was no hurry for repeal. They could have prevented the I.R.C. from going into any other venture while they had time to reconsider its past, the principles on which it was set up and the policies which they themselves wished to pursue.

Nor was there any need for hurry to repeal the Industrial Expansion Act, because that Act was entirely dependent for its operation on the Government themselves, and if the Government did not wish to use it they need not have done so. I do not know whether they think that they will get any electoral credit out of this, whether they think this is a popular move. Unfortunately, I do not think that this is an issue which arouses great interest in the country. But it does arouse great interest among those of us, in this House and outside it, who have had, throughout our working lives, an interest in economic and industrial development.

I must repeat what has been said before—that we have our doubts about the Secretary of State's own enthusiasm for the Bill. He has too much industrial experience not to realise that this is not a time in industrial history, certainly not in ours, for doctrinaire economic policies. The Bill will do nothing to change the technological climate. Nor will it do anything, unfortunately, to help solve the problems of industrial and regional reconstruction, which are by no means over and from which we have been suffering for perhaps one hundred years.

Practically the whole time I have been in the House we have been concerned with these problems. We have had debate after debate on them. First, they were on what were generally called the macroeconomic problems. That was the day of the Keynesian economics. When I first entered the House, everything was to be solved by the management of the economy. We have learned that is not enough. During the last 10 or 15 years, our minds have turned more and more to efficiency, technological development, management and the skills of our workers in industry. Successive Governments have had to take action to change the conditions of our industrial life at the industrial level, not at the macro-economic level, at which we were deficient.

I have said many times in the House that these problems are not new. Warnings about them have been given consistently over at least the last hundred years. During that period, our competitors have increasingly gone ahead of us, with the exception of the inter-war period. That was a special period, due, of course, to the post-1918 inflation on the Continent and the subsequent violent deflation and mass unemployment. Strangely enough, during that period of great unemployment, we had greater restructuring of industry and a higher rate of growth than in many other periods. But I hope the Government are not going back to that. Apart from that period, we have been continuously overtaken by competitors.

I cannot believe that a Government who obviously need and want to use the skills of business men and have brought in from outside the right hon. Gentleman, as a businessman and industrialist, to help them in industrial policy, do not understand these problems and that they are not going to try to develop some policy other than the policy of 19th century laissez-faire.

The days of a close relationship between Government and industry are here for good. They will not go. They may vary in their form and in their extent, but no one in any modern society can believe that Government and industry are not closely entwined, for defence reasons if for no other. I do not know what proportion of the United States economy is closely entwined with the United States Government, but in defence—although that appears to be lagging now—and in activities such as space exploration and so forth it is enormous in terms of the advance of technology in modern industry. We have serious problems because of the close entwining of the major industrial powers.

It has been clear for a long time that the market itself is not, at any rate in this country, an efficient mechanism for restructuring and modernising industry and improving its management. It is not as efficient, it appears, as the once much-criticised German banking system, which has always played a much more active rôle in the management of the enterprises which it has helped to finance. This was much criticised in Britain for many years, but I think that we are coming around to a rather different view. If I read aright the thoughts of the right hon. Gentleman, judging by the speech he made at the annual dinner of the I.C.F.C., they bear some relationship to my thinking on this matter. But the City and the banking system and the market have not so far provided a method of improving either the structure or the management of British industry.

It is an extraordinary thing that we have in this country a large number of merchant banks and that the chairman of one of the largest was the chairman of Rolls-Royce. It is interesting that a merchant bank played a large part in the financing of Rolls-Royce but apparently was not aware of the financial and management problems from which Rolls-Royce was suffering. This applies not only here but throughout the whole of industry. No one can claim that that little body, the I.R.C., could do more than make a small dent in this problem. It was beginning to build up some knowledge, some expertise, some influence. It was a useful body for this purpose.

It was a tool which the Government could use without directly intervening. I know that the Under-Secretary keeps complaining about the lack of Parliamentary responsibility and so forth but I aways thought that it was Conservative policy at any rate that Government should not intervene directly, too immediately, that the Civil Service was not a suitable mechanism for direct intervention in industry and that some intermediate approach was required.

I have always pressed for a much closer relationship with industrialists and busi- ness men in determining our industrial, economic and tax policies. When we were in office we brought into Government a considerable number of business men who helped us a great deal. The Government have also brought in business men but, as my right hon. Friend said, they have lost them. It is a great mistake to believe that business men will improve the machinery of Government. They know nothing about it and when they get into it they are completely lost.

I do not believe that any business man could have built up the National Insurance scheme in 1948 any more than I believe that any business man, by himself, without the great number of civil servants, could have introduced the decimalisation of our currency which has been so successfully carried out in the last few weeks. It would be impossible, and that is an answer to those who consider that our civil servants are amateurs. They are not.

Mr. John Biggs-Davison (Chigwell)

What does the hon. Gentleman think of Lord Woolton's achievement at the Ministry of Food during the war?

Mr. Albu

I did not know that Lord Woolton was a civil servant.

Mr. Biggs-Davison

I was referring to the hon. Gentleman's comment that business men were no good at dealing with the machinery of Government.

Mr. Albu

I do not understand the hon. Gentleman. Lord Woolton was a Minister, he was brought in during wartime and in war-time things are very often different. I am not suggesting that we should not have the right hon. Gentleman here. I am not sure whether he will be successful, and I do not know what his hon. Friends think of him. I am glad to have those with industrial experience in the House as Ministers. That is not what we are talking about. I am asking whether it is any use to bring the business man into Government relations with industry. My answer is "Yes". What I am saying is that that is not what the Government are doing. They are not using their business men as advisers on their relations with industry, on industrial or economic or the tax problems facing industry. They are using them to fiddle about, interfering in the administration of Government itself, of which they have absolutely no experience.

Their very training and education is completely different from that of the civil servant. His responsibility is to the Minister who is responsible to the House. Every civil servant knows that, and that is why business men are always utter failures. Of course, I am not suggesting that a few improvements in the typing pool will not be helpful. Of course that will be so. But the suggestion that they can improve the machinery of Government is nonsense. What they can usefully do, and what they should be used to do, is to help the Government in their relations with industry and to advise the Government on industrial policy. That is why a body such as the I.R.C. was so useful. We brought in a number of business men. We brought them into many other parts of our Government as well, and they did a useful job. I think that the right hon. Gentleman knows in his heart of hearts that a great deal of what I am saying is so.

When this Bill is passed we shall have to wait to see how the Government deal with the problem. That is what we want to know; what will the Government do about their relations with the aviation, shipbuilding, computer and machine-tool industries? It is all very fine to say, "Nothing. These must stand on their own two economic feet." If that is so, given the present state of British industry, they will soon be standing on very little at all. We shall find ourselves without some of the most important industries necessary for a modern industrial society, in many of which we are already backward. The whole range of engineering—mechanical engineering, in particular—is still not in a healthy state.

These are the problems still to be faced and dealt with. No doctrinaire adhesion to macro-economic principles will make any difference to the problems; they will still be there when this Parliament finishes, and whoever comes into the next Parliament will have to deal with them.

5.28 p.m.

Mr. Leadbitter

There is an inevitable tendency to repeat Second Reading points on a Bill like this because we are left in the situation described by my right hon. Friend the Member for Birkenhead (Mr. Dell) who said that even after Standing Committee scrutiny the Bill succeeds in doing nothing. As amended, it virtually leaves hon. Members on this side of the House as confused as ever. Because of the puerile attempt by the Under-Secretary, without any help from the Secretary of State as to what Government policy was, we have been left in a vacuum.

We can perhaps best address ourselves to this by taking into account the variety of statements which have been made and the number of decisions reached on regional policy. Whatever else may be said about the Bill, it is a stupid, puerile and ineffective Bill which wasted a considerable amount of time. The Bill is titled wrongly. It is called an Industry Bill, but it is a Bill of disengagement, withdrawal, abdication following the shuttered concept of non-intervention mouthed by the right hon. Gentleman on more than one occasion.

We could give the Bill some names but we found in Committee that we cannot alter the Title at the beginning, nor can we alter it in the middle or at the end. The Title has to be in accordance with the Amendments accepted. None of our Amendments seemed to find favour with the Under-Secretary who acted for the Government in the absence of the right hon. Gentleman. We wanted to see him, to tell him how concerned we were about it. We were worried in case he was making a mess somewhere else, but he never came along. We wanted to help the country to get out of the difficulty.

The news about this Bill and the other despondent news about Conservative policy had left the populace in a state of puzzlement. It had certainly left industrialists wondering how they were to plan future investment programmes. It left the regional authorities, economic planning councils and boards, various quasi-political and local authority and trade union bodies set up to look after regional affairs, in a state of some concern.

On the question of regional policy, as with the right hon. Gentleman's attitude to motor insurance, he has complete confidence in private enterprise and he does not accept that the Government are responsible for anything which has happened since they came to power. To say the least, that is arrogant. A good politician admits his mistakes occasionally to show that he is human, but not the Secretary of State for Trade and Industry. He gives the House a cock-and-bull story about his intentions. In order to satisfy himself that his thoughts are right, he stands before his mirror each morning and talks to himself and convinces himself and then says later that the rest of us do not understand him.

Will the Secretary of State tell us what combination of industrialists or which single industrialist made representations to him to the effect that the Corporation should be brought to an end? What representations were made from any quarter outside industry? What representations came from any political quarter? Some Conservative-held local authorities will be making representations to him very shortly, saying, "We are worried. What do you propose to do for us?"

If no representations were made to the Secretary of State, the only conclusion we can draw is that he decided to bring the Corporation to an end or it was decided by the Cabinet. A possible conclusion is that his right hon. Friend the Member for Bexley (Mr. Heath), who I understand is the Prime Minister, might have decided the matter for the Cabinet and then the right hon. Gentleman had to do as he was told. Responsibility for ending the Corporation cannot be laid at the door of anyone else but the Conservative Government. If the Secretary of State is prepared to take responsibility for it, let him say so. If it were a Cabinet decision, let him say so. If no one outside the Government persuaded him to get rid of the Corporation, let him say so.

The ex-Chairman of the Corporation, Lord Kearton, and his successor and their industrial colleagues on the board, plus the trade union representative, were working in complete harmony with industry. They were making progress during the Corporation's three years of life—and we should bear in mind that the first year was one of apprenticeship and of gaining the confidence of industrialists. Therefore, in practice, a much shorter period was involved in bringing about mergers and making improvements in industry, and in introducing new principles of application in management and concepts of rationalisation which time and again have been applauded by industrialists who have had the opportunity to express their opinion impartially.

The product of that exercise has been the creation of an interesting portfolio of investments worth £120 million. The Secretary of State cannot help but agree that no harm was done by the Corporation. Indeed, the evidence shows that a great deal of good was done. The Corporation had a hand in creating the British Nuclear Design Group in which it had a considerable shareholding. It had a hand in bringing about the Nuclear Power Group—the second string in our nuclear posture. Bearing in mind that we produce more nuclear power for civil purposes than the rest of the world put together, the Corporation's contribution was useful. In a short time the Corporation made a useful contribution in textiles, light engineering, heavy engineering, boiler production and in a range of other manufacturing activities which cut across a very broad section of the industrial infrastructure.

The House should not ignore the terms of reference of the industrialists appointed by the Minister. The Secretary of State must try to have a sense of humility. He has not a monopoly of business expertise in the House. It was only by fortune, good luck and the grace of God that he got to the top in the C.B.I. He was not the only pebble on the beach there. He must have a sense of humility and accept that the evidence shows that he acted in a way which conflicted with the evidence of industrialists.

The conditions under which the Corporation operated were that it should exercise a completely independent judgment in industrial matters; that it should suffer no intervention from the Government; and that there should be no veto on any of its decisions by the Minister. It was provided with finance to enable it to work with industry and to help in those sectors of industry where solutions could not be found. The investment of Corporation money was based on one of a number of criteria. The basic criterion was that no Corporation money should be invested if another source was available.

The Secretary of State is getting rid of a body which has been proved to have done useful work. How can he say that the termination of the Corporation stems from anything other than blatant, misguided political dogma? The same applies to the termination of Sections 1 and 7 of the Industrial Expansion Act, 1968. That Act produced three schemes which have been proved to be essential to the regions and will be of benefit to our balance of payments, namely, the creation of two aluminium smelters, one in Anglesey and one in the North, and the I.C.L. computer holdings company.

I and others on the Select Committee on science and Technology know the important part which my right hon. Friend the Member for Bristol, South-East (Mr. Benn) played as Minister of Technology in the creation of these three major beneficaries of the Industrial Expansion Act. We know the danger to I.C.L. holdings in the light of the recently competitive positions claimed by I.B.M. and Honeywell.

Does the Secretary of State, after Rolls and other recent examples which have conflicted with his philosophy, still say that it will not happen again? He can only be justified in saying that it is the Government's intention at this stage to use the provisions of the Act, but he cannot have a crystal ball and say that it can never happen.

The great advantage of the Act was that it gave reserve powers. If that were the best way of dealing with a situation, why not keep it—unless it is because of a dogmatic political posture from which the Secretary of State feels that he cannot deviate in case, at the next Conservative conference, he is charged with contradictions? So on these two counts the evidence shows that there was no case for getting rid of I.R.C. and that it can be a major mistake to get rid of reserve powers which could have been used in eventualities like those which have occurred recently.

The extent and nature of the Rolls affair was outside the scope of the Bill, but there are many examples of how future needs might have to be met. The right hon. Gentleman is foolish to get rid of something which need never have been used, unless in his judgment or that of the House it had to be invoked. To repeal it completely is silly.

The Under-Secretary of State, who is the hot gospeller of the Conservative Party on regional policy, answered our simple little Amendment—I supported it, so it was bound to the be right—which asked him, under Clause 1(2), to consider regional policy. We put the most reasonable arguments before him, based on decades of experience in the region. I am glad to see that my hon. Friend the Member for Houghton-le-Spring (Mr. Urwin), the ex-Minister responsible for the North, is here. Probably, he is hoping that there will be a change of heart, but I think that that is wishful thinking. The Under-Secretary of State would not take account of this vast experience.

He asked what decisions had been taken by our Government which were responsible for the present regional policy. The other regions can speak for themselves, but what I say can probably be emulated by them. In the Northern Region, before this Government came to power, we claimed 160 new manufacturing industries. We claimed, on the Board of Trade estates, considerable advances in factory building, over 70 advance factories, over 120,000 new jobs and the creation of government training centres, staffed and built to produce 3,000 newly trained men per annum. We had a road-building programme of £50 million. We had a construction programme of £143 million. We had inducements to industry of over £163 million.

I do not have to have a brief to read from to give the answers, as the Secretary of State must have when he comes to the House: I have learned the job. I am giving it to him in the most beautiful language I can, so that he can understand it. Therefore, we had over £300 million per annum of aid in the Northern Region. Indeed, the North-Eastern Development Council, which appealed to the Department only recently to be a little more reasonable about the situation in the region, told us that, during the period of Labour Government, £1,000 million was injected into the North.

The Bill is a serious contribution to the serious lack of confidence in the region, which has caused the present situation. In October of last year, 13 industrial developments certificates were granted, involving factory space of 365,000 square feet. In January this year—this shows the slide—there was one industrial development certificate, involving factory space of 22,000 square feet. Under the I.D.C. policy, the rate of factory building was running at 1,935,000 square feet in the year before the Conservatives came to power. That is the record; that is the result.

More than that, inquiries in the region for industrial development have slowed to a trickle. Will the Secretary of State name the 30 industries in the Northern Region and Scotland which have contracted out? If I am wrong on that point, it shows that I am not perfect, but have just generalised a little too much, but all the rest is factually correct, certain and right.

The Under-Secretary, the Secretary of State and the Prime Minister—the Father, the Son and the Holy Ghost—come to the North and declare that important area a special development area. For the last five years in Hartlepools, I have been saying that it is an example in the United Kingdom of progress—the only constituency, in the last year when the Conservative lot was in power, in 1963–64, with a 12½ per cent. unemployment rate. But, when we left office in June last year, the position had been altered. We boasted about bringing in, during that period, 4,000 new jobs, 30 new industries and extensions to existing industries. The proposals included a new central area development and a new port complex. Despondency was thereby transformed into hope and optimism and the situation was intended to be an attraction to other industries. We sought to use our policy as an instrument to deal with unique cases of hardship in West Durham.

Heaven knows what trouble the present Government will inflict on West Durham by the proposals in the Bill. I shall be asking Questions month after month about the number of inquiries on the North-East Coast resulting from this shift in policy, the taking away of investment grants and the use of the provisions of the Bill. If the Secretary of State is not able to provide the gravy, then surely at some point he must admit that his policies are responsible for the situation. He cannot for very much longer continue to ascribe the present situation to the policies of the Labour Government. All the facts are available to prove him wrong. We must be patient and wait for the point at which he caves in and admits he is wrong.

The claim has been made that the I.R.C. cannot be helpful in solving the present situation and that the Industrial Expansion Act is not the right instrument. However, it was meant to be part of a package. We know that measures are being prepared to deal with the financial needs of the shipbuilding industry which, sad to say, is still sick and still needs a great deal of help. But the help being offered by the Government falls some £300 million short of what is required by the shipbuilding industry and we shall have to watch the situation with great care.

It is part of the democratic process that, after angry words are spoken in the House, the normal courtesies prevail. But in the end our duty is towards the country as a whole. I would ask, the Government in the cause of the prosperity of Great Britain and as a result of all the advice we are receiving from experienced people in industry and commerce, from Members of Parliament who know the situation in their constituencies, from economic councils and local authorities, to try to be more reasonable in their policies, to be more resilient and to relax a little more. Let them not threaten people. They have had their months of threats to the trade union movement.

The intrinsic value of our democratic process is that, at the end of the day, it is the decision of the people in the country who send hon. Members to this House, and we must be careful about our attitudes towards those people. This must apply however weak those people may be—people such as the Post Office workers. If one keeps firing boomerangs in the air dictated only by one's philosophy without any consideration for the people whom one serves, those missiles will return and wrap themselves round one's neck.

I hope that the regions will not suffer from the Government's policies. I hope that the Secretary of State will listen to other points of view, and I trust that he will take reason into account. I hope that he will regard his unhappy experience over the past few months as a great lesson in his political life. The lesson is that in serving the House of Commons one cannot be rigid in one's attitudes. One must be prepared, if the evidence so demands, to change one's thinking.

The Secretary of State knows how hard I have pressed my point of view upon him and his Department. He may feel that it is purely a matter of parliamentary conflict, but it is not. It is a disbelief in what the right hon. Gentleman stands for. However, I hope that as a man he will rise above the situation and will not repeat these nonsensical provisions set out in the Bill, which are stupid and irrelevant nonsense.

5.55 p.m.

Mr. Tom Boardman (Leicester, South-West)

I apologise to the House for intervening in this debate, as I was unavoidably absent during the speeches of both my right hon. Friend the Secretary of State and the right hon. Member for Birkenhead (Mr. Dell), and I regret having missed those contributions. I have, however, had to serve my penance in having to listen to the speech—or sermon—by the hon. Member for The Hartlepools (Mr. Leadbitter), about which I shall say no more.

My only purpose in intervening in this debate is to correct a misunderstanding to which I believe I gave rise in my Second Reading speech. In that speech I referred to the position of the G.E.C.A.E.I.-English Electric mergers and said that nobody could say that that merger had been a great success story—

Mr. Ogden

The hon. Gentleman in that speech mentioned a factory in my constituency. My own experience is that that particular part of the new combine is more independent and more successful as a result of the merger than was the case under the old set-up.

Mr. Boardman

If the hon. Gentleman had allowed me to continue, I was about to say that if my words were taken out of context they could be quoted as a condemnation of the management, workers and so on. However, that was not intended. I recognise the great problems of organisation in integrating these three large companies. There have been difficulties, including hardship to those who have become redundant, but I believe that the company has tackled this matter in a realistic and efficient way, even if the results of the amalgamation in some respects may not have been as great as some anticipated.

I should at this point declare an interest, which I did not know I had when I spoke on the earlier occasion. I find that I happen to be a small shareholder in that company. I would hate it to be thought that any condemnation attributed to me previously was now being turned into praise because of an interest of which I have become aware. I can assure the House that it is not intended in that way.

When I made my statement it was with the object of explaining that I thought that the I.R.C. had failed in putting together a variety of companies, of which I quoted this as an example; that it was not a success story in regard to the I.R.C. That was my intention and my belief. I went on in that speech to say One might ask whether that Sir Arnold Weinstock would not have done better without the I.R.C. being in the field. I then gave credit, if that be the right word, to the I.R.C. which did not belong to it. Perhaps I was misled by what had been claimed by the right hon. Member for Bristol, South-East (Mr. Benn). As reported in column 363 of the Second Reading debate, he criticised my right hon. Friend by saying: The right hon. Gentleman did not mention General Electric—A.E.I.—English Electric, but he knows that, faced with the huge combines of Siemens and Philips, those firms were too small to compete."—[OFFICIAL REPORT. 26th January, 1971; Vol. 810. c. 363–416.] The inference there quite clearly was that the I.R.C. had the responsibility and the credit for being the catalyst which resulted in this merger. However, I am informed by the Chairman of the General Electric Company, with whom I have been in correspondence on this subject, that that was not so. I understand from him that the G.E.C. decision to make a bid for A.E.I. and the subsequent decisions of G.E.C. and A.E.I. to merge were neither of them prompted by the I.R.C. but were the considered decisions of the boards involved, based on their assessments of the needs of the markets in which they were operating. The right hon. Gentleman was not entitled to claim credit for that merger.

Mr. Benn

I did not claim credit for it. I was arguing about the need for larger units, and I cited that case. However, I must tell him that the rôles of the Government and of the I.R.C. in mergers of this kind are complex. Cases are not triggered off by demands from the Government or the I.R.C. Anyone who knows about these relationships knows that they go on continuously. The Government and agencies like the I.R.C. may be involved at different stages, which may be helpful, or, if the Monopolies Commission intervenes, may prevent such a thing occurring.

Mr. Boardman

But, at that time, we were discussing the rôle of the I.R.C., and the inference from the right hon. Gentleman's remarks was that the G.E.C. —A.E.I. merger became possible because of some rôle that the I.R.C. fulfilled and which will not be capable of being discharged after the passing of this Bill.

That leads me to another point. If the I.R.C. was unnecessary, one asks why it was necessary for public money to go into the merger at a subsidised rate. However, I leave that question there. The sole point of my intervention midway through the debate was to put right the impression that I thought that the management of G.E.C., which had such a difficult job, was doing it badly. Neither did I want the impression left that this merger was suggested by the right hon. Gentleman to justify the I.R.C.

6.4 p.m.

Mr. Douglas

I want right away to take up the point which the hon. Member for Leicester, South-West (Mr. Tom Boardman) has raised. I was surprised that he did not refer to the First Report and Accounts of the I.R.C. On page 18, he will see a note saying: An exchange of letters between the I.R.C. and the G.E.C. was published in the formal offer document sent to A.E.I. stockholders on 14th October, 1967. The I.R.C.'s letter confirmed that the proposed combination of the businesses of the G.E.C. and A.E.I. had its full support but added that it was for the shareholders of A.E.I. to decide what was in their own interest. I accept that there are other hon. Members with more experience of this form of business enterprise than I have, but I read into that that the rôle of the I.R.C. on this and other occasions was that of an organisation to which enterprises could come to seek advice and guidance about mergers and restructurings.

I have said before that, in the beginning, the 1.R.C. had a jaundiced recep- tion from business. That is a view that I have formed from discussions with business men at a number of conferences. However, once the I.R.C.'s confidentiality, expertise and guidance were accepted by industry, increasingly it became the body to which industry turned for advice and assistance. It was not regarded by industry just as a means of obtaining access to a source of capital. The experience of firms in my constituency gives great substance to what I say and substantiates my point of view.

I am sorry to see that the Secretary of State has left the Chamber. I did not want to refer to him in his absence. However, I have no doubt that he will read my reference to him in HANSARD. It may be because I am a little younger than the right hon. Gentleman, but, when I look at him across the Chamber, I am always reminded of his likeness to the famous Hollywood actor, Claude Rains. The right hon. Gentleman recalls to my mind a film entitled "Here Comes Mr. Jordan". In that film, Mr. Rains made a mistake. Acting on behalf of the archangels, he inadvertently ended the life of an individual, and the film concerned his attempts to get the spirit of the person whose life he had ended back into another body. In the film, Mr. Rains was successful.

In ending the life of the I.R.C., I believe that the Secretary of State has acted inadvertently and against his better judgment. I think that he will spend the remainder of his Ministerial experience trying to put the same type spirit into another body. Already we see him searching round for ad hoc arrangements to fit the prevailing circumstances. I hope that I shall not transgress the bounds of order if I refer to the ad hoc arrangement of Yarrow Shipbuilders. In that case, instead of using the Vote of the Department of Trade and Industry, the Government are using that of the Ministry of Defence and concocting an ad hoc arrangement which allows Yarrow Shipbuilders to buy their way out of U.C.S. so as to assist the liquidity of U.C.S.

I do not mind the Government doing that. But it is not right for us to allow them to tell the country that they are doing it because they believe in nonintervention. Of course they believe in intervention. What we cavil about is the nature of the intervention and the fact that the Government's form of intervention lacks a clear assessment of priorities.

No matter how much assurance we get from the Under-Secretary of State, the Government are taking a step that undermines £120 million of investment when they seek to destroy the I.R.C. I realise that the Department of Trade and Industry will have a difficult job managing investment and timing exactly how it will dispense with both ownership and elements of control of various kinds. When we ask how the Department will do it, we shall no doubt be told that outside experts will be consulted.

I think that it is time that we asked how much the Government have paid in fees to outside experts since 18th June. I will not embarrass the particular companies concerned by mentioning their names in this House, because they have a high reputation for accountancy practice. But I should like to know how much the Government have had to pay in terms of public money to outside experts when they could have in the form of the I.R.C., or a modified I.R.C.—the Conservative Party's election commitment was to modify it, not to destroy it—a direct and continuing control in the exercise of its expertise.

It is not only hon. Members on this side of the House who are making this stricture on the Government. We, and people outside, have been questioning the capability of the joint stock company to finance advanced technology. That may be a matter which it does not occur to hon. Gentlemen opposite to do. However, I suggest that the events and experience of the last few months particularly ought to lead hon. Gentlemen opposite to ask the question: is the joint stock company, created in the middle of the 19th century, capable of financing the advanced technological products of the 20th century?

The New Scientist and Science Journal of 11th February carries the headline, Bring back the I.R.C. This is not a Labour Party publication. I submit that it is an objective vehicle for putting a case relating to modern advanced technology. It states: The questions now are: Can a modern industrial nation afford to back out of any area of advanced technology? Are there industries which are economically necessary—almost irrespective of their burden to the taxpayer? Clearly there are. When capital and manpower are limited it is obviously sensible to back those products which eventually acquire the greatest value-added. I suggest that that is not the type of appraisal which the Under-Secretary would make. I can see the hon. Gentleman's viewpoint. It is still, to use a Scottish word, in the atmosphere of the 19th century. Indeed, someone has called him an Adam Smith man. But Adam Smith was Professor of Moral Philosophy at Glasgow University and he had a desire to look at the moral qualifications which underpin economic activities. I am not maligning the hon. Gentleman in any way. All I am saying is that his method of approach to these problems is totally out of keeping with the times.

The article, to which I have referred, also states: Two things are now clearly vital: the first is that the Department of Trade and Industry must draw up a list of priority industries and take swift measures to ensure their healthy survival; the second is that, when the domestic market is seen to be too small to make unit costs competitive, international mergers of interests must be ruthlessly pursued by the government. Here is an organisation asking for the I.R.C. to be kept in being and arguing: Above all, Mr. Heath and his colleagues … must now quit indulging themselves in this irresponsible fantasy about private industry's inviolable right to commit hara-kiri. Intervention … is the legitimate behaviour of responsible government. Certainly the present government's dismantling of the Industrial Reorganisation Corporation was a short-sighted piece of unnecessary party politics. The argument is put cogently and clearly that, in terms of modern advanced technology, the I.R.C. is the type of organisation which we ought to have.

I should like to turn briefly to the views expressed by the Secretary of State; namely, that if we were to deprive the I.R.C. of finance and emasculate it, then some other form of finance to do the job that the I.R.C. was specifically designed to do had to be created.

The right hon. Gentleman, in a speech, to which my right hon. Friend has referred, on 5th November, at a dinner of the I.C.F.C., said: The disappearance of the I.R.C. is one of the factors which poses new problems to the City of London. It is symptomatic of a more wide-ranging change in the climate of relationships between Governments and the whole varied world of business enterprise, whether that be continued as private manufacturing industry, the nationalised industries, the service industries, farming, the financial institutions, the professions. The right hon. Gentleman was arguing for placing on the City of London the obligation to bring forward and to create some form of financial institution which would be capable of performing the role which the I.R.C. had performed in the past.

We have seen no evidence of any desire on the part of the Government to enter into a meaningful relationship with the City to get the flow of funds, either in terms of cost or amount for the financing of advanced technology, made available to companies entering into it in the United Kingdom. If the Government continue their policy, we shall be pushed into some form of international backwood, and we shall contract out of advanced technology. I do not think that the people of this country will put up with that. In terms of engineering and scientific skills, our people do not deserve that approach.

If the Government are to abolish the I.R.C., if they are to emasculate the provisions of the Industrial Expansion Act, then I believe that they will regret it. I believe that in their heart of hearts the Government are already regretting it. If they carried out the sentiments of the broad mass of the people who know what relationship a Government in modern times ought to have with industry, they should have the courage, even at this late stage, to withdraw this petty little Measure.

6.19 p.m.

Mr. Neil Kinnock (Bedwellty)

I should like to take up one point made by my hon. Friend the Member for Clackmannan and East Stirlingshire (Mr. Douglas). My hon. Friend made the justified allegation that we now have government by emergency. My hon. Friend said that the Government are ad hoc. That reminds me of the description of the Government by a constituent of mine who said that they will "ad" a bit like Rolls-Royce and "hoc" a lot like the profitable sectors of the nationalised industries.

The Bill certainly fits in which the whole concept of government by expediency. It is strange that in the debate today we have had charges levelled against the Government of simultaneously being a dogmatic Government and a Government of expediency. Beginning with the dogmas laid down in the Conservative Party's Manifesto, compounded by statements in the early weeks and months in power, the Government's dogmas have been tested by reality and they have had to come up with emergency and contingency actions for which they deserve the titles of ad hoc Government and Government by expediency.

At this time, with unemployment rising, with excess capacity in industry growing all the time and with an investment crisis on our doorstep, it is difficult for anyone who has any interest in or knowledge of economic history to avoid comparing this period of Government and this period in the economy with the experience of the pre-war depression. Often far too close an analogy is drawn between any given post-war period and the crisis of the interwar years. It is too easy for some of us, especially those from the regions that suffered particularly at those times, to draw comparisons with what happened between the wars, but there is every reason, employing all one's objectivity, for thinking that there are comparisons between the difficulties now besetting the economy and the difficulties of the economy and of society then.

There are two major differences between the economic and social experience of the inter-war years and that of the present time. First, things obviously are not as bad now as they were then —at least not yet. But nothing we have seen from the Government leads even the most optimistic person in the House or in the trade union movement to believe that a return to mass unemployment is an impossibility. Nothing the Government have done so far is a major impediment to or even a brake on the downward path towards national economic depression.

I hope that the Chancellor of the Exchequer and the Secretary of State for Trade and Industry between them will be able to spawn something that will postpone or for ever abolish from our minds the spectre of mass unemployment and mass depression. The regions have for many years experienced higher than average levels of unemployment and the levels are inching up day by day, until in parts of my constituency one man in ten is without a job. This is crisis level if ever there was one.

The second major difference between the experience of the inter-war years and that of the present is that in the inter-war years it was necessary to evolve a set of weapons to combat the economic difficulties. At least in the post-war period we should have had the advantage of hindsight. It was a national Government inspired and guided by Conservative hands in the 1930s which seriously began the process of engagement and involvement in industry. The Governments of the early and mid-1930s embraced the idea that it was the Government's responsibility to assure a certain level of economic prosperity, until by the end of the war this was a natural, accepted fact of life. It seems to us completely orthodox now to advocate that Governments should have this responsibility. For many years people have been taking for granted that Governments are responsible for maintaining high levels of employment, for generating investment and for seeing to it that no region suffers particularly from any policy. But now, these targets have all been either eliminated or shamefully abandoned by the Government.

So the real difference between the Conservative of the 1930s and the Conservative of the 1970s is that at least those nasty old Tories we heard so much about then were trying to do something about the difficulties besetting the economy. They were moving towards the inevitable engagement in and involvement with industrial decision-making in a modern economy. The Government today—and they are probably the only Government in the world who are currently doing it—are moving away from engagement in and involvement with industrial decision-making and industrial investment. This is a wholly regrettable and retrograde tendency.

The Government 30 or 40 years ago were intent on encouraging the will of private enterprise to find its own salvation. Now they appear to be content to abandon private enterprise to its fate. It was wrong for the Labour Party in the Election to use the slogan that we were fighting yesterday's men. Given an analysis of the programme which the Government are currently putting into practice, what we are talking about is an atavistic Government, a Government having far more to do with, and a closer relationship and closer similarity to, its distant forefathers than its fathers or even grandfathers, a Government drawing inspiration from a period long before the 1930s when their predecessors started to move towards engagement.

It is not the fact that engagement has the value of age. It is not that we should respect it simply because it has been around for a long time. It is not that we have evolved to a point where the Government have become responsible for a great deal of industrial decision-making and play a significant part in running the industrial economy. We have moved from the position where involvement in industry by the Government was a straightforward necessity to one in which it is a complete inevitability. The importance of engagement in industry comes from the fact that in a modern technological economy there is simply no alternative. As my hon. Friend the Member for East Stirlingshire pointed out in his reference to the role of the joint stock company in technology, it is simply that modern capitalism and modern industry, in whatever economy it is, the so-called free economy, the so-called public economy or the so-called mixed economy, is simply not capable of capitalising its own technology. There is only one institution capable of doing this satisfactorily and that, to a greater or lesser degree, is the Government. We are fortunate in that our Government are elected democratically. Other countries are not so fortunate. In any society with an advanced technology it is obvious that only one source of investment is guaranteed to be sufficiently secure to provide a modern economy with expensive technology, and that is the State.

The hard fact about the nature of modern technology is that to provide itself with an even chance of maintaining itself it either has to rely heavily on the State or enter into large combinations. While it is important for us to realise that the modern corporate firm relies on the State as a provider, it is also important to recognise that in large corporate institutions there is no direct responsibility on the controllers of those institutions to a democratic society.

To get the opinions given in the excellent T.U.C. "Economic Review" on the record, and to put the debate into a realistic context, I will quote paragraphs 150 and 151 of the review, which was published this week. Paragraph 150 says that a Monopolies Commission report: estimated that in the 11 years to 1968 the number of 'large' companies in British industry and commerce fell by nearly two-fifths, from 2,024 to 1,253. Out of those, the 40 largest companies, which in 1957 had accounted for 35 per cent. of the net assets of all such 'large' companies, had by 1968 enormously increased their share to 49 per cent. of total net assets. The report went on: It is widely accepted that the British authorities, and still more the British public, lack adequate knowledge as to the import/export transactions and transfer prices of such multinational companies". The report also made a point which we have frequently made in debating this matter, when it said: The same Monopolies Commission study … estimated that the net assets of the 10 largest U.K. based foreign-owned manufacturing companies in 1968 were £1,143 million, compared with about £400 million in 1957. As I said, companies which have achieved this size by sheer technological necessity are not sufficiently responsive to the inspection of democracy. By their action in this Measure the Government have thrown away the only permanent institution which had the function of carrying out this inspection. I am not claiming for the I.R.C. powers and abilities which went beyond its terms of reference. However, people were encouraged because it was a start in a process of accountability which I believe will become a feature of politics and governmental development.

We are now faced with rising unemployment, excess capacity and falling levels of investment. To a greater or lesser extent, most commentators agree that these difficulties are exacerbated or are certainly not helped by current Government policy. Despite these difficulties, which even the simplest can see, the Under-Secretary said that for him it had been a pleasant initiation into the philosophy of disengagement. On the basis of that statement he could qualify as a peripatetic tutor for Nero in teaching the violin.

In Committee, whenever hon. Gentlemen opposite were defeated in an argument—as they will continue to be defeated whenever they present legislation of this kind—they rested in the cosy armchair of dogma and the assurance of their majority. As my hon. Friend the Member for The Hartlepools (Mr. Leadbitter) pointed out, there comes a time when no Government can be assured of their majority.

As my hon. Friend the Member for East Stirlingshire said, there are whole sections of the community—whole groups of people, whole skills; in short, whole communities in the country—who will not permit a modern Government to take such an insular view of their responsibilities. They cannot detach themselves from modern governmental responsibility, and at the end of the day even the present Government will pay—and I mean before they are called upon to account to the electorate.

The crisis in the British economy will be such that they will have to rediscover some of the institutions and policies, including the I.R.C., which were followed by the Labour Government. In other words, their dogma will be brought up against reality.

6.35 p.m.

Mr. Ogden

For about three hours during this debate my hon. Friends representing all parts of the United Kingdom, with the exception of Ulster, have been united in their opposition to the Bill.

It is not without significance that my hon. Friend the Member for Bedwellty (Mr. Kinnock), speaking for Wales, gave precisely the same reasons for opposing the Bill as did my hon. Friend the Member for East Stirlingshire (Mr. Douglas), speaking for Scotland. Their remarks were reinforced by my hon. Friend the Member for The Hartlepools (Mr. Leadbitter) and even hon. Members who represent relatively prosperous constituencies in Southern parts of the country have spoken out strongly against the Bill. I have no doubt that if my right hon. Friend the Member for Bristol, South-East (Mr. Benn) spoke from a constituency point of view he would express similar sentiments. It is clear that the results of the Bill will, if only in small measure, make the future prosperity of every part of the United Kingdom less optimistic and hopeful.

The hon. Member for Leicester, South-West (Mr. Tom Boardman) spoke of a change of mind that he had had from what he said on Second Reading, when, he said, he made an unfair reference to the interest of the I.R.C. in the A.E.I.English Electric-G.E.C. matter. It is always nice to hear an hon. Gentleman opposite say that perhaps he was wrong, that maybe he made a mistake or that he might have been unfair.

I tried to intervene earlier to point out that in my constituency the largest industrial unit is the English Electric factory on the East Lancashire Road. It has had great difficulties because of the merger, and no one will deny that it lost a major part of its activities because of the reorganisation. However, the part that is left has, in the long term, a much stronger position than was the case a couple of years ago.

While this may have been a rushed marriage—even Weinstock will admit that he had to move into it 12 months before he was ready—those employed there tell me that they have more independence over their operations now, under the new structure, than they ever had under the old ré;gime. One example was given to me.

They were bidding from that factory for a major contract which required investment in machine tools and other equipment. That investment was necessary to make the bid. Under the old system, by the time they had got permission to buy the new machinery, they would not have had any chance of getting the contract. It will be seen, therefore, that they have more independence now. Without overlooking the difficulties that have occurred, such as redundancies and reorganisation, English Electric in my constituency is stronger now than it was before. Nor can it be denied that the I.R.C. had a useful part to play in that process.

The Under-Secretary said earlier, "Tell me where the I.R.C. was able to intervene and will not be able to intervene when the Bill is passed?" I remind him of the part the I.R.C. played in the Cammell Laird difficulties, remembering that, again, the Cammell Laird shipyard seems to be more secure, prosperous and effective now than it was under the old set-up. Because the I.R.C. was in operation, it was able to bring in new investment. As soon as the Government announced their intention to abolish the I.R.C., that sort of aid through that type of independent agency could no longer occur, and it could not be made available to the Mersey Docks and Harbour Board on the other side of the river. Whether or not the Government would have allowed that assistance to be given is another matter.

For about two and a half hours of this debate the Secretary of State had to sit on the Government Front Bench paying the price of his high office. He had to listen to our criticisms. It does not do a Minister, however high, and hon. Gentlemen opposite, any harm to hear criticisms of this kind. The right hon. Gentleman has learned a lot since he first entered the House.

It is not unusual for a Secretary of State for Trade and Industry or, as he was called, the Minister of Technology, to have a fairly rough ride in his first few months in the House. This Secretary of State is still something of an unknown quantity.

The right hon. Gentleman, in moving the Third Reading, explained that there had been some changes; he said that some items had been discussed in Committee, but substantially the Bill was the same as that which was accorded a Second Reading and that, for reasons which he had already given, he would not take up much time by explaining what it was all about. He certainly did not. We have a rough idea of what the Bill is all about.

The right hon. Gentleman missed an opportunity to explain what he thought the Bill was all about and to try to convince some of us that he is in favour of the Bill. Even after his nine months in the House of Commons we still do not know what the right hon. Gentleman believes. We certainly do not know which are his beliefs and which are those of his Department and who is the master in the right hon. Gentleman's house. His statements before he came to the House were in contrast to the statements he now makes.

There was a place in the British economy and in relationships between government and industry for the kind of semi-independent role which the I.R.C. was able to play—not only in major mergers and in investment, but in management, contact, communications, and so on.

During September and October of last year I spoke to the Chairman of the Corporation about the possibility of some changes. It is no secret that the Chairman was expecting some changes to be made. He described it in this way, "The old rôle of the Corporation is undoubtedly ending. The old chapter has been written. We shall have to write a new chapter for a new rôle". Unfortunately, that whole edition is being chopped by the Bill.

I hope that my right hon. Friend the Member for Bristol, South-East will take up the point made by my right hon. Friend the Member for Birkenhead (Mr. Dell) that there is a rôle to be performed by some organisation, an organisation which must have the ability to do the job in circumstances of increasing unemployment, falling investment, and lack of confidence. The I.R.C.'s rôle is ended. The Tories said that all they had to do was to get Ted into No. 10 and everybody would be fully confident and we should have industrial expansion, falling prices and falling unemployment. It is not as simple as that. One of the ways in which confidence and growth could have been achieved was by using the I.R.C. The Tories have destroyed the Corporation for political and not for industrial purposes.

6.42 p.m.

Mr. Anthony Wedgwood Benn (Bristol, South-East)

This has been an extremely good debate. I express my gratitude to the Chair for allowing a Third Reading debate to be used to enable us to consider the Government's policy broadly following the passage of the Bill, which we must admit will go through.

I, too, must declare an interest, in that the I.R.C. was thought up in the Ministry of Technology—in fact, before I got there —by a member of the Advisory Committee on Technology, of which Lord Kearton was another member, and the Industrial Expansion Bill was my own Bill which I introduced into the House and carried through. To see my stepchild and my own child slaughtered gives me a rather greater interest in the Bill than might otherwise follow from my rôle as an Opposition spokesman.

The Secretary of State is, alas, not able to be with us, though he explained the reason for this to me. As he will be without these two instruments, and knowing the sort of problem that will face him, I wonder whether we shall not hear one day at 3.30 that a receiver has been appointed to the Department of Trade and Industry and no further Questions can be asked owing to the fact that there are difficult negotiations to be worked out with the staff.

It is a big thing in government to dismantle instruments of government as distinct from policies. We regard this as a very important debate. What makes the debate so important to us is the fact that, by dismantling instruments which could have been left quiescent, the Government have chosen, for reasons best known to themselves, to make it much harder for an incoming Government in future to be able to take action in a situation which might require fairly rapid action.

Since the Bill was introduced there has been a total change in the situation, created by the decision to acquire Rolls-Royce. It would be improper for me to discuss Rolls-Royce in any detail or, indeed, to refer to any of the matters of controversy. However, I still do not believe that right hon. and hon. Members opposite have yet absorbed the significance of their decision to acquire Rolls-Royce in a one-Clause Bill. The one-Clause Bill which is now available to them is far more drastic in its implications than the very careful measure which they are shattering by seeking to secure a Third Reading for the Bill today.

There is no doubt that there are profound implications for the future of public ownership and the way in which future governments may have to act in the Rolls-Royce decision—in the attitude that a Government, when faced with a difficulty, can produce out of a hat a one-Clause Bill empowering the Government to do anything they like in respect of a company, instead of going through the procedures which we carefully laid down.

Following the dismantling of these two instruments—the I.R.C. and the Industrial Expansion Act—we are left with a model for another measure were it necessary for us to act.

It is a great pity that the Government did not use the instrument that lay at their disposal to deal with Rolls-Royce. I refer to the Industrial Expansion Act which was on the Statute Book. There is no question but that it would have involved presenting a project to the House.

I have before me the computer project which I presented to the House in 1968. Far more information was made available to the House of Commons by the Labour Government under the Industrial Expansion Act than was made available to the House of Commons on the occasion of the acquisition of Rolls-Royce. We still have not had a White Paper. Under the Industrial Expansion Act no project could come forward unless the full details were laid before the House for its consideration.

I attach very great importance indeed to the establishment of clear ground rules if government is to be operating in the territory that lies between itself and industry. The whole purpose of the Industrial Expansion Act was that we recognised that there would be occasions which could not always be foreseen when government would have to move into this area and that the best thing to do would be to lay down the ground rules and then apply them when individual instances arose. All that is to be discarded.

The second point that arises from the dismantling of the I.R.C. touches on another aspect of Rolls-Royce, namely, the future of the company. In his very first statement about Rolls-Royce the Minister of Aviation Supply made it clear that the Government had in mind the possible linkage of Rolls-Royce with European aero-engine companies. I will not comment on the merits of that. We had often discussed such a possibility. It is quite a sensible idea to consider at some stage. However, if the Government want to do it what instrument is to be used? It is necessary to use some instrument similar to the I.R.C.

All the interest in Europe in industrial policy, to which I referred on Second Reading and which I will not go over again, stems from what the Labour Government did. There is now an industrial corporation functioning in France. One is being developed in Italy. One is being considered in Western Europe. At the very moment when, if it were sought to link up in the way that I have referred, we should need such an instrument the Government proceed to dismantle the I.R.C.

Whatever might be said about the Corporation's domestic function—after all, if one did not like it one could have told it to lie still for a while—it was also operating in the trans-national area.

That is my first comment, that the Industrial Expansion Act was there for Rolls-Royce, and would have required greater accountability than is possible under the Government's one Clause Bill. But that Act is now to be killed, and the Industrial Reorganisation Corporation, which will be needed if Rolls-Royce is to be brought into the European aero-engine framework, will not be there, either.

I feel it almost unfair to blame the right hon. Gentleman for this because, having listened to his speeches, having looked into his eyes and having known him from the time when he was at the C.B.I. and on the National Economic Development Council, I cannot find it in my heart to accuse him of the paternity of this Bill. Its paternity came from elsewhere. But the right hon. Gentleman is, nevertheless, responsible for it, and we have to address ourselves to him.

This is one of a series of debates going back to January 1966 when the I.R.C. White Paper was published, and it seems an appropriate moment to look back at some of the arguments which were used. Many of us who are participating today are old hands. Like the cast of The Mousetrap, we have been at it a long time. It began a long time ago, we know one another very well, we know everyone's move, there are no surprises in the debate. In particular, we know the Under-Secretary of State, the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), like an old chess player; we know exactly what he will do. But let us go over the argument again in the light of five years' experience.

Is it really true that intervention always begins with the Government intervening? On the hustings, in broadcasts and at election time people always say that the Government are intervening and interfering. But the right hon. Gentleman knows as well as I do that what happens is this. He is sitting quietly in his office late on a Friday evening, and somebody comes in and says that this or that company is on the point of going "bust". Then the work begins. Is there a Government interest? Is it a defence contractor? What does the Ministry of Defence say? Is there a big export interest? What about the Board of Trade? What about the Treasury? Is there an instrument which we can use? What is the employment position? Has anyone been on to the Department of Employment?

Government is like that. Industry intervenes in government because the Government is elected to look at the broader interests of the community, not just to be a double-check on the accountant looking at the profit and loss account. There were other occasions—of course there were—such as, for example, on computers when we consciously decided that we should like to bring about a greater strengthening of the British computer industry, but in many cases of alleged intervention it was an intervention from the facts into the Government Department concerned. We never took compulsory powers because we did not need to, because we believed that it was possible to reach agreement in the light of some experience of working with others to try to find a proper solution.

I shall not go over all the examples which one could cite in which this happened, but, from the QE2 at one end to the Rolls Royce situation at the other, it is clear that the Government are likely from time to time to be faced with problems with which they must cope, whatever their ideological preference may be.

Although the C.B.I. was critical of the original I.R.C. and the Industrial Expansion Bill, I do not recall a specific objection to its use in practice. The right hon. Gentleman will contradict me if I am wrong. There were things which it may not have liked very much, but, once this machine was there, everybody could see the advantage of having it there.

Government-industry relations have secondary advantages in that, if the Government know what the problems of industry are, Government policy is more likely to reflect those problems in their own thinking in other areas. Certainly, as an industrial Minister I submitted to my colleagues in the Cabinet papers about industrial policy based upon the consultations which we had had with industry more generally.

Now, the question of "lame ducks". I want to take this out of its present climate of controversy. The phrase "lame duck" was not invented by the Secretary of State for Trade and Industry. It was widely used at the time of the Industrial Expansion Bill. The charge was that, if we had that Bill as an Act, we should encourage lame ducks. I have searched my memory and my conscience, and I want to make a serious comment to the House about lame ducks.

First, they were generally and broadly described as being those projects under the Industrial Expansion Act or the I.R.C. which would not have survived without their help, and this constituted permanent subsidisation. There never was in my mind, or anyone else's mind, the idea of permanent subsidisation of anything. The cases which were often used as examples of lame ducks did not come under the Industrial Expansion Act at all. People often talked about shipbuilding as one of the great lame ducks. That came under the Shipbuilding Industry Act, and, quite candidly, no Government have any alternative—the right hon. Gentleman knows this—but to try to get the shipbuilding industry going because it is in an area where there is high unemployment, there is a great deal of skill employed in it, and it is worth putting more money in to try to set it right. But it was never with the intention of permanently subsidising production. No one thought that.

The other area into which Government money has to go is on the civil avaiation side, in launching aid. The question of the RB211, which we cannot discuss in detail today, had nothing to do with the I.R.C. or the Industrial Expansion Act. It was a perfectly straightforward investment in advanced technology. Rolls-Royce did not go wrong because money was available. It was because Rolls-Royce had years of experience as a defence contractor in which it had put up proposals to the Government, the Government had always added 100 per cent. for contingencies, the Treasury had added another 100 per cent. for contingencies, and the Cabinet considered the matter in the light of quite different figures and almost always found that it was an underestimate. In the case of this particular engine, the company had probably believed its own estimates. I do not know. Certainly, none of these charges can be attached to the Industrial Expansion Act or the I.R.C.

Another argument was that there would be no projects if we had the Industrial Expansion Act. We know from experience, however, that the projects come forward from industry. A further argument used was that it would be better to leave investment to flow naturally from the market generally. The right hon. Gentleman and other right hon. and hon. Members opposite are always saying that it is better to give the money back, and industry would invest. But, as the Secretary of State knows, he is faced with a grave slump in investment; the forecasts have all gone to hell and 1971 looks like being even worse.

Although nobody claims that the impact of the Industrial Expansion Act or of the I.R.C. is massive—the Prime Minister gave the figure that restructuring touched, I think, only 1 per cent.—it is still substantial, and can be very substantial in particular areas where unemployment hits gravely.

I do not want to sound gloomy, but if, for example, the RB211 were to go and Derby were to be left with the full consequences, how else could one deal with the situation than by being highly selective and highly intensive in where one put one's money to utilise the facilities which are there for expansion? It could be done only by measures similar to the ones which the Government are now throwing away. And the development areas more generally require selective investment.

How do we want this process organised? Is it to be by civil servants or by business men? I agree entirely with what my hon. Friend the Member for Edmonton (Mr. Albu) said about the proper place for business men and the proper place for civil servants. Speaking as one who never had a Civil Service background but who went first to a Ministry, being thrown in at the deep end as head of a Department in 1964 for the first time, I know that my opinion of the civil servants and their contribution to the formulation of policy by advice, and their execution of policy when the policy is formulated, could not be higher. But they are not the people to give the sort of advice on the sort of business problems which come to a Minister from businesses faced with difficulty. One must have access to experienced business men, and it really is a great convenience for any Minister of any party to be able to call on the advice of the sort of men who gave their services to the Industrial Reorganisation Corporation.

These men are available on various other bodies, for example, on the N.E.D.C., where one may have a knockabout once a month on policy and then have a nice lunch. But in the I.R.C. one had a developing body of expertise, of people with distinguished business careers who were ready to give their free time to work on the problem not just of restructuring but of management, and they stood in exactly the right relationship to Ministers. In other words, they were independent. If they disagreed with one, they said so, and one could not ask them to do things which they did not want to do. Indeed, one would have been very foolish to try to ask them to do things which they did not want to do.

A formidable agency was built up in the I.R.C. All the Government did was to start it. The rest flowed from the way the work developed and from the quality of the men serving on it. To bring all that back into the Department —with the best will in the world—and try to do it from inside the office, where the civil servant knows that he must always speak for his Minister and everything he does is accountable, just will not work. The time-scale of industry is now totally out of phase with the time-scale of our political cycle. For example, the Concorde was thought of in the 1950s, started in 1962, enters service in 1974 and lasts for 20 years, coming out of service in 1994. It outlasts a dozen Prime Ministers and maybe half-a-dozen Governments. If industrial policy and the agency by which it is developed are to be knocked about and chopped about every three or four years, just as expertise is developing, the Government will do grave damage—not irreparable damage, because nothing is irreparable—to the slow development of a rational industrial policy.

It is no good their trying to separate it from industrial relations. Day after day when I have to put down Private Notice Questions about various things to the Secretary of State I hear him say, "It's nothing to do with me." How can be really expect a sense of responsibility on the labour side when labour says, "But the Government do not care what happens. They are stepping back. All they are doing is to intervene on the industrial relations side. They do not care at all about the development or continuity of our job. They say that that has nothing to do with them." The philosophy is unworkable.

The Government will get their Bill through. It will go through the House of Lords, lubricated by the good will associated with the other place, and the two instruments will be killed; they will not be there. But the right hon. Gentleman knows quite well that that is not the end of the matter. He is feeling for something to replace the children from our period of office which he is slaughtering. We shall come back to the problem, with the precedent of the one-Clause Rolls-Royce Bill to guide us. My right hon. Friend has hinted at the ways in which in due course we—"we" as the community, and not just as a possible incoming Government—shall have to tackle this destructive Bill, which is an example of the shambles of industrial policy into which the Government have got us. I very much hope that the House will not give it a Third Reading.

7.2 p.m.

Mr. Ridley

I should like first to thank those hon. Members who serve on the Committee. Some found it necessary to make their points often and at length, being none the worse for that, and others found it not necessary to say anything at all. Perhaps they may be described as being the better for that. I thank them all for their valuable contributions, of very different sorts, to the deliberations on the Bill in Committee.

Apart from some more detailed points, the same threads ran through our debates —the philosophy of Government intervention, regional policy, and to some extent! shipbuilding—which have been apparent in this debate. The main question which has been pretty well absent from our debate today is that of parliamentary accountability. I hope that this is because to some extent the House feels happier about the provision for parliamentary accountability which we have made, just in relation to the Bill. I do not want to make it wider than that.

I should like to clear up one small point from an earlier stage of the Bill's passage. I can now tell the hon. Member for East Stirlingshire (Mr. Douglas) that the summary to which he referred, which was the I.R.C. conclusions on Rolls-Royce, will be made available to the Departmental Inquiry, as my right hon. Friend the Minister for Aviation Supply said would happen in answer to a Question.

I was asked an important question about the confidential documents the I.R.C. possesses which might come into the Government's hands. I have considered again very carefully whether it is possible to draft an Amendment to give practical effect to the concern expressed in Committee that the documents should not reach the Government if they were not destined to do so. I have not been able to frame an Amendment to reconcile the two differing requirements.

I could not find a way to tell the right hon. Member for Birkenhead (Mr. Dell) this, because there was no Amendment on the Order Paper on which I could announce the decision to him. I hope that he will forgive me for telling him now. However, I can say that the I.R.C. has made what progress it can without a postal service in consulting all the firms which have laid documents with it. If from this debate the message goes out that the Government would be glad if any firm which has sent papers or documents to the I.R.C. at any stage, and which wishes them not to come into the hands of the Government, would get in touch with the I.R.C. as soon as possible, I am sure that arrangements can be made to deal with the matter. I think that every firm will be written to individually, and we will make certain that the administrative solution is satisfactory, even if we cannot find a legal solution.

This has been a good debate. Listening to it, I was struck by the very wide range of things in which Labour Members thought the I.R.C. had been engaged, and which they thought it was for. I noted the activities which it was supposed to have been undertaking, and which it is supposed the Government are losing for the future: the promotion of mergers, the control of international companies, industrial decision-making at the highest level, the supply of capital to industry, the rescue of bankrupt companies, technological backing and capital for modern industry risk ventures, the replacement of management, and regional policy. All of these were supposed to be the duty of the I.R.C. in the minds of the Labour hon. Members, and they can probably think of other variants of them.

When the right hon. Member for Bristol, South-East (Mr. Benn) started talking about the cast of the "Mousetrap", I could not help wondering whether I was the cheese or the mouse. Labour hon. Members have built up a fairyland in their own minds, thinking that all our industrial problems can be solved by this—I agree—interesting and valuable experiment in setting up the I.R.C., and that in some way the industrial troubles which are upon us, and which will certainly continue to face us in the future, could all have been made to disperse if only we still had the Corporation and the Industrial Expansion Act. We wonder whether Labour hon. Members believe what they say.

The right hon. Member for Birkenhead seemed surprised that we had referred the Reed-Bowater merger to the Monopolies Commission without preventing it. There were no fewer than three such references during his Administration's tenure of office—the B.I.C.C.-Pyrotenax merger, B.M.C.-Pressed Steel, and G.K.N.-Birfield—all mergers referred to the Monopolies Commission without their being prevented in the meanwhile, so—

Mr. Dell

The hon. Gentleman is right. All those references took place in the very early years of the working of the 1965 Act. It was on the basis of those references that we decided never to do such a thing again. If the hon. Gentleman checks the records he will see that no such references were made after April, 1968.

Mr. Ridley

I think that that information might have come out when the right hon. Gentleman made his accusation against the Secretary of State. But otherwise there was little mention of mergers in the debate and we got back to the good old ground of philosophy. I think that the right hon. Gentleman was right in saying that two questions are involved here—first, industrial philosophy, and, secondly, the method which is to be employed to implement that philosophy.

The difference between the two sides of the House is that Labour seemed to be advertising help for all. They seemed to set up a begging bowl for any industry to apply to. This Government's philosophy is not like that at all. It is that we shall disengage from the activities of industry. But, as my right hon. Friend has consistently and properly said, there will always be exceptions, and for it to be imputed that the Government will be inflexible and will never deviate from their philosophy would be as absurd as if we were to accuse Labour of having a philosophy that there will be State money for all industries, no matter how worthy or unworthy. We all have our principles and it is fair to admit that, from time to time, we all find it necessary to make exceptions. That is true of both sides of the House.

In the instances cited during the debate, the vital interest of defence has been the main motive for the Government's help to both Rolls-Royce and to Yarrow with the taxpayers' money, because it was essential to national defence that these companies should produce the products they were manufacturing. But there are also social reasons—particularly in Belfast, for example. We all agree that the political and social conditions in Belfast made it right for the Northern Ireland Government to rescue Harland and Wolff from its financial troubles. No doubt there will be other cases in future.

I come to the question of the "lame ducks" or the "propping up", as the right hon. Gentleman called it. It is not that the I.R.C. itself wanted to do this. That was not the job for it. It never was. Whenever it was asked to make a rescue operation, it refused to do so. So hon. Members must realise that their plea to use the I.R.C. for this purpose would have met with no response from the I.R.C. itself. It always refused to have anything to do with that sort of operation.

The philosophy of the Labour Party creates an illusion in the minds of people that there was, in the Government or in the I.R.C. or in the Industrial Expansion Act, a limitless sum of money available which did not have to come from somewhere. It was this attitude, induced in people in their everyday lives, which was one of the reasons why their policy was not successful. I want to say something about regional policy in this connection because many of the speeches referred to this aspect—particularly the speech made by the hon. Member for The Hartlepools (Mr. Leadbitter).

If we have a situation of limited money supply or credit supply—one which is fairly severe—and at the same time a 14 per cent. annual rise in wages, it follows as clearly as day follows night that company liquidity will be under strain, that many companies will cease to be profitable and have to carry losses, and that some will make redundancies or even go bankrupt. That is the reason for the depression in the regions. It is not the fact that the Government have announced that they are to abolish the regional employment premium in 1974, and any hon. Member who examines his own conscience must admit that that is true. It is absurd to believe that the present difficulties—and there are difficulties, not only in the regions but in the country as a whole—are due to decisions announced but not yet having any economic effect, when hon. Members opposite know full well that the legacy they left us of mounting costs and mounting prices against a background of restricted credit and shortage of liquidity is the cause.

Mr. Leadbitter

Has not the hon. Gentleman seen the statement made by Sir John Hunter on the consequences of the decision to withdraw the regional employment premium? Does not he understand that Sir John is not a member of the Labour Party but a business man who understands the value of such measures as the premium? The hon. Gentleman cannot dispose of the matter like that. It is the Government's decisions which are responsible for part of the lack of confidence in the regions.

Mr. Speaker

Order. This is getting a little wide of Third Reading.

Mr. Ridley

I think that the hon. Member for The Hartlepools does not understand the difference between the present and the future.

As to methods, we shall be accountable for our actions. On all occasions when the Government have intervened in situations, we have made a statement in the House, and there was also the one occasion when a statement was made in Stormont because the Northern Ireland Government were responsible. In the case of Rolls-Royce, we introduced a Bill. I do not believe that we shall deviate from the rule that, if special help is given in any case, Parliament will be informed, and if necessary debates can take place. I accept what the right hon. Gentleman says—that there must be full accountability for the use of public money, but that is very different from saying that we ought to have ready at hand a weapon, which we may or may not need, whereby we can do this sort of thing on numerous occasions.

The wish to prevent civil servants from advising and helping in these industrial matters is curious. Under the Industrial Expansion Act, only three schemes were ever made—and all three were produced and discussed and set up by civil servants before even the Bill was thought of or brought before the House. The entire operation of the Act was carried out by officials without any help from business men of any sort. Once the Labour Government had the Act, they never brought in another scheme. With all their business men and advisers, they never found another use for it. Some of these arguments from the right hon. Gentleman sounded a little shallow.

We have plenty of sources of industrial advice. My right hon. Friend keeps in close touch with a wide range of industrialists on both sides of industry. We have industrial advisers in the Department who are first-class and to whom I pay tribute. We have contacts with all sorts of bodies whose job it is to bring their views to the attention of Ministers. As the right hon. Gentleman said, it is the industrialist who appears on a Friday evening in the office and says, "I have a problem which I want to discuss with you". Industry certainly intervenes in Government—I do not doubt that. The question is the extent to which the Government should intervene in industry in return.

I do not believe that the House can quarrel with the decision to end these two instruments and to bring the Act to an end. We believe that the policy did not succeed in the way it was hoped. In some ways, it created false hopes and illusions and persuaded hon. Members on both sides of the House that there

was something here which was in some way a substitute for success by hard work and the demands for the market. But it did not exist. I hope the House will give the Bill an unopposed Third Reading.

Question put:—

The House divided: Ayes 282, Noes 236.

Division No. 233.]	AYES	[7.18 p.m.
Adley, Robert	Dykes, Hugh	Jopling, Michael
Alison, Michael (Barkston Ash)	Elliot, Capt. Walter (Carshalton)	Joseph, Rt. Hn. Sir Keith
Amery, Rt. Hn. Julian	Elliott, R. W. (N'c'tle-upon-Tyne, N.)	Kaberry, Sir Donald
Archer, Jeffrey (Louth)	Emery, Peter	Kellett, Mrs. Elaine
Astor, John	Eyre, Reginald	Kilfedder, James
Atkins, Humphrey	Farr, John	King, Evelyn (Dorset, S.)
Awdry, Daniel	Fell, Anthony	King, Tom (Bridgwater)
Baker, Kenneth (St. Marylebone)	Fermer, Mrs. Peggy	Kinsey, J. R.
Baker, W. H. K. (Banff)	Fidler, Michael	Kirk, Peter
Balniel, Lord	Finsberg, Geoffrey (Hampstead)	Kitson, Timothy
Barber, Rt. Hn. Anthony	Fisher, Nigel (Surbiton)	Knight, Mrs. Jill
Batsford, Brian	Fletcher-Cooke, Charles	Knox, David
Beamish, Col. Sir Tufton	Fookes, Miss Janet	Lambton, Antony
Bell, Ronald	Fortescue, Tim	Lane, David
Bennett, Sir Frederic (Torquay)	Foster, Sir John	Langford-Holt, Sir John
Bennett, Dr. Reginald (Gosport)	Fox, Marcus	Legge-Bourke, Sir Harry
Benyon, W.	Fraser,Rt.Hn.Hugh(St'fford & Stone)	Le Marchant, Spencer
Biffen, John	Fry, Peter	Lewis, Kenneth (Rutland)
Biggs-Davison, John	Galbraith, Hn. T. G.	Lloyd, Ian (P'tsm'th, Langstone)
Blaker, Peter	Gardner, Edward	Loveridge, John
Boardman, Tom (Leicester, S.W.)	Gibson-Watt, David	McAdden, Sir Stephen
Body, Richard	Gilmour, Ian (Norfolk, C.)	MacArthur, Ian
Boscawen, Robert	Gilmour, Sir John (Fife, E.)	McCrindle, R. A.
Bossom, Sir Clive	Glyn, Dr. Alan	McLaren, Martin
Bowden, Andrew	Godber, Rt. Hn. J. B.	Maclean, Sir Fitzroy
Boyd-Carpemer, Rt. Hn. John	Goodhart, Philip	McMaster, Stanley
Bray, Ronald	Goodhew, Victor	Macmillan, Maurice (Farnham)
Brewis, John	Gorst, John	McNair-Wilson, Michael
Brinton, Sir Tatton	Gower, Raymond	McNair-Wilson, Patrick (NewForest)
Brocklebank-Fowler, Christopher	Grant, Anthony (Harrow, C.)	Maddan, Martin
Brown, Sir Edward (Bath)	Gray, Hamish	Madel, David
Bruce-Gardyne, J.	Green, Alan	Maginnis, John E.
Bryan, Paul	Grylls, Michael	Marples, Rt. Hn. Ernest
Buchanan-Smith, Alick(Angus,N&M)	Gummer, Selwyn	Marten, Neil
Buck, Antony	Gurden, Harold	Maude, Angus
Bullus, Sir Eric	Hall, Miss Joan (Keighley)	Maudling, Rt. Hn. Reginald
Burden, F. A.	Hall, John (Wycombe)	Mawby, Ray
Butler, Adam (Bosworth)	Hall-Davis, A. G. F.	Maxwell-Hyslop, R. J.
Campbell, Rt.Hn.G.(Moray&Nairn)	Hamilton, Michael (Salisbury)	Meyer, Sir Anthony
Carlisle, Mark	Hannam, John (Exeter)	Mills, Peter (Torrington)
Channon, Paul	Harrison, Brian (Maldon)	Miscampbell, Norman
Chapman, Sydney	Harrison, Col. Sir Harwood (Eye)	Mitchell, Lt.-Col. C.(Aberdeenshire, W)
Chichester-Clark, R.	Harvey, Sir Arthur Vere	Mitchell, David (Basingstoke)
Churchill, W. S.	Haselhurst, Alan	Monte, Roger
Clark, William (Surrey, E.)	Hastings, Stephen	Molyneaux, James
Clarke, Kenneth (Rushcliffe)	Havers, Michael	Money, Ernie
Clegg, Walter	Hay, John	Monks, Mrs. Connie
Cockeram, Eric	Heseltine, Michael	Monro, Hector
Coombs, Derek	Hicks, Robert	Montgomery, Fergus
Cooper, A. E.	Higgins, Terence L.	Morgan-Giles, Rear-Adm.
Corfield, Rt. Hn. Frederick	Hiley, Joseph	Morrison, Charles (Devizes)
Cormack, Patrick	Hill, John E. B. (Norfolk, S.)	Mudd, David
Costain, A. P.	Hill, James (Southampton, Test)	Murton, Oscar
Critchley, Julian	Holland, Philip	Neave, Airey
Crouch, David	Holt, Miss Mary	Nicholls, Sir Harmar
Crowder, F. P.	Hornby, Richard	Noble, Rt. Hn. Michael
Curran, Charles	Hornsby-Smith, Rt. Hn. Dame Patricia	Normanton, Tom
Dalkeith, Earl of	Howe, Hn. Sir Geoffrey (Reigate)	Nott, John
Davies, Rt. Hn. John (Knutsford)	Howell, David (Guildford)	Onslow, Cranley
d'Avigdor-Goldsmid, Sir Henry	Howell, Ralph (Norfolk, N.)	Oppenheim, Mrs. Sally
d'Avigdor-Goldsmid, James MaJ.-Gen.	Hunt, John	Orr, Capt. L. P. S.
Dean, Paul	Hutchison, Michael Clark	Osborn, John
Digby, Simon Wingfield	Iremonger, T. L.	Owen, Idris (Stockport, N.)
Dixon, Piers	James David	Page, Graham (Crosby)
Dodds-Parker, Douglas	Jenkin, Patrick (Woodford)	Page, John (Harrow, W.)
Douglas-Home, Rt. Hn. Sir Alec	Jennings, J. C. (Burton)	Pardoe, John
Drayson, G. B.	Jessel, Toby	Parkinson, Cecil (Enfield, W.)
du Cann, Rt. Hn. Edward	Johnson Smith, G. (E. Grinstead)	Percival, Ian
Pike, Miss Mervyn	Sheet, T. 0048. H.	Turton, Rt. Hn. R. H.
Pink, R. Bonner	Smith, Dudley (W'wick & L'mington)	van Straubenzee, W. R.
Pounder, Rafton	Soref, Harold	Vaughan, Dr. Gerard
Powell, Rt. Hn. J. Enoch	Speed, Keith	Vickers, Dame Joan
Price, David (Eastleigh)	Spence, John	Waddington, David
Proudfoot, Wilfred	Sproat, Iain	Walder, David (Clitheroe)
Pym, Rt. Hn. Francis	Stainton, Keith	Walker, Rt. Hn. Peter (Worcester)
Quennell, Miss J. M.	Stanbrook, Ivor	Walker-Smith, Rt. Hn. Sir Derek
Raison, Timothy	Steel, David	Wall, Patrick
Ramsden, Rt. Hn. James	Stodart, Anthony (Edinburgh, W.)	Walters, Dennis
Rawlinson, Rt. Hn. Sir Peter	Stoddart-Scott, Cot. Sir M.	Ward, Dame Irene
Reed, Laurance (Bolton, E.)	Stokes, John	Warren, Kenneth
Rees, Peter (Dover)	Stuttaford, Dr. Tom	Weatherill, Bernard
Rees-Davies, W. R.	Sutcliffe, John	Wells, John (Maidstone)
Renton, Rt. Hn. Sir David	Tapsell, Peter	White, Roger (Gravesend)
Rhys Williams, Sir Brandon	Taylor, Sir Charles (Eastbourne)	Whitelaw, Rt. Hn. William
Ridley, Hn. Nicholas	Taylor,Edward M.(G'gow,Cathcart)	Wiggin, Jerry
Roberts, Michael (Cardiff, N.)	Taylor, Robert (Croydon, N.W.)	Wilkinson, John
Roberts, Wyn (Conway)	Tebbit, Norman	Wolrige-Gordon, Patrick
Rossi, Hugh (Hornsey)	Temple, John M.	Woodhouse, Hn. Christopher
Russell, Sir Ronald	Thatcher, Rt. Hn. Mrs. Margaret	Woodnutt, Mark
St. John-Stevas, Norman	Thomas, John Stradling (Monmouth)	Wylie, Rt. Hn. N. R.
Scott, Nicholas	Thompson, Sir Richard (Croydon, S.)	Younger, Hn. George
Scott-Hopkins, James	Tilney, John
Sharpies, Richard	Trafford, Dr. Anthony	TELLERS FOR THE AYES:
Shaw, Michael (Sc'b'gh & Whitby)	Trew, Peter	Mr. Jasper More and
Shelton, William (Clapham)	Tugendhat, Christopher	Mr. Paul Hawkins.
Simeons, Charles
NOES
Abse, Leo	Driberg, Tom	John, Brynmor
Albu, Austen	Duffy, A. E. P.	Johnson, Carol (Lewisham, S.)
Allaun, Frank (Salford, E.)	Dunn, James A.	Johnson, James (K'ston-on-Hull,W.)
Allien, Scholefield	Dunnett, Jack	Johnson, Walter (Derby, S.)
Archer, Peter (Rowley Regis)	Eadie, Alex	Jones, Barry (Flint, E.)
Armstrong, Ernest	Edwards, Robert (Bilston)	Jones, Dan (Burnley)
Ashley, Jack	Edwards, William (Merioneth)	Jones, Rt. Hn. Sir Elwyn(W.Ham,S.)
Ashton, Joe	Ellis, Tom	Jones, Gwynoro (Carmarthen)
Atkinson, Norman	English, Michael	Jones, T. Alec (Rhondda, W.)
Bagier, Cordon A. T.	Evans, Fred	Judd, Frank
Barnes, Michael	Fernyhough, Rt. Hn. E.	Kaufman, Gerald
Beaney, Alan	Fisher, Mrs. Doris(B'ham, Ladywood)	Kelley, Richard
Benn, Rt. Hn. Anthony Wedgwood	Fitch, Alan (Wigan)	Kerr, Russell
Bennett, James (Glasgow, Bridgeton)	Fletcher, Raymond (Ilkeston)	Kinnock, Neil
Bishop, E. S.	Fletcher, Ted (Darlington)	Lamond, James
Blenlinson, Arthur	Foot, Michael	Latham, Arthur
Boyden, James (Bishop Auckland)	Forrester, John	Lawson, George
Brown, Bob (N'c'tle-upon-Tyne,W.)	Fraser, John (Norwood)	Leadbitter, Ted
Brown, Hugh D. (G'gow, Provan)	Freeson, Reginald	Lee, Rt. Hn. Frederick
Brown, Ronald (Storeditch & F'bury)	Galpern, Sir Myer	Leonard, Dick
Buchan, Norman	Carrett, W. E.	Lestor, Miss Joan
Buchanan, Richard (G'gow, Sp'burn)	Gilbert, Dr. John	Lewis, Ron (Carlisle)
Butler, Mrs. Joyce (Wood Green)	Ginsburg, David	Lipton, Marcus
Callaghan, Rt. Hn. James	Golding, John	Lomas, Kenneth
Campbell, I. (Dunbartonshire, W.)	Cordon Walker, Rt. Hn. P. C.	Loughlin, Charles
Cant, R. B.	Gourlay, Harry	Lyon, Alexander W. (York)
Carmichael, Neil	Grant, George (Morpeth)	Lyons, Edward (Bradford, E.)
Carter, Ray(Birmingh'm, Northfield)	Grant, John D. (Islington, E.)	Mabon, Dr. J. Dickson
Carter-Jones, Lewis (Eccles)	Griffiths, Eddie (Brightside)	McBride, Neil
Clark, David (Colne Valley)	Griffiths, Will(Exchange)	McCartney, Hugh
Cocks, Michael (Bristol, S.)	Hamilton, James (Bothwell)	McElhone, Frank
Cohen, Stanley	Hamilton, William (Fife, W.)	McGuire, Michael
Concannon, J. D.	Hannan, William (G'gow, Maryhill)	Mackenzie, Gregor
Conlan, Bernard	Hardy, Peter	Mackie, John
Corbet, Mrs. Freda	Harper, Joseph	Maclenann, Robert
Cox, Thomas (Wandsworth, C.)	Harrison, Walter (Wakefield)	McMillan, Tom (Glasgow, C.)
Cronin, John	Hart, Rt. Hn. Judith	MacPherson, Malcolm
Crosland, Rt. Hn. Anthony	Hattersley, Roy	Mahon, Simon (Bootle)
Cunningham, C. (Islington, S.W.)	Healey, Rt. Hn. Denis	Mallalieu, J. P. W. (Huddersfield, E.)
Davidson, Arthur	Heffer, Eric S.	Marquand, David
Davies, Denzil (Llanelly)	Horam, John	Marsh, Rt. Hn. Richard
Davies, C. Elfed (Rhondda, E.)	Houghton, Rt. Hn. Douglas	Mason, Rt. Hn. Roy
Davies, (for (Cower)	Howell, Denis, Small Heath)	Mayhew, Christopher
Davis, Clinton (Hackney, C.)	Hughes, Rt. Hn. Cledwyn (Anglesey)	Meacher, Michael
Deakins, Eric	Hughes, Mark (Durham)	Mellish, Rt. Hn. Robert
de Freitas, Rt. Hn. Sir Geoffrey	Hughes, Robert (Aberdeen, N.)	Mendelson, John
Delargy, H. J.	Hughes, Roy (Newport)	Miliar}, Bruce
Dell, Rt. Hn. Edmund	Hunter, Adam	Miller, Dr. M. S.
Dempsey, James	Janner, Greville	Mine, Edward (Byth)
Doig, Peter	Jay, Rt. Hn. Douglas	Molloy, William
Dormand, J. D.	Jeger,Mrs.Lena(H'bn St.P'cras, S.)	Morris, Alfred (Wythenshawe)
Douglas, Dick (Stirlingshire, E.)	Jenkins, Hugh (Putney)	Morris Charles R. (Openshaw)
Douglas-Mann, Bruce	Jenkins, Rt. Hn. Roy (Stechford)	Morris, Rt. Hn. John (Aberavon)

Moyle, Roland	Rhodes, Geoffrey	Thomas, Jeffrey (Abertillery)
Mulley, Rt. Hn. Frederick	Roberts, Rt.Hn.Goronwy(Caernarvon)	Thomson, Rt. Hn. G. (Dundee, E.)
Murray, Ronald King	Robertson, John (Paisley)	Tinn, James
Ogden, Eric	Roderick, CaerwynE.(Br'c'n&R'dnor)	Tomney, Frank
O'Halloran, Michael	Rodgers, William (Stockton-on-Tees)	Tuck, Raphael
O'Malley, Brian	Roper, John	Urwin, T. W.
Oram, Bert	Rose, Paul B.	Varley, Eric G.
Orbach, Maurice	Ross, Rt. Hn. William (Kilmarnock)	Wainwright, Edwin
Orme, Stanley	Shore, Rt. Hn. Peter (Stepney)	Walden, Brian (B'm'ham, All Saints)
Oswald, Thomas	Short,Rt. Hn. Edward(N'c'tle-u-Tyne)	Walker, Harold (Doncaster)
Owen, Dr. David (Plymouth, Sutton)	Short, Mrs. Renée (W'hampton,N.E.)	Wallace, George
Paget, R. T.	Silkin, Rt. Hn. John (Deptford)	Watkins, David
Palmer, Arthur	Sillars, James	Weitzman, David
Parker, John (Dagenham)	Silverman, Julius	Wellbeloved, James
Parry, Robert (Liverpool, Exchange)	Skinner, Dennis	Wells, William (Walsall, N.)
Pavitt, Laurie	Small, William	White, James (Glasgow, Pollok)
Peart, Rt. Hn. Fred	Smith, John (Lanarkshire, N.)	Whitehead, Phillip
Pendry, Tom	Spearing, Nigel	Whitlock, William
Pentland, Norman	Spriggs, Leslie	Willey, Rt. Hn. Frederick
Prentice, Rt, Hn. Reg.	Stallard, A. W.	Williams, Alan (Swansea, W.)
Prescott, John	Stoddart, David (Swindon)	Williams, W. T. (Warrington)
Price, J. T. (Westhoughton)	Stonehouse, Rt. Hn. John	Wilson, Alexander (Hamilton)
Price, William (Rugby)	Strang, Gavin	Woof, Robert
Probert, Arthur	Summerskill, Hn. Dr. Shirley
Rankin, John	Swain, Thomas	TELLERS FOR THE NOES:
Reed, D. (Sedgefield)	Taverne, Dick	Mr. William Hamling and
Rees, Merlyn (Leeds, S.)	Thomas, Rt.Hn.George(Carditf.W.)	Mr. Donald Coleman.

Bill accordingly read the Third time, and passed.