INDUSTRIAL POLICY

HC Deb 12 December 1972 vol 848 cc247-374

Mr. Speaker

Before calling on the right hon. Member for Bristol, South-East (Mr. Benn) to move the motion, I would inform the House that I have selected the amendment in the name of the Prime Minister and his hon. Friends: In line 1, leave out from 'House' to end and add ' fully supports the massive measures which the Government has taken to stimulate the economy so as to achieve a growth rate of 5 per cent., and in particular the greatly increased incentives to invest, and welcomes the recent indications of an encouraging upturn in manufacturing investment intentions'.

4.1 p.m.

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

I beg to move, That this House expresses its concern at the failure to secure an adequate level of industrial investment in the United Kingdom; draws attention to the problems created by that failure, especially in the machine tool and shipbuilding industries; and shares the general lack of confidence in Her Majesty's Government and its policies for industrial expansion. The subject to be raised in this debate is undoubtedly central to Britain's economic prospects over the next few years. There has long been broad agreement that the low level of investment has been a major factor in holding back economic growth and weakening our competitive position. This point has been strongly and regularly made by Ministers in all parties and Governments, by industrialists, by trade unionists and commentators, and was strongly stressed by the party opposite before and during the last election.

Since 1970, Ministers have consistently argued that they could and would produce sustained economic growth and the investment necessary to underpin it, and their confidence is expressed again in today's amendment. Indeed, HANSARD is peppered with optimistic statements on this subject and Ministers, in endless Press releases, at dinners and on other occasions, have argued that this is what was likely to happen.

In the minds of the Government, this has of course always been linked very strongly with impending entry of the Common Market. Indeed, both the opportunities offered by the wider market and the costs that it was known that this would involve were believed to be obtainable only on the basis of a rapid rate of growth underpinned by massive investment. It was often argued by Ministers, hon. Members opposite and others that, once the decision to enter the EEC was taken, the recovery of investment would almost automatically follow.

It is now 2½ years since the Government came to power, 18 months since the Cabinet accepted the terms for entry, over a year since the Commons vote, and entry is less than three weeks away. Yet, last week, the Secretary of State's own Department, the Department of Trade and Industry, issued the worst quarterly figures for manufacturing investment since 1967. They were over 2 per cent. down on the previous quarter, 13.9 per cent. down on the first quarter of 1971, 11 per cent. down on the first nine months, the comparable period of 1972 over 1971, and they were no less than 18 per cent. down on the last quarter of the period when Labour had responsibility.

This should, of course, be compared with the progressive rise in investment in real terms from 1967 onwards, under the previous Administration, from £1,306 million in 1967 to £1,594 million in 1970. This 11 per cent. fall must also be set against the forecast made earlier this year by the Government of a mere 3 per cent. fall, which was revised in October to a 7 per cent. fall and in actuality has amounted to the 11 per cent. that I have quoted.

It is not surprising, therefore, that even such a warm admirer of the Government of the day as the writer in the Economist found it necessary to say that the economy is by no means as robust as the Chancellor has been suggesting. This certainly bears upon the amendment. The Times commented that the failure to stimulate the economy …during 1970 and 1971, no doubt for fear of cost inflation, probably contributed more to the present serious economic predicament than any other single factor. Of course, the consumer boom which the Chancellor stimulated and the rise in hire purchase are continuing, but this has so far had no discernable effect on investment or on stocks. The result is that not only has the growth produced been lop-sided: during their first year in power, the Government deliberately dismantled almost all the machinery available to them geared to stimulate investment. Investment grants were abolished, the Industrial Expansion Act was repealed, the IRC was abolished, the Shipbuilding Industry Board brought to a conclusion and we were warned that the regional employment premium, which is of supreme importance, is to be phased out.

It was at exactly that moment that these measures might have helped to bring investment up. The Government have now spent the last year—not under this Minister but under his predecessor—trying to assemble or rather to reassemble, all those very instruments. A form of investment grant has been introduced, the Industry Act has been brought in, the Industrial Development Executive has been created and substantial subsidies have been granted to the nationalised industries.

But the re-engagement which the Government have decided should follow disengagement has come too late to check the disastrous fall in investment to which I have referred. The effect, of course, has been to throw serious doubts over the Government's growth target and in the process has had a serious effect on a number of industries.

Our motion mentions two industries to which no doubt other hon. Members will want to refer in greater detail. I want to mention them briefly.

The first is machine tools, which has been through the severest recession for a generation and is only now showing signs of emerging painfully. The value of new orders in the spring of 1972 was the lowest since 1963, and the 1971 figures were 37 per cent. below 1970. Although home orders began to rise in July, the total orders outstanding at the end of July were still no less than 27 per cent below the figure for one year earlier.

The labour force in machine tools has been reduced by between 20 and 25 per cent. in the two year period 1970–72, and employment, particularly in the north and north-west, has fallen sharply. There is still under-utilisation of capacity. Although the industry depends upon general and sustained growth prospects, there are special cyclical problems in the industry to which attention has been given. For that reason—

Mr. Gerald Kaufman (Manchester, Ardwick)

Would my right hon. Friend accept that whatever cyclical growth or any other kind of growth we get in the economy will not help the redundant machine tool workers in my constituency since Churchill Machine Tools in Altrincham has been closed down and their jobs will never come back?

Mr. Benn

I hope that my hon. Friend will be able to deal in greater detail with that case, which contributed to the fall of 11 per cent. in the figures I gave. This is part of the major employment problems whach have faced workers in the machine tool industry. Of course the unions involved have believed for some time that public ownership in the machine tool industry would contribute substantially to a solution of their problems. The measures which might be taken by the Government to deal with the cyclical problems are the ones to which I now wish to turn.

The National Economic Development Council recommended a £20 million programme of orders by the Government. We had an announcement of £10 million worth of orders earlier this year and a further £6 million worth later, but not even reaching the figure that had been recommended.

There is certainly a need for a reexamination of a policy on depreciation allowances for second-hand machines in order to try to bring up orders in a situation where the general demand is not sufficient. There has been pressure for examination of the Canadian experience of low-interest loans for leasing, and examination of contracts for continuous plant replacement. A serious look is now required at the controlled investment reserve scheme, perhaps based on the Swedish experience of plant modernisation certificates.

Within the machine tool industry there is anxiety about our entry to the European Economic Community partly because of the possibility of investment taking place on the Continent and partly because, with the very depressed level of the industry, if demand does pick up there is a risk that these orders may be met by imports from the Continent.

I turn to shipbuilding, where the problem has been very much worsened by a fall in world ordering which has affected British yards. One must hope that the rise in freight rates, the recovery now taking place, may improve the prospects for world ordering. But, even so, the British share in the reduced world market is still very low and the rate of ordering in the British shipbuilding industry has been giving rise, to a great deal of concern.

From January to May of this year, the orders totalled 291,000 gross registered tons, compared with 995,000 tons a year earlier. That is a 70 per cent. drop in orders for shipbuilding in the course of a single year. In the third quarter of 1972 there is probably the worst quarterly figure since the war, and some say since the 1920's.

What is important here is that the British share of the world market, whatever that is, should be brought up in order to provide employment in our shipbuilding areas. It is a great pity that the dismantling of the Shipbuilding Industry Board, even though the Government have now put millions of £s into the industry since the end of the SIB, should have occurred just after the Board had begun to follow through the reorganisaion upon which it was engaged. The Government have announced their tapering grants for building, and undoubtedly more will be needed.

The Government, and particularly the Secretary of State, who made his statement yesterday on the coal industry, will have to face the fact that the same problems of employment arise in shipbuilding areas as arise in coal mining areas and that a subsidy, perhaps in the form of technological grants, will be necessary in order to maintain British shipbuilding in existence. Undoubtedly one of the reasons why large sums of money were put, for example, into Govan and Marathon following the collapse of Upper Clyde is that when the Government economists did their calculations it became apparent that it was more economic to do this than to allow unemployment to rise to the level that would otherwise have occurred. With the amount of public money in the shipbuilding industry, the case for public enterprise there is, in my judgment, absolutely unanswerable.

I turn to some other problems associated with the problem of investment. We have in engineering not only a slower rate of growth than is required but a very serious problem of job loss, the destruction of jobs that contributes in part to the anxiety of hon. Members on the Opposition side of the House.

The job loss in the engineering industry in 1971 was no fewer than 260,000 jobs. In the first part of this year, January to May, there was a further loss of 110,000 jobs. This brings me on to unemployment, because although there has been a welcome fall from October, the Secretary of State should not forget that unemployment is still 34 per cent. above the level at which it was when the present Government came to power, and there is still a large number of workers in all parts of the country engaged in looking for work. The figures for Britain as a whole indicate that 3½ unemployed persons are looking for every vacancy; in the North-West the figure is eight; in the North it is nine; in Scotland it is 12.

At a time when the Government have changed their calculations for publishing the unemployment figures, it is worth noticing that the census figures have now come out and they suggest that the real level of unemployment is very much higher than is revealed by the official statistics.

We have to relate all this to the prospects for the future. The Government's case is clearly put in the amendment to the motion, saying that there will be a massive recovery of investment. But it is over this forecast for the future that there have now been some doubts cast. This is the question of confidence, to which we refer in the motion. Everything depends here, in terms of investment, on the amount of confidence that business may have in future prospects. Confidence cannot be sustained for ever simply by optimistic Government statements, of which we have had a plethora over the last two years. Confidence must be soundly based, and if it is to be soundly based the Government will have to give better answers to the anxieties that have been made public from a number of directions in order to try to relieve those anxieties or, where necessary, take measures to dispel them.

I turn, first and foremost, to the anxieties expressed on behalf of the CBI at a private meeting—which I was not privileged to attend—of the Conservative Party Trade and Industry Committee, which quite properly aroused a great deal of public interest. As it was what is called in polite circles a "leak", one must not attach too much importance to the words attributed to Mr. Clapham at that meeting. But if the Evening Standard for that night is to be believed, the Chancellor summoned Mr. Clapham to come to see him shortly thereafter and, after that, the position was clarified. I, therefore, do not base myself on what The Times said but on the CBI clarification of what CBI anxieties are, and one can identify three very clearly at present.

One anxiety—I cannot think that this view will cause any disagreement in the House—was a belief that the rate of growth forecast by the Government is obtainable only if a major shift in investment takes place. The second anxiety was that it is not possible for future planning to go forward with confidence unless industry knows what the second stage of the prices and incomes policy will be, for obvious reasons. The third anxiety—with which I want to deal in a moment—was that the effect of moving from a floating £ to a fixed parity under the arrangements which will have to be arrived at with the EEC also introduces another element of uncertainty.

As, Mr. Speaker, you will not be calling the Liberal amendment, I suppose that I can only notice that the Liberals advocate a permanently floating pound within crawling pegs. That is an interesting proposal from a party which is committed to entering the EEC on present terms. But at any rate, the level at which the £ is fixed and the way in which it is allowed to change obviously has a substantial effect upon future investment planning. Whether or not the CBI's research department is right in its calculations, it is certainly true—it has been published—that it reckoned that there would have to be a move from about a 9 per cent. to a 19 per cent. rate of investment in order even to sustain a 5 per cent. rate of growth over a prolonged period. The CBI is anxious, as must be obvious to anyone who studies the figures, about a capacity shortage and about the one-year to three-year investment lag which follows if the recovery in investment is much delayed.

Mr. J. Bruce-Gardyne (South Angus)

Since the right hon. Gentleman bases those comments not on the highly misleading report which appeared in The Times but on the CBI statement, surely he cannot leave out of account the most important point made in that statement, namely, the very close relationship between industrial investment and profitability, and the need to expand the profitability of industry. Does the right hon. Gentleman support that?

Mr. Benn

I am drawing attention to the anxieties expressed. Undoubtedly the CBI anxiety on that score was expressed. I cannot deal with every aspect of the matter, although this does bear on a point to which I shall come later—namely, how the second stage of the prices and incomes policy is to be handled and its effect not only on profits but on living standards; hence upon the interest of the TUC and the anxieties of its members, to which I now wish to turn.

If the Government will look again at the TUC paper, dated 10th October, dealing with one of the last Downing Street meetings, they will find that the TUC analysis is that even the 5 per cent. growth rate will not be sufficient to reduce unemployment and that a 6 per cent. growth rate would be necessary for the reduction of unemployment by 100,000.

On the one hand there is the CBI anxiety, for some of the reasons given and the one which the hon. Gentleman intervened to add, on the grounds that the 5 per cent. may not be sustained, and on the other there is the TUC anxiety that even if it were to be sustained unemployment would not fall to the necessary level.

That brings me to the next point, which is how the inflationary situation is to be handled by the Government during the next 12 months. It has been estimated that there is already a 4 to 5 per cent. increase in inflation built in as a result of the common agricultural policy, the value added tax, import prices, and the 1 per cent. increase for rents, many of those increases being products of deliberate Government policy.

The Economic Advisory Council in Bonn, whose forecast for this country was published recently, suggested there would be a 9 per cent. rise in consumer prices even taking account of the present freeze. World commodity prices are rising. What is happening in other areas, if I may refer to one, is that with entry into the Common Market removing from the Government the power to control public sector prices, we could well have a rise in steel prices of perhaps 10 per cent. next year to bring steel prices into line with the prevailing level of Community steel prices.

At a time when we are trying to tackle inflation the Government will find their hands stayed with the expiration of the Counter-Inflation (Temporary Provisions) Act. Therefore, this is the position. With wages held, with prices rising, there is serious anxiety on that score.

I now turn to another problem which has absorbed a great deal of attention, the shift in the balance of payments which, even allowing for the dock strike which created some distortion of the figures, has led The Financial Times, for example, to argue that the surplus of over £1,000 million last year must by now very largely have disappeared. If one takes into account, looking at the full balance of payments figures, that the flow of investment to the Continent is proceeding at a greater level than inwards investment, there are double grounds for anxiety.

It would be foolish of the Government to ignore the importance of their own discussions with multinational companies concerning investment plans or to describe solemn undertakings given to successive governments as being merely of "cosmetic" significance. The hon. Member for the Cities of London and Westminster (Mr. Tugendhat) made a very powerful point there, as it were reminding the Minister for Industrial Development that what is good for General Motors may not be good automatically for the United Kingdom. Finally, regarding the balance of payments, an OECD publication forecast a likely or possible deficit for 1973.

Industry is bound to ask itself whether the Government intend, if the situation develops, to try to implement what became known loosely as a "Maudling-" 1964 policy within the context of the membership of the Common Market. Indeed, is it possible that that can be done?

This brings me to the question of fixing the parity after the float. Earlier this year it appeared from public statements as if President Pompidou expected the float to end before the end of the year. Evidently, it is now deferred. We do not know when the float will come to an end. We do not know at what level it will come to an end. The Chancellor of the Exchequer, who made a great point in his Budget speech last year of indicating that the Government did not intend to allow future growth to be held back by an unrealistic or artificial exchange rate, now finds himself in the context of EEC entry in a situation where his freedom of action might be limited.

One other inevitable anxiety is the rise in interest rates and the edging up of the minimum lending rate no doubt in order to obtain control of the money supply: it is an indicator that business is bound to take seriously.

There are many other anxieties of a different kind from those I have mentioned to which I ought to make reference. One is the regional policy, where there is great uncertainty about the effect on the regional policy of entry into the Common Market. There is still the unaltered decision to phase out the regional employment premium which, according to one newspaper report, would cost the Ford Motor Company alone about £1 million in a year.

There are rumours of the contraction of the railways, to which reference was made earlier, and which, were it to be carried through, would have serious effects upon development prospects in Scotland, Wales and the regions. There has been mishandling of the North Sea oil development, which presents a very important potential growth in investment; and the general instability of Government policy, which means that there has been a virtually total reversal in every area of policy.

We have only to wait for the Prices and Incomes Board to come back with the second stage of the counter-inflation policy for the whole policy to be set back in opposition to everything said by the Government earlier.

Even concerning the negotiation of terms of entry into Europe there is now some indication of Government rethinking. The meetings of the National Economic Development Council, which I attended for many years, are private, but the Secretary of State was, after the most recent meeting quoted in The Guardian as expressing his determination to change community policy in the next year. In what respect? Sir Frank Figgures of NEDC called for a modification of the common agricultural policy. So renegotiation appears even at this late stage, in some senses to be even in this Government's mind.

I could not complete the review of those legitimate and proper anxieties without adding one, which Parliament knows is very real and which, in our view, is a wholly unnecessary anxiety. The anxiety that has been brought to the forefront by the continuing policy of confrontation with the trade union movement which the Government have chosen, the rise in the number of days lost and workers involved in strikes this year has now reached twice the 1971 level. The problem here is basically political. The Government have not made up their mind whether they wish to establish a working relationship with the trade unions; or whether they see in continuing confrontation a possibility of building a political strategy which would advance them when the time comes for a general election or to explain their failures in dealing with inflation. Yet it is upon the whole question of industrial relations that a great deal of the confidence and hence the prospects for higher investment and more jobs must come.

If the right hon. Gentleman is looking again to see how the problems of better relations could be improved he would do well to re-examine in greater detail the proposals made by the TUC during the abhortive tri-partite talks. What the TUC asked for covered many of the anxieties to which I have referred. It wanted a firm commitment to growth and a real cut in unemployment; an effective price control in order to avoid the freeze being simply a cover for a wage freeze; a cut in VAT or, as we recommended in the House, its postponement; a rent freeze; expansion of the housing programme where at present completions and starts in the private and public sectors have been falling; a premium rate of capital gains tax to deal with the scandal of land prices; a renegotiated common agricultural policy, particularly to secure price reductions in cereals; better measures on consumer protection, on which, admittedly, the Government have now moved; and a further increase in social security payments, notably on pensions and family allowances.

All these proposals are highly relevant to the encouragement of investment which we must have if the present forecast rate of growth is not to peter out. These are anxieties which only Ministers, by clear policies and clear statements, can resolve. The charge in our motion can be summarised simply. It is that half-way through the Government's term of office, after many changes of policy, the country is still experiencing serious inflation, high unemployment and a consumer boom unmatched by the necessary recovery of investment. All that is accompanied by social injustice deliberately fed into the system by the Chancellor in his succession of Budgets and other measures. At the end our motion states that confidence in the Government is lacking, and by voting tonight we are asking the House to note that lack of confidence and also to share it.

4.32 p.m.

The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Peter Walker)

I beg to move to leave out from "House" to the end of the Question and to add instead thereof fully supports the massive measures which the Government has taken to stimulate the economy so as to achieve a growth rate of 5 per cent., and in particular the greatly increased incentives to invest, and welcomes the recent indications of an encouraging upturn in manufacturing investment intentions. I welcome the opportunity of the debate in order to comment upon the line of argument adopted by the right hon. Member for Bristol, South-East (Mr. Benn) and to give my impressions of the future prospects of our economy.

The right hon. Gentleman's speech contained a sort of shopping list at the end. When at the weekend the right hon. Member for Grimsby (Mr. Crosland) suggested that one of the Labour Party's problems was that it had not developed its policies, I thought that that was unfair in view of the hard work done by the right hon. Member for Bristol, South-East on policy matters. Before the Labour Party conference he published a document which was given to the delegates and called "Labour's Programme" in which in great detail he gave his reflections and the reflections of the Labour Party on what its current thinking should be. It is not, therefore, as the right hon. Member for Grimsby suggested, a lack of policy; it is just that the policy the Labour Party prepared was virtually rejected by the British electorate, and for very sound reasons. Much of what the right hon. Gentleman was saying today showed a negative attitude to what is happening. He had nothing positive to say about industrial relations—just hostility towards the Industrial Relations Act and at what had been done.

Mr. Benn

The Secretary of State will note that the policy set out in the document to which he refers was the total, unconditional and absolute repeal to the Industrial Relations Act.

Mr. Walker

I am grateful to the right hon. Gentleman for making my point. On almost every issue the view of the Labour Party is the total repeal of this, a "No" to that and a rejection of something else. The public are waiting to hear of something that they will do. On industrial relations they originally produced their own proposals but dropped them. The same happened on the Common Market. Throughout his speech the right hon. Gentleman referred to difficulties and problems of the Common Market, but he made no reference to the opportunities. He obviously rejects the Common Market.

The right hon. Gentleman's attitude to international investment is to suggest that what is good for General Motors might not be good for Britain. But he said nothing positive about the importance to this country of attracting international investment and how the Labour Party would set about achieving that. His document refers to international investment, and nothing could be better designed to frighten off every possible £ of international investment than that. Therefore, the Labour Party, in contrast to the positive proposals and actions of the Government, has its list of negative ideas of rejection and repeal.

There is now a considerable range of Government incentives to industrial activity. Substantial tax reductions have taken place since the Government came to office. We are making a considerable contribution to the strong consumer demand which is creating a strong increase in economic and industrial production. There are also specific measures for encouraging investment, including the availability throughout the country of free depreciation, and of 40 per cent. initial allowances for new buildings. There are additional measures for the regions by way of investment grants.

I wish first to examine the two particular industries mentioned in the Opposition motion about which they expressed their anxieties, and upon which a large number of hon. Members will no doubt wish to speak. The right hon. Gentleman expressed regret at the disbanding of the Shipbuilding Industry Board. During the period that that board was in operation while the last Labour Government were in office a total of £41 million was provided for the shipbuilding industry. Of that sum all but £12 million was for modernisation, and the £12 million went to meet losses that had taken place at UCS and Harland and Wolff. In addition, they provided a further £10 million for losses at UCS and Cammell-Laird. So, of a total of £51 million, £22 million went to offset losses and the balance was designed for the modernisation of the yards.

Already the Government have put forward proposals for Govan Shipbuilders and Cammell-Laird amounting to £23.2 million, £20 million of which is for modernisation and the improvement of the industry. Harland and Wolff has put forward proposals for a new project estimated to cost £35 million which will expand the steel facilities and thus the output of large tankers and create a further 4,000 jobs. The Government have agreed that this project should go ahead, and work on certain parts of the scheme has already started.

Assistance for the project will be provided by the Ministry of Commerce under Northern Ireland legislation, but the company will make a substantial contribution towards the cost from its own resources. In three years, therefore, the Government will have given more money to assist the modernisation of British shipyards than the last Government gave in six years.

Mr. James Hill (Southampton, Test)

How much of that £35 million will be directed towards the Southampton yard of Harland and Wolff?

Mr. Walker

The project concerns primarily the Belfast yards.

Mr. E. Fernyhough (Jarrow)

Is the Minister in a position to tell us how much help he will give Swan Hunter in respect of the proposals which it has put forward for the old Palmer's yard? The company is anxious to make it one of the finest in the country, but it will need help. Can it be arranged?

Mr. Walker

I cannot say today. I shall be mentioning other matters which are of importance to the North-East.

In addition to the substantial increase in aid for modernisation that has taken place, the Government have brought forward from the Ministry of Defence £70 million worth of orders for the Royal Navy. They have also brought in tapering construction grants which between 1972–74 will provide the shipbuilding industry with an additional £50 million.

Mr. Robert Hughes (Aberdeen, North)

rose—

Mr. Walker

I have given way four times in the last few minutes. I must get on.

The scheme operated by the Ministry of Agriculture, Fisheries and Food for fishing vessels provides additional help. In the last three years 357 orders have been placed under that scheme.

Mr. Robert Hughes

rose—

Mr. Walker

I have given way four times.

We can under the Industry Act make available grants for modernisation. We are studying that at present. During the last three years in the 13 major companies operating in the shipbuilding industry, the labour force has stayed at 77,000 men. There has not been a reduction in the labour force during that period. At the moment there is a number of large orders in the advanced stage of negotiation. There is only one major shipyard with short-term problems regarding its order book—that is Swan Hunter. Schemes for modernisation are being examined in connection with that yard. It is able, as are other shipyards, to take advantage of the aid which we are willing to provide for ships with a high content of technology. I hope it will take advantage of that aid.

I will point out the contrast of that approach with what has happened in the British shipbuilding industry generally. The right hon. Member for Bristol South-East mentioned that he regretted the fact that orders worldwide were rather better than the British share. I have discovered that the position at present is that the British shipowners have ordered £1,600 million worth of ships, of which £1,200 million has been placed abroad in foreign shipyards. Only £400 million is being placed in this country.

It is for that reason that we are anxious to press ahead at a fast speed with the modernisation of the shipyards. We are continuing our talks with the Chamber of Shipping and the shipbuilders to see whether in future we can obtain much closer collaboration between the British shipowners and the shipbuilders.

We are discussing various ways in which we can use the Industry Act and the facilities under the legislation for technology. We have at the moment aid for high technology ships. As soon as further data are available on these schemes we will try to make swift decisions upon them. We have agreed with Doxford and Sunderland on a formula whereby we can give considerable help in the modernisation of its yard. I can assure the House that immediately the facts and figures come forward from the company a speedy decision in accordance with that formula will be made to assist it.

My hon. Friend the Member for Tyne-mouth (Dame Irene Ward), has taken a particularly keen interest in the development of the Sea Horse engine and is anxious to see that the development taking place in the North-East between Doxford and Sunderland and Hawthorn Leslie is given every opportunity to succeed. Following the representations which have been made by my hon. Friend, I had a meeting yesterday with a director of Doxford to discuss the prospects of the engine. Doxford's management changed a few months ago. It has appointed one of the best and leading engineers in the world on marine engines to head its engine division. Doxford asked that he should have time to examine the prospects for the engine thoroughly and to carry out the various technical tests which are needed. I have assured Doxford that as soon as it has completed the exercise, and if it wishes to come to us with a submission that it is a technically sound and commercially viable project, we will consider what can be done to assist the project.

We have carried out a major report on the whole of the industry on an international basis. The report will soon become available and we will with the shipbuilding industry and the shipowners discuss the report. But there is one fact of which the House should be aware. I refer to the scandal of the policy pursued by the previous Government on giving aid to shipbuilding. They gave grants of 25 per cent. and 20 per cent. for shipbuilding irrespective of whether the ship was built in the United Kingdom or anywhere in the world. That resulted in a substantial disadvantage to British industry.

I took steps today to discover the exact position. I must tell the House that £350 million of the taxpayers' money has been paid to foreign shipyards under the grants which we stopped soon after we came into office. Shipowners registered in this country received £215 million, and £135 million went to shipowners registered abroad. I hope that when, the Opposition talk about the shipbuilding industry they will realise that its £350 million of taxpayers' money, which helped about £1,400 million worth of shipping orders that went abroad, probably did far more to modernise the Japanese shipyards than it ever did to modernise the British yards.

Mr. Peter Rost (Derbyshire, South-East)

Does my right hon. Friend agree that the story is even worse than that? The taxpayers' money was extracted from industry in higher taxation.

Mr. Walker

That was the multiple effect of the last Government's shipbuilding policies. When the history of that period of shipbuilding is written, it will be considered to be one of the most disastrous to the British economy and British shipbuilding.

I now turn to the machine tool industry—

Mr. Arthur Blenkinsop (South Shields)

As the right hon. Gentleman is condemning the policy of providing grants for foreign shipbuilders, will he make a statement about the provision of assistance to ship-owners for building in British yards?

Mr. Walker

I have stated that whenever there is a high content of technology involved—and there are six applications at present—we will consider what can be done. We are also talking with the shipbuilders and shipowners about ways in which we can use the Industry Act and the Science and Technology Act to assist. If one quarter of the £350 million spent abroad had been spent at home the position would be rather less urgent than it is now.

Mr. Robert Hughes

Is the right hon. Gentleman aware that the Hall and Russell shipyard, which is building an oil rig survey vessel on spec, has just been told that it cannot get £50,000 grant because it is not building for an order? Consequently, the manager of the yard has decided that he must stop all work because he now has doubts about the selling position.

Mr. Walker

I will ask my right hon. Friend the Minister for Industrial Development to comment on that when he winds up.

I now turn to the machine tool industry. The Government advanced the procurement programme of the public sector by £16 million to try to assist the problems of the industry during the last year. We have also decided to bring into operation the pre-production order scheme whereby orders can be placed by the Government for new and advanced developments in machine tools to assist in preparing for those developments. We are also willing to consider proposals under the Industry Act which will help in the modernising of given sectors of the machine tool industry.

But, of course, basic to the decline in the machine tool industry has been the general failure to obtain growth in past years. This is now changing. Let us take as an example the growth currently taking place in the motor car and motor cycle industry. There has been a dramatic change since the present Government took office. In the motor car and motor cycle industry during the second quarter of this year compared with the second quarter of 1970, in real terms—at constant prices—production has risen from £204 million to £323 million; in the radio and television industry it has risen from £138 million to £189 million. In other words, the policies pursued by the Government are bringing about the economic growth needed for the revival of the machine tool industry.

I have just received the order figures for the machine tool industry for the third quarter of the year, and I am pleased to say that they are the best ever in our history. The total orders—both home orders and exports—are the best for three years. This is an indication that an upturn is taking place as a result of the strong consumer demand which has now been in existence for some time.

But when we examine the relative strengths of machine tool industries, the Labour Government had a remarkable record of failure to keep up with international competition. During the period when the right hon. Member for Bristol, South-East carried out a great deal of activity in the machine tool industry and had a tremendous amount of ministerial responsibility, how well did he do compared with our major competitors? During the period 1964–70 supplies of machine tools in this country went up from $340 million to $464 million, an increase of about one-third. In the same period in West Germany they went up from $762 million to $1,425 million—more than double. In those six years of Labour Government, whereas our figures rose by one-third, the West German figure doubled. In 1964 deliveries of machine tools in this country were 40 per cent. greater than deliveries in Japan. By 1970 they were less than half the Japanese figure, which had gone up from $253 million to $1,086 million.

Thus, in its relative world position this country slipped sadly behind the rest of the world in those six years of the white heat of the technological revolution. In fact, the Labour Government left a machine tool industry in decline and in a relatively poorer position compared with the rest of the world. I very much agree that investment is needed on a larger scale throughout our economy. A number of indicators show that this is likely to take place, and it is the intention of my Department to give every encouragement to it.

Mr. George Lawson (Motherwell)

Is the right hon. Gentleman arguing that the responsibility for efficiency and enterprise in industry is that of Governments? Does he not believe that what he has just been describing is a dismal failure of the people with whom he is so friendly to run their own industry in a manner which measures up to the performance of their counterparts elsewhere in the world? Should he not be ashamed of these figures as being a reflection of private enterprise as shown by British industry?

Mr. Walker

I note the fact that in the hon. Gentleman's view Governments have no responsibility and no effect on the success of industry. Indeed, from one's experience of right hon. and hon. Members opposite, Governments have only an adverse effect. But the figures I have now will show how a different Government, giving more encouragement and creating more economic activity through sensible policies, create the conditions for expansion to take place.

For example, the new orders for the engineering industry in the latest three months for which the figures are available are 10 per cent. up on the previous three months; industrial production is 4 per cent. up on a year ago; unemployment is 120,000 down on last March; the production of motor cars and motor cycles is 58 per cent. up on 1970; production in the radio and television industry is 37 per cent. up. The aircraft industry has six months' more work in orders in hand than when we took office, and its exports are up 25 per cent.

The Government intend not just to assist industries with passing difficulties. We also intend to help the potential winners in the British economy. For example, one of our most successful industries at present is the wool textile industry, which satisfies 95 per cent. of our home demand and yet exports one-third of its production. This industry has immense potential in the Common Market, and, therefore, it is right that the Government should discuss with it methods by which we can prepare a programme for modernisation.

Mr. Dan Jones (Burnley)

Having made an examination of so many industries, including the wool textile industry, has the right hon. Gentleman also examined the cotton textile industry? What promise can he give in that direction?

Mr. Walker

The textile industry in general comes within the terms of the Industry Act and our regional policy. We are constantly keeping them under review. As I have said, the wool textile industry has a very considerable potential market, and modernisation at a speedy rate will help. A great deal of modernisation has taken place in the cotton textile industry, as well as rationalisation.

I turn now to other ways in which we can stimulate the economy. I want to mention the difference in attitudes which has developed, to my regret, between the two parties in relation to international investment. At the moment, there is a great deal of potential investment looking for a base within the Common Market. With this massive market, a number of other countries in the world are looking for bases within it. Britain has a considerable opportunity of attracting a great section of that investment. Likewise, many other Common Market members could well be interested in opening industrial activities in Britain. Our former partners in EFTA might well be looking for a base for industries in this country.

I therefore cannot comprehend the way in which at times the Labour Party and the trade union movement—at least some members of them—show hostility to overseas investment. Many right hon. and hon. Members understandably rejoiced at the success of the move to get Marathon to come to the Clyde and open up activities there. Indeed, a trade union leader took a very active part in the negotiations; he went over to the United States to help persuade the company. Marathon is 100 per cent. American-owned and has no United Kingdom directors. But it is providing 900 jobs on the Clyde which would not otherwise be there. There is a similar story with Imperial Typewriters in Hull. It was taken over in 1966 by an American company when it was employing 618 people; today it is employing 1,763. In Leicester the same company was employing 1,437 people in 1963 and today is employing 2,244. I cannot believe that this type of investment is other than completely beneficial to the country.

Mr. Maurice Edelman (Coventry, North)

Will not the right hon. Gentleman make a distinction between one type of investment and another—between the beneficial investment perhaps dealing with consumer goods and the other type in which there is a 100 per cent. takeover of a strategic height of the British economy?

Mr. Walker

If hon. Members opposite do not want General Motors, Ford or Chrysler to operate in this country, or want to put such regulations on them that they will find it more attractive to set up industries in other parts of Europe, they must pursue that policy. I am totally against it. I believe that it is very important in the interests of this country, particularly at this moment, to attract as much foreign investment as possible. I intend to have talks with some of the leaders of the trade union movement to ask them to join me in persuading overseas Governments to choose Britain as the base for their investments. This is a time when Britain should go all out to attract international investment.

Mr. Benn

Is the right hon. Gentleman aware that the consistent feeling of the Opposition is not one of unqualified hostility but quite the reverse. We welcome foreign investment, but in dealing with major multi-national companies there is a basic British national interest which the right hon. Gentleman, just like the trade unions, should have in mind in discussions and relations with those companies. That is the point we have been emphasising.

Mr. Walker

I hope that what the right hon. Gentleman said will be noted. But when we start laying down a load of restrictions which are not laid down anywhere else, if there is a choice of somewhere else to go to the companies will probably choose somewhere else. A number of the statements and suggestions in, for example, the document published before the last Labour Party conference are the sort of statements that discourage foreign investment from coming to this country.

I want very much to obtain a consensus on both sides of the House on the matter. I believe that what the right hon. Gentleman says shows that he recognises that international investment is important. My judgment is that from now until about 1976 a great deal of international investment can be obtained for this country. It is the duty of both parties, of the CBI and of the trade union movement to go all out to attract it to Britain.

Mr. Peter Shore (Stepney)

The right hon. Gentleman must address his mind to the matter more seriously, because it is above all one where things must be judged on their merits. Is he aware of the enormous damage being done to this country by allowing too much investment in, for example, North Sea oil? The cost to our balance of payments of servicing that investment will be very damaging.

Mr. Walker

That shows the right hon. Gentleman's total ignorance on North Sea oil. In fact, it will bring substantial balance of payments advantages to this country. A considerable industry will be built up on it. It gives us an opportunity to attract a great deal more international investment into this country. Therefore, it is another prospect that my Department and the Government will encourage.

We have had a period of considerable growth in the consumer industries. The figures I have given for the third quarter and the indications of future investment programmes prepared by both my Department and the CBI show a potential upturn in investment. I believe that it has unfortunately been too long in taking place, and that there is a great need for it to happen as speedily as possible. British industries that have prepared investment programmes will be well advised to proceed at the earliest opportunity, because, if they do not, delivery dates for machine tools and other items will become longer and more difficult, and they will not be able to carry out the re-equipping that many of our industries need.

The Department will encourage some of the potentially winning sections of British industry. We must, far more than ever, link our trade prospects with our industrial prospects. Too often we have large investment programmes at home when industries are doing well and do not link the potential increase in productivity then to conquering markets abroad. We could do much more in that sphere.

We are poised in a position where we have the immense opportunities of the European Common Market, a worldwide connection second to none, and an industry which has enjoyed the fastest expansion for some years. It is on the basis of that, rather than the relative economic decline of Britain that took place in the last six years of a Labour Government, that we can now start an economic resurgence.

5.5 p.m.

Mr. Frederick Willey (Sunderland, North)

I am sorry that I must say this, but the Secretary of State has been very disappointing. I had thought that he would have worked much harder on his speech than he has. After all, he left his previous Department under a cloud of the scandal of land prices and the miserable failure of his housing policy. I advise him that in his present responsibilities he had better leave the matters we have been discussing this afternoon to the Minister for Industry.

I shall continue being non-controversial, and shall deal only with shipbuilding. There has been a reference to third quarter figures from Lloyd's which show that orders had literally dried up. But we must put them in their context. The longer-term world prospect for orders remains good, and we can be optimistic about the shipbuilding industry. The important thing to grasp is that it is a great world boom industry, probably the greatest boom industry in the world in the post-war period. The essential figures are as follows. In 1950 the total world output was 3½ million tons; in 1960 it was 8½ million tons; in 1970 it was 22 million tons; and in 1971 it was 25 million tons.

Until comparatively recently Britain was the leading world shipbuilder. At times after the war we reached half the world production. Even as late as 1955 we were producing one-third of the world's new shipping. That has now fallen to 5 per cent.

May I put the difficulty in its immediate context. I was critical when we were rather euphoric about Geddes.

I argued then, and do so again retrospectively, that Geddes was no more than a first-aid operation. It should have been much more. We should have been expansionist, as Geddes said. The Geddes Report said that our objectives should be not 5 per cent, but 12½ per cent, of world output.

I noticed that when the Hill Samuel Report was published the new chairman of Govan Shipbuilders said that coming new to the industry he wondered what was wrong with it. He mentioned two things. One was Government intervention throughout the world and the other was the fact that it is a standstill industry, but he added that industry never just stands still". We had an industry that was standing still when there were the opportunities to expand.

Let us see what happened in the rest of the world. All we did after Geddes was not quite to stand still; we almost maintained production. But during the same five years Japan increased its output by 4½ million tons, twice the total output of the British yards. It was not only Japan that increased its output. Going down the league table, we find that Sweden and West Germany both increased their output by 500,000 tons. We are now fourth in the table, probably dropping to sixth and certainly to fifth. During the same period, when we could barely hold our production, our two immediate competitors, France and Spain, doubled theirs. During the period of the implementation of Geddes, world output increased by 11 million tons, and we were the only shipbuilding country in the world that failed to take advantage of that increased market.

Now let us turn to shipping. The right hon. Gentleman was misleading when he talked about investment grants. There has been no party controversy about this. We had investment allowances, and I thought that the Conservative Party claimed credit for giving priority to shipping in making investment allowances. Investment grants were not for shipbuild- ing. That has been my complaint. They were for shipping, and the shipping industry would properly say that it has a very modern, efficient fleet. The industry has depended very largely on the investment grants to make it so. Let the right hon. Gentleman read his brief a little more carefully next time so that he knows what he is speaking about.

Let us now turn to the shipping position. Exactly the same thing has happened here over the last five years or so. We used to be the greatest shipping country in the world but we are no longer. Now we are third in the league table. During the period of implementing Geddes we have been overtaken by Japan, which has doubled her fleet. We are in a similar position as we are in shipbuilding, and are hard pressed by Norway and Russia, which latter has come up to fifth place.

In the last 11 years the world fleet has doubled. Britain is the country whose fleet has remained relatively the same. I fail to, shake people about this. I assure them that we cannot say that the British shipbuilding industry was the optimum size, because the countries that have overtaken us have expanded. We cannot say that the British mercantile fleet was the optimum size, because the countries that have overtaken us have also expanded. Let us consider the two industries together. This is the crux of the problem.

The hon. Member for Dorset, West (Mr. Wingfield Digby) will remember that we discussed this a long time ago. Quite incredibly, we have become the world's largest importer of new shipping. Last year we exported 400,000 tons but we imported nearly 2,500,000 tons of new shipping. British shipowners built in Japanese, Swedish and West German yards alone twice as much shipping as they built in British yards. Compare this with Japan. The Japanese have doubled their fleet and overtaken us, and every Japanese ship was built in a Japanese yard.

I turn to development area policy. It is in the development areas that 90 per cent, of shipbuilding is carried out. How now can we talk about development area policy if we allow this to happen? How can there be a development area policy for my constituency if we cannot go out to win the markets that are there? The right hon. Gentleman knows that we are anxious to extend our investment.

This is the disastrous situation we face. What have we to do? In broad terms the answer is simple. We have to do just as much as—no more and no less—other countries are doing for their shipbuilding. The Minister for Industrial Development will probably be more receptive to what I have to say than the Secretary of State. If all these countries are doing this and have been doing it for so long, they are probably not so wrong in doing it. They have probably got a good reason. Whether they are right or wrong, we cannot afford to go on facing this unfair competition.

Against those two simple propositions let us examine the facts. We have had the Industry Act, which I welcome. The shipyards are in development areas. I heard what the right hon. Gentleman had to say about coal yesterday and I was delighted. All that he said, and it seemed very effective, was that we have to do just the same as the West Germans. I hope that he will come forward very shortly and say the same about shipbuilding. Some of the benches behind him were a little disturbed, but he said said "Look here, all I am doing is what is done on average in Western Europe, and no more than the West Germans are doing." I ask him to do no more than this for shipbuilding.

Mr. Peter Walker

The right hon. Gentleman would be satisfied if we do exactly the same thing in shipbuilding as the West Germans do, and no more?

Mr. Willey

This is something which I will pursue now. We have parity with credit guarantees. This is a cheap form of assisaance. We have parity in building grants. These were introduced in the European context. I accept the principle of the tapering grants, but I believe that the taper in the circumstances of shipbuilding today is too severe. The right hon. Gentleman should go to Europe and negotiate this. Europe is anxious to protect shipbuilding. Let us take an initiative. The taper is rapidly coming down to 4 per cent. It could not come at a worse time. I ask the right hon. Gentleman to deal with this.

The right hon. Gentleman has dealt with high technological tonnage, but the difficulty is definition. We simply do not know what it means. The Secretary of State did not help us this afternoon. We must know this because in Sunderland at the moment we are waiting to sign contracts. They are on the desk, but until we know what the Government mean by this we cannot make any progress. I am not arguing for investment grants; I am arguing for a clear definition so that we can get these contracts signed.

I know that the right hon. Gentleman is in trouble with the Chamber of Shipping, but I am not pleading for it. I am looking at this from the point of view of shipbuilding, and I recognise the fact that 80 per cent. of the work has gone to foreign yards. I ask for a different form of assistance. If we can get help for home yards within GATT, well and good.

The right hon. Gentleman asked me to suggest a few alternatives—

Mr. Norman Atkinson (Tottenham)

Before my right hon. Friend goes on to that, may I point out that the right hon. Gentleman must face up to his own criticisms of the previous Labour Government's performance? I listened carefully to the debates in those days, and I also listened to the interventions of the right hon. Gentleman. These grants were made to the consumer as against the manufacturer. At that time, in line with his own political philosophy, he was arguing that where the grants were made to consumers the contracts must go to the lowest tender irrespective of what part of the world the tender came from. If that was the argument he used then, why does he try to poke fun at the Labour Government, who were pursuing that sort of policy even though people like myself disagreed with it? The right hon. Gentleman shakes his head. Is he saying that the record tells lies? He argued this case. Let him stand up and deny it.

Mr. Willey

I am obliged to my hon. Friend, but I hope that that will go into injury time. If we can provide an incentive for orders to go to British yards I am willing to look at investment grants, but I want to put some other suggestions to the right hon. Gentleman.

First, we could have the economic risk guarantee such as is operated on the continent. This is an insurance against inflation. Steel prices have been mentioned, but most of us know that there are many countries in which steel prices are pegged for four or five years for shipyards. If this can be done in Europe, we can do it here. Next, we can use the State holdings. We can also use loan facilities with reduced rates of interest. All of these are being used on the continent. We should look at these so that we may attain parity.

I turn to the shape of the industry. I know that the Minister for Industrial Development in replying will say that he is, very properly, awaiting the Booz-Allen Report. But action has been taken. We have had help given to individual yards. The cart has gone before the horse. I am not complaining, because in Sunderland we have established the proposition that successful shipbuilding is as entitled to aid as unsuccessful shipbuilding. We are looking forward to substantial aid to help us modernise and expand output.

I ask the right hon. Gentleman to look at this seriously and not simply to look at Japan. Let him look at France, which has doubled its output and concentrated production on specialised carriers. As a result, it has dominated an important and lucrative world market. We have to look at the market in the same way. I believe that we should concentrate on medium and smaller vessels. This is what Russia in particular has been doing.

We must also look at the change that is taking place in world production. The Japanese are putting capital into other yards. The Japanese yards are no longer cheap labour yards. Yards in Taiwan, Korea, Singapore and Latin America are cheap labour yards. We have to look at the market they will supply and not compete with them.

We have to look at the oil rigs. I was not very pleased to get Marathon here; we should have been able to do this ourselves. We must have Government aid and intervention. One cannot expect a yard to turn to oil rigs unless it is going over to this production completely. We must also bear in mind the service boats and tugs.

A substantial part of British shipping is publicly owned. The CEGB, the British Steel Corporation, British Rail and BP all have either publicly owned shipping or are publicly chartering. The Government should approach this public sector for a response and a formula to help British shipbuilding. We must also look at the home and coastal fleet, which is continually being criticised as it was in the Rochdale report. It is time it was nationalised. All this affects British shipyards and the placing of orders by British owners.

In spite of what has been done, I bring forward the suggestion I made at Question Time last week for a standing conference of both sides of industry with the Under-Secretary of State in the chair. The Minister may say that a lot of discussion is going on, but I should like it to be formalised. We must do better in assisting British owners to put orders with British yards. It will take time. It is a question not only of financial incentive but of attitude. Mr. MacConochie said the other evening that British shipping does not owe British shipbuilding a living; I can add that the British Government do not owe British shipping a living. But we are all living together and we have to do the best we can for one another. I believe that it is the duty of the Secretary of State to devise ways and means of getting better dialogue and discussion.

5.22 p.m.

Dame Irene Ward (Tynemouth)

This is a difficult speech for me to make, but I have made many difficult speeches in my life and I do not move away from them. I have complete confidence in the Secretary of State and in the future arrangements that he will be able to make. I find him a very co-operative Secretary of State. He does not always agree with me, naturally, and I do not always agree with him, but I appreciate co-operative Secretaries of State and I am glad that he has set out my views on Seahorse.

I am not always pleased to hear of a new arrival in our shipyards. The new arrival may be a brilliant man; I do not know who he is. I cannot believe that the chairman of the shipbuilders' federation, Mr. Greenwell, and the technician from Hawthorn Leslie would have given such a brilliant presentation of Seahorse to the Parliamentary and Scientific Committee as a future marine engine which will earn a lot of foreign currency unless they had real knowledge. I am only an amateur and I do not have all the documents and advice available to Secretaries of State. I just have to say how I look at things.

We on Tyneside and Wearside have been sucessful marine engineers for many years, and we have produced Charles Parsons. I am grateful to my right hon. Friend for saying that when the project has been analysed he will help if necessary. I accept that, and I am very pleased about it. Whoever is this new man at Doxford, I do not believe that the chairman of the shipbuilders' federation and the expert from Hawthorn Leslie would he so enthusiastic about Seahorse if they had no real knowledge.

Mr. Peter Walker

This is no new man appointed by my Department or anyone else. Doxford is saying this. Doxford owns 50 per cent. of it and wants to make certain tests. When those tests have been done, Doxford wants to discuss the future with us. If the firm which owns 50 per cent. of the project—and, obviously, it has agreed with the owners of the other 50 per cent.—wants to carry out tests before coming to us to ask for an approach on development and aid, the only thing we can do is to wait for the firm to come.

Dame Irene Ward

I am grateful to my right hon. Friend for saying that, but the chairman of the shipbuilders' federation is a director of Doxford. A notice has appeared in the Newcastle Evening Chronicle to the effect that the firm has outlined the advantages of Seahorse and said that I had put up its case to the Government—and very proud I was to be able to do it. At the same time, Doxford has just been sold to Court Line. Doxford and Hawthorn Leslie put forward the value of Seahorse, and I thought that it was very exciting. If shares in Doxford have been taken over or bought by Court Line, the shareholders may not be so enthusiastic about the ability of the North-East Coast to produce marine engines, but I am.

Mr. Willey

We very much appreciate the help that the hon. Lady is giving us, but some time ago when Doxford and the hon. Members representing Sunderland constituencies met the Minister for Industry these matters were discussed, and they are in train.

Dame Irene Ward

I am grateful to the right hon. Gentleman. Although he and I disagree in politics, we both have shipbuilding, shipping and marine engineering at heart. Representing a Sunderland constituency as he does, I am sure the right hon. Gentleman would make representations, but, at the same time, it is my Government who happen to be in power and not his.

The Opposition think that everything can be dealt with by nationalisation, but even the most ardent nationalisers might be put off by the enormous amount the taxpayer has to meet on behalf of the coal industry. I do not believe in nationalisation, although sometimes private enterprise is not as good as all that.

I am not very pleased with my right hon. Friend's amendment. I accept the Government's overall case, but they did not refer in the amendment either to shipbuilding or to machine tools. I like to get down to the details, and I am glad that up to the present moment the debate has concentrated on shipbuilding and shipping.

My right hon. Friend the Secretary of State for Trade and Industry may take the view put forward by the Chamber of Shipping about building ships abroad, but in making those observations he might have mentioned the contribution made by the shipping industry to our balance of payments. I like things to be properly balanced. I do not like to make criticisms unless I look at both sides of a question; there are always two sides to every story. The shipping interests have done a great deal for our invisible exports and our balance of payments.

Many of my hon. Friends support what was said by the Secretary of State. That is all well and good, but I wonder how many people who cheer know the whole story. My right hon. Friend should recognise that there is a good as well as a bad side of the story. A great deal of public money has been put into Harland and Wolff, and in view of the situation in Belfast and in Northern Ireland I would not grudge them a penny. However, I do not support the expenditure of public money which has been wasted by us on Clydeside and Merseyside. It would have been very much better had some of that money been spent on Tyneside.

I now come to the difficult part of my remarks. Part of the problem of being in this House is that everybody must try to be tactful. I am not tactful. I was never brought up to be tactful, but was taught to say what I thought. Sometimes I find that Sir John Hunter, the Chairman of the Swan Hunter Group, is as unbalanced as I am, and I cannot say more than that. One moment he is on one side and the next moment he is on the other side. I suppose that is the way he works. This is exactly the way in which my mind works. I can see a great many reasons for supporting what the Secretary of State says, but every now and then I feel that I must say something against him.

Sir John Hunter has been a very difficult man to deal with, but sometimes very good men and women are difficult. Therefore, I must regrettably say that I am not satisfied with what my right hon. Friend said about Tyneside. Members of Governments, certainly those at Secretary of State level, must look at the large problems involving economic and overall employment considerations, but sometimes they do not appear fully to realise the problems of the individual.

I have lived all my life on Tyneside, I am a Geordie and I feel that it is not enough for my right hon. Friend just to sign some order or other. We must ask, as did the right hon. Member for Sunderland, North (Mr. Willey), what these ships will be, what will be the technical requirements and what orders there will be. I do not know the answers to these questions, but what I do know is that we on Tyneside are faced with so much unemployment that I would not be carrying out my responsibility on behalf of the people of Tyneside if I did not say these things in this debate.

My right hon. Friend has not had very long in his present office, but I must point out to him that the discussions between the shipbuilders and the Chamber of Shipping which have been held under the auspices of the Department of Trade and Industry have been going on for a very long time. I have no idea what the results will be, but I know that I must go on Tyneside and meet the hundreds of thousands of people who are apprehensive about their jobs.

I appreciate the fact that we are to build HMS "Newcastle", though we have not nearly enough naval ships and I should like to see a great many more being built in this country. I understand that the building of one ship for which Swan Hunter has won a contract will not begin until March. I cannot contemplate the anxieties among the people on Tyneside, many of whom would not vote for me in any circumstances, but there are many who have always been loyal to the views I hold.

I understand that one or two of my right hon. Friends have had interesting interviews with shop stewards, and I am glad that we have that type of relationship with the shop floor. This is a quite new attitude by government and I am grateful for it. However, what was said today by my right hon. Friend the Secretary of State for Trade and Industry was not enough to give Tynesiders the feeling that they will not face serious unemployment.

My right hon. Friend the Prime Minister has told the House that the rate of unemployment is coming down. I accept that statement and I am grateful for it, because I believe that our party has done a magnificent job—[Interruption.] It is no good Labour Members giggling about it. At least a Conservative Government have not landed the taxpayer with all the losses made by the nationalised industries. As much as I like miners, I must tell my right hon. Friend the Secretary of State for Trade and Industry that I regard the announcement made by him yesterday as quite deplorable. I am sorry that my right hon. Friend had to make that statement so early in his career in his present office.

I cannot bear the thought that many thousands of shipbuilding workers on Tyneside will be out of work at the beginning of the year. I cannot go to them and say that we have these few ships in the pipeline. I am rather tired of pipelines. I think that the Government have put quite a lot of nice things in the pipeline. But what emerges from pipelines is not always necessarily what is predicted. I am a bit of a cynic, so I want to hear a great deal more about Tyneside and the terrific unemployment that it faces. I have received a great many letters from technical people and from ordinary shipyard workers expressing anxiety. That anxiety is rightly expressed.

I hate to say this, but I am not certain that I shall be able to support the Government on this occasion. I have always felt the same. I know that it does a great deal of good sometimes to say to a Government. "I am sorry, I am afraid that I cannot support you". There it is. My right hon. Friend the Secretary of State has given us hope. I am sure that matters will come right in the end. But my right hon. Friend has not given me sufficient hope for me to be able to go back to Tyneside and to reassure those who have always relied on me. If I do not support my own Government, they know that I will say so. Someone has to say so. I have to say so tonight.

The reason why I do not support my right hon. and hon. Friends is that I have not been given sufficient news about these ships which are in the pipeline. Therefore, much as I regret it, it is unlikely that I shall be able to support the Government and it would be dishonest of me not to say so.

At the same time the country is landed with the most appalling results of the six years of Labour Government. Fortunately on Tyneside people know that—

Mr. Geoffrey Rhodes (Newcastle-upon-Tyne, East)

Come off it.

Dame Irene Ward

I shall not come off it. I intend to say what I believe to be true.

Mr. Rhodes

I have one of the biggest shipbuilding industries in my constituency—not in Tynemouth. If the hon. Lady implies that when Labour went out of office there was no work in the shipyards and that depression was already setting in, she is quite wrong. The orders stopped in October 1970, when Government aid to shipbuilding on the Tyne stopped. The hon. Lady must not try to pass the buck over to this side of the House.

Dame Irene Ward

I am grateful to the hon. Gentleman for his intervention. That does not include the deficiencies on the nationalised industries—

Mr. Rhodos

We are discussing shipbuilding.

Dame Irene Ward

I can discuss what I like.

At the time of the General Election I did not commit myself to the policy outlined in my party's manifesto about the phasing out of the regional employment premium—

Mr. Rhodes

Quite right.

Dame Irene Ward

I said as much in my speeches, and I actually had it recorded in the Press so that there would be no question of people suggesting that I had not said it.

Mr. Rhodes

The hon. Lady was not the only Tory candidate to stand at the General Election.

Dame Irene Ward

No, but I happened to he the only Conservative candidate in my constituency. There were not two Conservatives standing for election.

I shall continue to make my own decisions. When the time comes for the phasing out of the regional employment premium I shall be able to judge—and I am sure that I shall be able to do it with great enthusiasm—the results of the policies being put into operation by my Government. Meanwhile I want to ensure that a few lines are left open.

I am grateful for what my right hon. Friend the Secretary of State said today, as I am for the help and encouragement he always gives me. I am sorry on this occasion to disagree with him. I have disagreed with many people in my lifetime. I hope that my right hon. Friend will understand

5.45 p.m.

Mr. Graham Tope (Sutton and Cheam)

I crave the indulgence of the House for this my maiden speech. I hope that I shall be forgiven for the somewhat indecent haste in which I am losing my parliamentary virginity. On this occasion at least my remarks will be fairly brief.

I understand that it is one of the traditions of this House for an hon. Member making his maiden speech to pay tribute to his predecessor. I am in the somewhat unusual position in that he was also my Member of Parliament for many years during which time I got to know him reasonably well. We had many political differences, but he is a gentleman for whom I have great respect and for whom I believe this House has great respect. He has now gone to a warmer climate in Bermuda, for which I envy him, where he is now Governor-General. However, he has not entirely severed his connection with me because my mother came from Bermuda and he will find amongst his subjects, if that is the correct word, many members of my family. I hope that at the moment he is not feeling too uncomfortable there.

I gather that it is also the convention on these occasions to talk a little about one's constituency. In view of the comments which have been made in the national Press, I hasten to assure hon. Members that they are in no great danger of getting their feet wet from the parish pump, though after the events of last Thursday there are those who may be suffering some storm damage in the relatively near future.

Sutton and Cheam is very much a commuter constituency having problems of the sort which are peculiar to such constituencies. One special problem that I ought to mention is that resulting from the way in which successive Governments have allowed public transport to decline. This is causing great difficulty to my constituents and to many others in outer London. Perhaps I shall not depart from convention too much if I venture to comment that the people of Sutton and Cheam do not have to walk 400 yards in the rain to realise that we have a traffic problem. I intend to press for a reversal of this trend where enormous subsidies are made to private transport. I want to see the emphasis put back on to public transport, where it belongs.

In my constituency we have a much higher than normal number of old-age pensioners. I was surprised to read in the course of the by-election campaign that my constituency lay in a blue chip stockbroker belt. It is often thought that Sutton and Cheam is a relatively wealthy part of the country. However, I was astounded and distressed during the by-election campaign to see the poverty in which many old-age pensioners live in Sutton, never mind other parts of the country. I shall be pressing for a realistic pensions policy which will tie pensions to average national earnings so that pensions are not left behind with pensioners having to rely on the sort of charity that we saw in the week of the by-election. Much as I welcomed the Christmas bonus which was paid to our old-age pensioners, it smacked of poor law charity.

I come now to the motion, which is concerned with industrial policy. There is very little industry in Sutton and Cheam, and no ships have been built there for many years. As a result there is not a great deal that I can say about shipbuilding. I have no personal experience of the subject. However in Sutton and Cheam there is considerable concern, as there is throughout the country, about the lack of economic growth and investment. There is the feeling that unless the chaos resulting from confrontation that we have seen for far too long in industry is brought to an end soon, there is little hope for realistic investment.

When the Opposition were in power they failed totally to get to grips with these problems. Now it seems that they adopt the attitude that the unions are right whatever they do or say. That kind of attitude is scarcely credible in the circumstances. Certainly it is not credible to the people of Sutton and Cheam.

The Prime Minister and his colleagues do not impress the people of Sutton and Cheam either. They do not help the situation when they harp on the theory—and it is only a theory—that all our problems are due to excessive strikes and the unreasonable trade unions. The overwhelming majority of trade unionists are not unreasonable people. There are many of them in Sutton and Cheam. I know personally that they are extremely reasonable people who are very much concerned about the state of the country.

The Industrial Relations Act, which the Liberal Party has always thought was irrelevant to the real problems in industry, has been seen to be a total failure. This is seen in Sutton and Cheam too. I sincerely believe—I stressed this point time and again during the by-election— that the only real answer to our economic and industrial problems in the long term is to adopt the Liberal policy for a new industrial charter which will bring a partnership rather than confrontation to our industry. Until we can bring about this feeling of well-being in industry, there will be no lasting hope for worthwhile investment.

I expect that hon. Members have heard it said from these benches before, but I repeat that I should like to see a partnership between capital and labour in industry. Both are equally important. Industry cannot survive on capital alone. Equally, it cannot survive on labour alone. The two are of equal importance. Our law should recognise their equal importance. It does not at present. These are the kind of amendments for which I shall continue to press.

I should like to see a relationship in which management and employees work together as a team rather than as a wrestling match, which is the present situation. I want employees to be granted equal rights with shareholders of sharing the profits of the concerns to which they devote most of their working lives. I want them to have equal rights in the election of directors, for instance, and in the administration of the company to which, I repeat, they give most of their working lives. This is an investment at least as considerable as that of the shareholders and it should be recognised by the law.

I should like to see works councils set up in all companies and industries in this country. I believe that would be a more worthwhile contribution to industrial well-being than the Industrial Relations Act. We would have the opportunity of making employees feel themselves to be part of the concerns to which they devote a major part of their lives. It is only by adopting such policies that we will get to grips with our economic problems. Until the whole country can feel that it is working together as a team, we shall not get the confidence that is needed to obtain the investment which we so desperately need.

I said that on this occasion I would make a brief speech. I cannot promise that that will be so in future.

Finally, I bring a plea from the people of Sutton and Cheam—many of whom I met in the rain recently—to stop the bickering between capital and labour and between their representatives in this Chamber and to get on and work together to create a climate in our industry which puts an end to the present wrestling match and brings together labour and management working as a team.

5.53 p.m.

Mr. Ian Lloyd (Portsmouth, Langstone)

It is a privilege to have the opportunity of congratulating the hon. Member for Sutton and Cheam (Mr. Tope), who has shown us two things. By making his maiden speech, which I am sure he is glad to have behind him, within the first couple of hours of being within the House of Commons, he has exhibited the courage which we have learned to accept from Liberal Party Members because, being few in number, they must be courageous.

Equally the hon. Gentleman has exhibited the sense or feeling that time is not on his side. But if within the next two or three years he exhibits in his speeches in this House the qualities of integrity, enthusiasm, humour and knowledge, I am sure that all will listen carefully to what he has to say and forget completely the party of which he is a member.

I turn now to the important subject of the debate. Unfortunately my voice is limited and I shall have to be brief. Therefore, I shall summarise my remarks somewhat brutally.

Before turning to the particular question of shipbuilding, which I should like to discuss in detail, I shall refer to one or two remarks by the right hon. Member for Bristol, South-East (Mr. Benn). He referred in his speech to the "robustness of the economy". That is an interesting phrase. He implied, by the content of what he said afterwards, that if we looked round the globe, wherever we found a large public sector within a private enterprise economy or a country in which the public sector virtually comprised the whole of the industrial sector, in some way we would find robustness, whereas if we looked elsewhere we would find the opposite.

It does not need a long telescope for us to look very far round the world to realise that the opposite is the truth. Wherever there is considerable industrial robustness in the world today, it is generally found in countries such as the United States, Japan, Switzerland and others where the private enterprise sector is largely uninhibited and is working extremely effectively.

The right hon. Gentleman claimed that we could solve the problems of our machine tool and shipbuilding industries by increasing the element of public ownership. Who are the world's major exporters of machine tools? Is it the USSR? No. Is it Chile? No. Is it Cuba? No. Where are the main exporters of machine tools? They are in West Germany, Switzerland, the United States, Canada and other private enterprise countries. These are the countries where the great innovative processes which dominate the machine tool industry have taken place and are being exploited.

Looking at the world's shipbuilding industry, again one sees that there is no evidence that the introduction of public enterprise or public ownership as such necessarily, produces the answers we want. Indeed, again the opposite is the case. Where was the most significant development in shipbuilding undertaken immediately after the war? I suggest that it was in the late 1950s in Sweden by three major Swedish shipbuilding companies: Ericksburg, Gotaverken and Kockums. These yards set the example which the Japanese widely followed. They were basically three private enterprise companies in Sweden.

The most dramatic success, as everybody now realises, has taken place in Japan. To that we must now add some of the considerable achievements which have followed both the Swedish and the Japanese examples in countries like Greece, Spain and Portugal, where the Lisnave shipyard is repairing a considerable volume of the world's super-tankers.

We should not confuse the issue by introducing the old hoary subject of whether public or private enterprise is the answer to industrial success. Looking at the analysis in "World Ships on ", a vast and interesting document which lists about 2,000 or 3,000 ships, whatever other conclusions may be drawn, this conclusion simply cannot be drawn at all.

The right hon. Member for Bristol, South-East referred to confrontation as part of the difficulty in which industrial policy finds itself in the United Kingdom today. He said that this was a policy chosen by the Government. I remember the phrase very well, because it is important. Obviously this is a political judgment. It is convenient for right hon. and hon. Gentlemen on the Opposition side to say that such a policy is chosen by the Government. It is equally convenient for right hon. and hon. Members on this side of the House to say that such a policy is not chosen by the Government but is imposed on them by a multitude of decisions elsewhere. If we are realistic in looking at confrontation, surely we should recognise that the situation is created by a massive series of decisions on both sides of the industrial fence. Whether it is Government and trade unions or employers and trade unions, confrontation, if and where it exists, is the result not of one decision or one man's decision but of a vast series of decisions taken throughout the country.

Looking at the matter carefully, we seem to be dealing with what is essentially a sub-optimisation problem. We have substantial sectors of the community which are prepared to base their decisions on an optimum which is seen only from a fairly narrow and restricted point of view—that is, the point of view of a particular trade union in a particular context. This is a form of sub-optimisation from which we have suffered and will continue to suffer for a long time.

I do not share the view, which has been expressed on both sides of the House, that if one looks back at the record of British shipbuilding over the last 20 to 25 years one can say that it is due basically to the decisions taken by Governments formed by hon. Gentlement opposite or by the present Government. I believe that it is due to a failure of national imagination for which all parties in the industry and all parties in the country must accept blame.

It is a failure of imagination stretching back a long way because, if one looks at the sort of thing that was being said about British shipbuilding in about 1955 to 1960, one finds that a most interesting and dramatically correct report was produced by the Department of Scientific and Industrial Research. It predicted almost exactly what has happened, but what was the effect of that report? It was completely and utterly ignored by everyone responsible at all levels, and that included the Government, the Civil Service, the employers and the trade unions. I make no exceptions to that sweeping generalisation.

Some hon. Members may have been at the meeting of the Parliamentary and Scientific Committee upstairs about a week ago. If one thing became clear from what was said, it was that what had taken place in the last 20 years was, in relative terms, a catastrophic decline in the strength of the industry. From a position at the end of the war of virtual world dominance—although under threat—it has declined to a position where it is well down on the order list, well down in technical capacity, well down in economic capacity and, as we have heard today from my hon. Friend the Member for Tynemouth (Dame Irene Ward), it is asking for more Governmnt aid of one form or another. The right hon. Member for Sunderland, North (Mr. Willey) suggested that the only way out was to emulate the example of giving substantial subsidies of one form and another, of special prices, special loans, special costs of steel and every form of artificial support that can be engineered.

If one looks at the survival of shipbuilding in Europe—and we have only 18 days left in which to look at the survival of shipbuilding in Britain—one realises that the sort of argument that has been produced this evening is one that we must abandon, and abandon very soon, because if we, the Germans, the Italians, the French and the Spaniards enter into a competitive race to subsidise our shipbuilding industries by every means at our power, all that we shall do as countries and ultimately all that we shall do as Western Europe, is artificially to shift resources from our other industries into shipbuilding.

We may or may not succeed in doing that, but if we do it on the piecemeal scale we are now employing, country by country, all that we shall succeed in doing is entrenching substantial over-capacity in ship-building throughout Western Europe, and this substantial over-capacity may not—almost certainly will not—be low-cost, efficient capacity.

How do we respond—if we are to respond—to the challenge of Japan? In my view, we should not respond by taking this problem country by country within Western Europe and saying that we shall at all costs and by all means ensure the survival of a substantial proportion of our present shipyards and build ships by our present techniques at their present sites where labour apparently is prepared to build and nowhere else. That way lies disaster.

What did our major competitor, Japan, do? In the middle 'fifties and early 'sixties, facing an almost identical situation to that in the United Kingdom and in Western Europe, with old-fashioned yards and building ships, as I was told at Nagasaki, by methods which the British taught them, the Japanese decided to look at world markets. They did some highly intelligent market planning and technological forecasting and said that what they were doing then would not do. The told themselves that if they carried on in that way they would not achieve their end.

Whether or not one agrees with them, they said "We shall start with new green field sites. We shall build new building docks so that we can take the best that Sweden has so far shown the world in building ships and America has shown in management and computers. We shall take the best that we can find everywhere". Following that they went round the world and without hesitation and without pride they picked up the best they could, brought it back home and in the early 'sixties created a series of massive and massively efficient shipyards round the coasts of Japan. I have seen several of them, at Arakai, Sakai and elsewhere. These are the shipyards, the tools with which Japan has swept the world markets for ships.

We have to choose. We can say that that has happened and there is no possibility of catching up and, therefore, we are not going to use green field sites to build super-tankers and we shall leave the Japanese to dominate the world markets for super-tankers and bulk carriers. That is a feasible decision. Or we can say that we shall go on trying to build ships of high technology, and this is a reasonable policy, but I suggest that even if we do that, even if we limit ourselves to that choice of policy, we shall not get very far by following the kind of across-the-board subsidy policy that we are adopting now. This will not produce in the United Kingdom, or necessarily elsewhere in Western Europe, the type of yard that we want to be able to compete with Kockum's in the production of liquid natural gas carriers, or with the French or the Japanese. This will not produce the type of yard that will ensure that British shipowners who have built millions of pounds worth of the most advanced container ships will bring the orders back to the United Kingdom and build them here.

They will do that only if within the United Kingdom or Western Europe—and we have only 18 days in which to consider the United Kingdom—we rationalise the whole of our shipbuilding in such a way that there emerges from this process of rationalisation—whether public or private rationalisation is a matter of indifference to me—a small number of highly efficient, effectively organised, superlatively technologically equipped shipbuilding yards. With them, within the next decade Western Europe will be able reasonably to reclaim its due and proper proportion of the advanced shipbuilding that is undoubtedly going to be done.

Dame Irene Ward

I wonder whether my hon. Friend would explain—because it would be of interest to the House—that all the shipbuilding industries of the world subsidise their shipbuilding, which is the problem.

Mr. Lloyd

I appreciate that that argument always carries weight, but my argument is that merely by counter-subsidising, by saying that the Japanese, the Germans and the French give 10 per cent. and therefore we will do the same, by saying that they give cheaper steel so we will do the same, does not meet the problem. By matching these artificialities we do two things. First we take our eyes off the main game, which is to build British ships or European ships which are better in quality, cheaper in price and technologically superior to anything done anywhere else in the world. We do not achieve our aim by concentrating our whole policy on subsidies.

The second thing is that if we set this example in the shipbuilding industry, why should it not be followed in other indutries under threat anywhere in the United Kingdom or in Western Europe? Once we start this policy of endless interference with basic raw material costs, with all the basic factor costs of an industry, the situation that we finally produce is one in which nobody knows what anything costs in real terms. A number of our major industrial problems today arise from the fact that already we are in the position that too few people know what anything really costs.

We take from one industry to pay another, we subsidise energy costs and we do not know what our real energy costs are any longer. This must spill over into shipbuilding and into more important industries. One can think of a number which will be more important in the decades ahead in terms of gross national product and their contribution to our industrial survival. I am very much afraid that, if we carry on in this way, we will simply be producing a situation in which recovery becomes progressively more difficult.

Mr. Ted Leadbitter (The Hartlepools)

I am following the hon. Member's argument, but his last points seem to need some definition. Is he saying that he disagrees with Government intervention as a matter of principle, that the Government should never interfere and should not have interfered into the case of Rolls-Royce or Upper Clyde Shipbuilders and that, more recently, they should not have funded the problems of the coal industry?

Mr. Lloyd

No, I am not saying that I disagree in principle with Government intervention. I am saying that if the market economy is to work properly, Government intervention must be limited as much as it can be. Once it starts, it grows upon itself and each act of Government intervention as a rule requires a succeeding act.

I have already spoken in the House about Rolls-Royce, but on the particular point of Upper Clyde Shipbuilders I would have agreed that if, on social and economic grounds, it was necessary to introduce such a vast special sum into the Clyde, it should have been on a green field site lower down the Clyde and not at Upper Clyde as it now exists.

Mr. Leadbitter

Therefore, the hon. Gentleman is saying that he does not propound this as a matter of rigid principle, but that the Labour Government, for example, were right to intervene at the point at which it was socially desirable and economically right to do so.

Mr. Lloyd

Yes, I would accept those criteria. They are very broad criteria. It is on the interpretation that the argument arises. But in shipbuilding, which is so central to our debate, all Governments, if I may be so brash and bold as to say so, since the war have got this answer wrong. They are continuing to get it wrong because they are considering the problem on too narrow a sector and are failing to appreciate that the only answer, if British shipbuilding is to survive, is for it to become a completely reorganised part of a much more efficient European industry. That is my firm belief and that is what I am arguing.

There is one element which should come to the fore in this debate and sooner or later we must start to take cognisance of it. Right hon. and hon. Members on both sides refer to growth. Growth is the great solution to all problems. Growth is the accepted criterion. So long as we get our GNP improvement, our 5 per cent. or whatever it is, we will be off the hook, politically and economically. The period within which we can go on proclaiming this criterion without the most important and dramatic qualifications will not be very long.

Economic growth must now be qualified by a most important criterion: is it sustainable in the long term? Are we talking about sustainable gross national product, sustainable growth? If we can say that we are, none of the factors that we are introducing into our policies will be self-destructive.

It is very convenient to ignore all the environmental and pollution consequences of growth, to pretend that they do not exist and to talk of other things being equal. But we are learning now that other things are not equal. They are catching up with us very fast. Even if we ignore the report of the Club of Rome—and some devastating criticisms have been levelled against it—the hard kernel of truth remains that growth is becoming a limited objective which we pursue at our peril.

6.14 p.m.

Dr. John A. Cunningham (Whitehaven)

I regret the absence of the Secretary of State, for two reasons. The first is that he made a very complacent contribution to the debate, instanced by his remark that during the period of this Government unemployment has come down. That was his sole reference to unemployment. In fact, it is at least 250,000 more than it was when his Government came to office.

The second reason is that we were told some time ago that the right hon. Gentleman had responsibility within the Cabinet to speak for the interests of the Northern Region. I want to talk about how effectively he has been doing that, or not doing that, and also about the situation in my constituency in Cumberland, which is in the Northern Region.

The terms of the Government amendment, and certainly the complacent tone of the Secretary of State's speech, will come as a surprise to electors in the Northern Region. We remember, on the Government's assumption of office, their scrapping of investment grants. We were told in effect—as the hon. Member for Portsmouth, Langstone (Mr. Ian Lloyd) has told us again tonight—that that kind of subsidy to industry could not go on indefinitely, that it was wasteful and not the correct way to help investment in Britain.

We were all somewhat surprised—hon. Members on the Government side were astonished, while we on this side were pleased—when, earlier this year, the Government introduced their Industry Act. Not only were they reintroducing the investment grants which two years earlier they had abolished, but they were, in the words of one prominent newspaper, writing themselves a blank cheque to give aid to industry.

I should like to turn to the policy which the Government have adopted to investment claims by companies in development areas which had been made before 27th October 1970. It is interesting to note that, according to a parliamentary reply, £91 million worth of investment claims from companies in development areas is still outstanding, more than two years after the Government terminated that aspect of policy.

In the Northern Region, I understand—again from a parliamentary reply—that 1,146 applications, involving between £22 million and £23 million worth of investments, are still outstanding. So it ill becomes the Secretary of State to say that he is doing all in his power to stimulate investment, particularly in the development areas, when he has been presiding over—certainly his colleagues have been presiding over—what seems to me to be a go-slow in the payment of claims made more than two years ago.

It will be interesting, incidentally, to see what kind of backlog now develops, since the introduction of the Industry Act, on the payment of Government money in the form of grants. Indeed it will be interesting to see what, if any, effect the introduction of that Act has on the confidence of firms in the Government's general development area policies. They certainly have not been going out of their way in other fields to stimulate anyone's confidence in their express aim of rejuvenating the regions.

To digress slightly, a consideration of the Government's policies on road development shows that, in the area of the proposed new Cumbria, two public inquiries involving main trunk roads are awaiting ministerial replies. One of those inquiries ended more than two years ago and the second ended in the spring of this year.

As for the problem of communications, which one would have thought that the Government would try to tie in with their policy on investment, Cumberland County Council approached the Government for aid towards a transportation study in the West Cumberland industrial belt. The Minister concerned told the county council that this study could not be allowed on two grounds, the first being that of cost. It turns out that the cost of the proposed study was about £30,000. The median cost for studies previously agreed by the Government was £55,000, and the average cost was in excess of £100,000. That seemed to be quite a bogus argument. The second argument against agreeing the study was one of the size of the area, in population terms. Again, scrutiny of the Government's decisions in other areas shows that they have authorised such studies in areas with populations as small as 15,000. The population of the West Cumberland industrial belt is something approaching 150,000—that is, 10 times larger. So that, too, is quite a bogus argument.

The result, certainly in the minds of the industrialists in West Cumberland—this is the crucial point—is that the Government have no particular interest in development in the area or in helping the area to overcome its problems. If those three projects alone went ahead the investment which would come into the area would be substantial and certainly would be a very large increase on the Government's present performance.

I turn now to the attitude which the Government have been adopting towards companies in development areas when such companies apply for grants. I know of at least four companies in my constituency, three of them in one town, Millom, which regard themselves as being in dispute with the Government over claims for one kind of financial aid or another. The picture which emerges here is that whilst in public and on the surface the Government are saying "Yes, aid to industry and investment funds are available"—hon. Members on the Government side of the House may appreciate this point—and when confronted with the giants of industry such as UCS, Rolls-Royce or the coal mining industry the Government quite rightly give way and produce aid, when businessmen and smaller concerns are involved the Government's attitude is quite different, quite removed from their public protestations of wanting to give aid and succour to the development areas.

I well remember an hon. Member who sits on the Government side of the House writing in one of the northern newspapers about the need for entrepreneurs to solve the regional problems which exist in Britain. Many people who regard themselves as entrepreneurs and have approached the Government for some kind of assistance with a project would regard that as a joke.

I want specifically to say something about a project of which the Minister for Industrial Development is well aware, because it is important to have on the record of the House the attitude that the Government have adopted in order to see that Sealand Hovercraft Ltd., which is at present operating by the skin of its teeth in Millom, is continuing to operate only because of a work-in by the labour force.

In April 1971 the Government granted Sealand Hovercraft the tenancy of an advanced factory in Millom for five years, rent free. At that time, presumably, the Government had vetted the project and given it their blessing. The company began to develop in the town and adhered to its schedules, as agreed by the Government, in terms of equipping the factory and employing labour. At the same time the company applied for an operational grant. I understand that this application was made last year. This has not been denied. The figure of £127,500 had been agreed in principle as the level of grant which would be paid if grants were to be paid. However, months passed and the company, which was negotiating with the Department, received no definite answer on this point. It was not until I met the right hon. Gentleman last month, with representatives of the company, that they were told, almost in passing, that the grant was no longer available as it had been superseded by the provisions of the Industry Act and no payment was to be made to them.

The Minister for Industrial Development (Mr. Christopher Chataway)

I cannot let those remarks pass without reply. It is very odd that the hon. Gentleman could have picked up so little from a meeting at which I thought everyone explained the position in some detail. It was not the case that the company was told for the first time at that meeting that it could not have an operational grant. The fact is that in these matters, when an operational grant is considered under the Local Employment Act, advice is required from the Local Employment Act Financial Advisory Committee before the Secretary of State can make a grant. That was the position and it is only on a recommendation from the committee that the Minister can make that grant. The hon. Gentleman knows that that is the position and that that was the question at issue. I thought that he equally knew that the Department, in attempting to be helpful, said to the firm "You know that there is the Industry Act. Make an approach under that." My Department has spent a great deal of time on this case and at every level has attempted, in very difficult circumstances, to do everything it can to be of assistance. It has made a wide range of suggestions, that being one of them, and it does not do totally to misrepresent the efforts that have been made.

Dr. Cunningham

I am grateful to the right hon. Gentleman for what he has said. I agree that his Department has spent a lot of time on this matter. Many would say that it has spent far too long a time on it and that it ought to have reached a decision much earlier than it did. But I question what the right hon. Gentleman says about his Department's answer on operational grant, because I understand that the company has still not yet received anything in writing from the right hon. Gentleman or officials of his Department. The company argues that this was the first occasion on which it had been made clear that grant was not to be paid.

I also agree that the right hon. Gentleman considered assisting this company under the terms of the Industry Act. I shall take a little time to quote to the right hon. Gentleman a section of his Act. I know it very well. In Sectiton 13(2) the right hon. Gentleman will find a description which is almost word perfect for the descriptions which have been made of Millom, an area which is losing population, an area of high unemployment, an isolated area and a special development area. The right hon. Gentleman need not go beyond the first part of Section 1 of the Act to find a reason for helping Sea-land Hovercraft in Millom; but at least four opportunities present themselves in the Industry Act, in Sections 1, 2 or 4, to provide assistance. In any case, the right hon. Gentleman has decided not to do so. His right hon. Friend the Prime Minister, in a letter to me today—this was rather odd, as I wrote to the Prime Minister last week and received a letter today on which appears tomorrow's date, so I suppose the right hon. Gentleman can say that he replied eight days later a day in advance—has also decided that the Government cannot give any assistance to the company.

The result will probably be that the first industry to go into Millom in the four years since the ironworks closed, putting about 1,000 people out of work, will apparently not continue. Once again this town will revert to a situation of high male unemployment, in relative terms, in an isolated town set in a very rural area. It will be an electoral millstone around the neck of the present Government.

I understand that the project has been the subject of an independent assessment by people outside the Government and the firm. I still hope that the Minister will find it possible, as a result of that, to provide some aid to Sealand Hovercraft. The Government are now saying that their lame duck policy has been superseded by the tremendously benevolent Industry Act. In terms of the experience of small companies in my constituency that is not the case.

We have heard the argument adduced in the past that regions like West Cumberland need an upswing in the national economy and then their problems will be solved. One cannot disagree that greater investment in the area is needed. We can disagree about the effectiveness of the present Government's policies in producing the increased investment which is desperately needed in West Cumberland.

I should like to mention ways in which we can help my constituency, the Northern Region and regional employment in general. The right hon. Gentleman should consider producing within a White Paper or Green Paper a detailed analysis of the effect and success of Government policies in the regions during the last 10 or 15 years, because in spite of statements about the thoroughgoing review of regional policy which we were promised by the Government, no such review has ever been published. Without waiting for their own review the Government made substantial changes, and subsequently have made further substantial changes.

I can agree with the hon. Member for Langstone on one point. We need to know what effective policies there have been in the past and what the likely effect of policies will be in the future if we are ever to make any realistic attempt at resolving very difficult problems. The hon. Member should consider that very carefully. He should go back and urge his right hon. Friends to commit the Government to an extension of the regional employment premium. Apart from assisting industry in the development areas, that would create confidence concerning the Government's intention to resolve the problem. The hon. Member ought to look again at the control of industrial development certificates because their control was weakened shortly after the present Government came to office. Nothing seems to have changed in that regard since then. Here the hon. Member could make a much more positive contribution to increasing investment in the regions.

The Government should consider making available more aid and advice, not only advice in cash terms but technical and logistic advice, to companies which are considering moving from the overcrowded South East and setting up in the regions.

I am sure that my right hon. and hon. Friends representing the Northern Region, Scotland and Wales will furnish further serious points for consideration.

I should like to hear from the Minister during the course of his reply what he intends to do specifically about bringing industry to the town of Millom.

6.35 p.m.

Mr. James Hill (Southampton, Test)

This evening we are debating proposals tabled by the Labour and Liberal Parties. Both of them mention the lack of confidence in Her Majesty's Government and in their policies for industrial expansion. The amendment tabled by the Liberal Party goes further and has introduced the concept of a floating £ with crawling pegs. We know that the monetary policy of the EEC will be the snake in the tunnel. Those are facts of life.

The Government are bringing forward great policies for expansion. Both the Liberal amendment and the Labour Party motion seem to be dangerously out of touch with the reality of the moment. If Opposition Members had read the Financial Times headlines on 4th December it would have done them a power of good. The main headline was Sharp rise in investment". Others were General outlook, Freeze improves confidence"; Orders and output getting better and better"; Capacity and stocks, no production holdups"; Investment and labour, Investment outlook is good"; Costs and profit margins, Post-freeze trends not yet clear". Those headlines indicate how the country's leading financial paper viewed the country's affairs. I do not read too much into them as it is not present policies but the end product which will prove whether the Government have succeeded. Those headlines reflect the depth and severity of the loss of confidence which has entered the heart of our industry because of the six years of freeze-and-squeeze period introduced under the Labour Government.

It has taken too long for industry to respond to the Government's massive deflationary measures: £3,000 million in tax cuts to start with, free depreciation, and 40 per cent initial allowances for industrial buildings, to mention but a few items.

The Opposition will remember that before the General Election their Government were nearly buried under an avalanche of wage claims. It would not be fair today to think that there was any justification in either the Labour Party motion or the Liberal Party amendment.

Concerning the Government's shipbuilding policy, we heard today from my right hon. Friend the Secretary of State that the labour force was static at 70,000 and that contracts for £1,600 million of shipbuilding were being entered into, of which a total of only £400 million was being built in the United Kingdom. That is the heart of the problem. Today shipbuilders seem to be in the peculiar position of not being able to win back the confidence of the shipowner. I know that the Cunard company, with what I thought was a touch of whimsy, produced a ship called "Spirit of London", a magnificent passenger ship built in toto in Italy. That is the general trend. We find many of our historical, well-known shipowning companies now having their ships built abroad.

I know it is within the power of my right lion. Friend the Secretary of State to persuade them that they should at least have some national prejudice in favour of the shipbuilding yards in this country. The prosperity they have enjoyed in the past and will enjoy in the future stems from sympathetic government policies. It is fair to ask them to return some of those favours by endeavouring, using every sinew in their corporate body, to place the majority of their orders within the United Kingdom.

The Secretary of State may make loans to those who obtain cheap credit guarantees and also to those who obtain other special Government guarantees for the construction of ships in the United Kingdom. He could perhaps use that small lever on the shipowners who owe their prosperity to the United Kingdom Government and British trade, because it is something that we are willing and able to give them. This afternoon the Secretary of State said that £35 million had been granted to Harland and Wolff. This is a major step in the right direction. I realise the problems of Belfast, but I ask the Government not to forget the poor cousin, Southampton, which is going through a very bad time. I know that a merger between Harland and Wolff and Vosper Thorneycroft is on the cards and I believe that the Government should encourage such a merger in any way they can. The powers exist within the Industry Act to assist it financially if it is worth while and it would save duplication and hundreds of jobs.

One of the problems in the debate has been the emotive issue of unemployment and vacancies. It has been suggested that the Government do not care, that they are doing nothing and that unemployment is as bad as it ever was or ever will be. Surely we all agree that unemployment is the yardstick of any economy. The unemployment statistics must show a festering sore in the body of the country. Without a shadow of doubt unemployment is decreasing rapidly, as was proved by the November statistics. There were 770,438 people unemployed in Great Britain in November, or 3.4 per cent. of all employees. This was 21,681 fewer than in October and it showed for the first time since 1950 a decrease between October and November. That is something for which the Government can take credit. The figures show without doubt that their policies are working through.

Mr. Leadbitter

Certainly a fall from a million to about 800,000 is a record decrease, but will the hon. Member explain what that will mean in my constituency, where the ratio of men and boys wholly unemployed to every registered vacancy is 72 to one? Are not facts such as that more important than the generality of figures that the hon. Member has just quoted?

Mr. Hill

I cannot speak for other constituencies. In my constituency unemployment is 2.8 per cent. and it has fallen considerably in the last few months. These figures are for the country as a whole and it is only by nation-wide figures that the Government can show what the unemployment situation is. Any group of statistics must have its black spots.

The figures have been produced in a new form, as recommended by the interdepartmental working party, and I believe that they provide a more accurate indication of the real level of available labour resources. People who are temporarily stopped, and the Southampton ship-repair workers fall into this category, fully intend to return to the same job and they cannot be regarded as unemployed. But the ship-repair workers in my constituency are in a most difficult situation. A worker who is attached to a shipyard but who cannot be regarded as unemployed cannot resort to unemployment benefit. He is temporarily out of work and is subsidised by the ship-repairing yard to which he is attached.

The Department met representatives of unions and management from Harland and Wolff and Vosper Thorneycroft and the two Members of Parliament for Southampton. We had useful talks but we are still awaiting decisions that are now in the pipeline. I hope that in replying to the debate my right hon. Friend the Minister for Industrial Development can say how far things have progressed since our talks and whether there is any chance that he can help ship-repairing activities in my constituency under the terms of the Industry Act.

Yesterday I was fortunate to be invited, with the hon. Member for Southampton, Itchen (Mr. R. C. Mitchell), to the opening of one of the new employment offices. The Department of Employment deserves congratulations on its imaginative and futuristic programme for modernising employment exchanges. The old dole offices are no more and we do not want them, because people cannot be encouraged to use them. I want the employment exchange to deal not only with the unemployed but with those who wish to move on to a better job. The employment office must be a window on employment in its area. The hon. Member for Itchen will agree that the design and the lay-out produced a most pleasing effect. Nine hundred vacancies were itemised on cards so that applicants could select a job in the same way that a house hunter can select a house.

Mr. R. C. Mitchell (Southampton, Itchen)

Before the hon. Member leaves the question of unemployment, and since he has given the unemployment figures for October and November this year, will he give the figures for June 1970 when his Government took office?

Mr. Hill

Like all true politicians I do not like to think in the past and perhaps in that particular case it would be wise to pass quickly on. I am sure that none of us here is interested in what seems to be an event of many years ago. The most pertinent figures will be those at the next General Election which I am sure will be extremely palatable and will do great justice to the Government.

Southampton does not have a true unemployment problem, as I realise when I raise the subject here among other hon. Members who might have 72 people unemployed for every vacancy. Nevertheless, I ask my right hon. Friend to take note of the pocket of unemployment in the ship-repairing industry in Southampton. The industry gets little or no benefit now from the docks or from the shipowners. The passenger ships which used to bring their trade to Southampton are disappearing. We are now experiencing a traumatic switch from passenger traffic to containers and bulk carriers. The ship-repairing yards would be grateful for any consideration which could be given to their problem, especially if the Minister could aid or seduce shipowners to have their repairs done in Southampton. I can promise them that they would enjoy the finest quality work with the least labour trouble and both I and the hon. Member for Itchen would be most gateful.

6.48 p.m.

Mr. Maurice Edelman (Coventry, North)

I much preferred the straightforward, if ingenious, case put up by the hon. Member for Southampton, Test (Mr. James Hill) to the devious and sophisticated case put forward by the Secretary of State. The Secretary of State applied a sort of cosmetic treatment to the situation which masked more of an ugly situation than it revealed.

I wish to turn from the shipbuilding industry to the problems of the machine tool industry. The machine tool industry is the pacemaker of the whole economy. The Secretary of State seriously distorted the true situation. Since the Tory Government came to power orders have fallen by approximately half; unemployment and redundancies have risen substantially. Some of the most famous names in the machine tool industry have become names synonymous with difficulties, danger and the threat of unemployment. The whole picture of the machine tool industry is one of an industry suffering from a wasting disease. It is useless for the Secretary of State to offer it a diet of smooth words. What is necessary to restore the industry is Government action within the wider framework of national recovery.

There are four major reasons for the industry's decline and four major symptoms which illustrate the decline. First, output per industrial employee in the United Kingdom is only 45 per cent. of the average for the United States of America, Japan, West Germany, France, Italy and Spain. Second, the United Kingdom rate of investment per employee in modern production equipment is only half the average for those countries. Third, the rate of installation of new machines in Britain is lower than during the trough of six years ago. Finally, approximately 60 per cent. of machine tools in the United Kingdom are over 10 years old, and that is more than in practically any other major industrial country.

An industry which does not revitalise itself is doomed to a slow decay. My right hon. Friend the Member for Bristol, South-East (Mr. Benn) took a somewhat pessimistic view of the attitude of those engaged in the machine tool industry to the prospects in Europe. He suggested that there was a certain amount of doubt and a diminished likelihood of the industry's enjoying some of the benefits it now enjoys. That is not so.

I quote from the Engineer, a respected paper, which published an article on Europe and the machine tool industry in its issue of last June: Britain's tool industry stands to gain more than it loses by entry into the European Economic Community. Machine tool users, too, will be better off with a wider choice of buyers after tariff barriers come down. That is when we join a market which is 4½ times as big as our present domestic market.

This warm encouragement to machine tool builders as they display their wares to world buyers at Olympia this week comes from the industry's economic development committee in an analysis of the consequences for the industry on entering Europe. I am not one of those who imagine that entry into Europe is an automatic guarantee of success. I believe, on the contrary, that if we enter Europe the situation will become even more competitive and we shall be even more hard pressed to maintain our position. The opportunities provided by entry lie in the fact that there will he an enlarged domestic market with customers who are engaged in sophisticated industrial activities and who will welcome the machine tools we produce.

However, we are embarking upon this venture under the most unfavourable auspices. Unemployment and the threat of redundancy have been increasing. The Secretary of State said that last month orders were higher than at any time possibly in history. To what extent do those orders consist of the subventions issued by the Government to stimulate the economy? I do not think that the situation is any the worse for that. Indeed, I welcome the help the Government may be giving to firms to build up their order books. However, this stimulus is a once-for-all operation. Therefore, completely false conclusions can be drawn from the fact that the order book has suddenly risen.

Our machine tool industry has now sunk to fifth in the league table. With the French and Italian industries coming up, our position may sink even lower.

However, I pay tribute to our great industry with its great history, because all this is happening at a very time when our machine tool industry is producing some of the most advanced machine tools that industry anywhere has ever seen.

It is a sad commentary that Herbert Ingersoll Ltd., for example, the most advanced manufacturer of numerical control and transfer machines, has fallen into the hands of the receiver simply because it did not find a sufficient demand for its products. At the same time, the Churchill Machine Tool Company, of Altrincham, has declined; in the last two years it has lost over £1 million, and it is forecast that the firm may be closed down and its trade removed to Coventry.

As is mentioned in the report and accounts for 1971 of Alfred Herbert Ltd., Churchill Machine Tool Company has a reputation which has existed for generations. Its design has won the Queen's Award. It is a company with a famous name, and if it were to disappear everyone would mourn its passing. Alfred Herbert Ltd., the parent company, says: The Churchill Machine Tool Company must have competitive costs. The Prime Minister has said repeatedly that one of the reasons for the decline of British industry and the emergence of unemployment has been that labour costs have been too high. This is an argument that hon. Members opposite and the Secretary of State himself have constantly repeated. In view of that it is worth comparing the labour costs of the British machine tool industry with some labour costs overseas.

The average hourly rate in West Germany, taking into account social benefits and so on, is $2.50. In Italy it is $2.16. In France it is $2.10. In Britain it is only$1.72. I mention that because it is bogus to suggest that because British machine tool workers are claiming higher rates the industry has become uncompetitive. That is not so.

Mr. Ian Lloyd

Is not the important criterion not the absolute comparison the hon. Gentleman has given but the labour cost per unit of output? The series of tables which have been produced by the latest Common Market report on industrial policy show that this comparison is very unfavourable.

Mr. Edelman

That is relevant. It involves the function of management. If labour costs rise in a situation where the hourly rate of the worker is relatively low, planning organisation and management must be involved.

I underline the question of the hourly rate because we now see a most sinister development in the machine tool industry. The manufacturers are hard pressed. The chairmen of companies have duties to their shareholders. They want to try to offer as large a return as possible. They want to make their companies viable. If necessary they are prepared to reorganise, to close down plants and to make men redundant and unemployed, even when they offer them golden or copper handshakes. They recognise their responsibility to their companies and not necessarily to the economy or, in many cases, the workers employed in the companies.

So we have a form of reorganising which involves the stripping of assets and the running down of companies and the sinister development which was referred to in The Times of 20th November. The article said: Several leading producers are stepping up production overseas in India and Spain to lower costs. It has long been a tradition of the machine tool industry to act as producers and factors and agents, with companies switching from one function to another to obtain the maximum financial benefit. But now there is a new development. British machine tool companies are exporting to India and Spain with a view to importing the machines which are made under licence at the expense of employment in this country. They are under-cutting the wage rates of the workers in our domestic industry. That must be deplored. There are redundancies in Alfred Herbert Ltd. amounting to approximately 4,000 in the last few years.

However, an extraordinary situation has come to light. The firm has been shown to be importing machine tools from India and Spain made under licence which are re-sold from the Coventry works. That is being done at a time of redundancy and difficulties. Capstan lathes are being imported. There is the No. 0 capstan lathe by Messrs. Gumuzio of Spain and the No. 1 capstan lathe by Mysore Kirloskar of India.

The right hon. Gentleman will know that I have been in correspondence with his Department about the matter. I received an interesting reply which dwelt on the CKD aspect of the export of machine tools for assembly in India. I do not necessarily quarrel with the principle of exporting completely knocked-down components to countries where there are infant assembling industries. That is an act of benevolence. In some circumstances it might be an act of self-interest because emerging nations tend to apply for restrictions on certain kinds of imports. That is true in India.

The trade union in my constituency are prepared to recognise and accept that the possibility of the export of the CKD in that situation is tolerable. But we are considering something quite different; namely, the under-cutting of our productive system by permitting machine tools to be manufactured under licence both in India and in Spain and then importing them into this country where they are sold as British tools. I hope that the right hon. Gentleman will deal with that abuse. It is deeply resented by workers in my constituency and elsewhere, who feel that those who are running the industry in the desperate situation in which it now finds itself are resorting to desperate measures. I was told by one trade union leader "This process is rubbing salt in the wounds, especially when there has been this very large scale redundancy." I hope that the Minister will not only investigate the matter but will give Alfred Herbert Ltd. guidance that this is something which is hostile to not only the long-term interests of Alfred Herbert Ltd. and the interests of the trade unionists who have blacked the operations—nobody likes to see a product being blacked but they have done so and these machines will be continued to be blacked—but the interests of the industry. I hope that the Minister will give advice and guidance to Alfred Herbert Ltd. to cease the practice which is damaging to its interests and the long-term interests of the industry.

I will put forward some thoughts about what can be done to enlarge investment in the machine tool industry. Despite all the welcome shots in the arm which I have urged in the past, such as the injection of £20 million in the form of bringing forward orders from the railway workshops and the technical colleges and so on, we are dealing with the symptoms but not the fundamental malaise of the industry. A general expansion of investment in the metal-using companies throughout the country is the only way in which the great wealth of resources which we have because of the second industrial revolution can be put to work.

For example, Alfred Herbert Ltd. has produced a superb development. It is not a machine but a computerised development called the Batchmatic, which makes it possible to have multiple control of batches of machines. It has not been seen before in British industry. It is the high point of the second industrial revolution. But these tremendous machines, which no doubt competitors in Western Germany and elsewhere will copy and produce, will not go into production simply because firms are doubtful. They are hesitant because there is a lack of confidence. Firms are unwilling to place orders for these machines.

The Swedish system of certificates, by which profits can be reclaimed under Government auspices and then used at appropriate times when the Government, in concert with industry and the trade unions, feel that expansion and new investment should take place works effectively in Sweden. It is perhaps one of the reasons why Sweden has such an advanced machine tool industry and why the level of investment there is so high.

It is a proposal which has been looked at sympathetically by the Machine Tool Trades Association. It has the general backing of all who recognise that subsidies are not the answer and that the answer can only be a general enlargement of investment so that the machine tool industry can once more set a pace for the country.

This is interventionism. It is an idea for Government participation. But it is no worse for that. Since the death of the IRC, which was murdered by the Government, it is necessary, as the Government have recognised, for them to intervene in a systematic and planned way to promote expansion. What we need, above all, is not just undiluted growth. I agree with the concept that general growth is not necessarily the best idea for any nation. We require selective growth, and it is only by means of the profit reserve certificates of which I have spoken that we can be enabled to obtain selective growth and in that way stimulate the machine tool industry.

7.10 p.m.

Mr. Wilfred Proudfoot (Brighouse and Spenborough)

Like my hon. Friend the Member for Portsmouth, Langstone (Mr. Ian Lloyd), I must apologise if my voice goes during my speech.

After studying the motion, the amendments and the variety of right hon. and hon. Members who have spoken so far, I am pleased to follow, in the hon. Member for Coventry, North (Mr. Edelman), an hon. Member from a booming part of the country. The debate has almost taken on the aura of a debate about the regions and unemployment. Obviously, these cannot be ignored. The motion is about an adequate level of industrial investment. I am almost sorry, however, that the Opposition have referred almost exclusively to machine tools and shipbuilding. It is obvious why that should have been so. It is because these two industries are exposed to competition in the world markets. They cannot be shielded from it. If we are not efficient in them, we shall suffer the consequences of lagging behind the rest of the world.

But capital investment is not just concerned with manufacturing industry—a fact which seems to have escaped the attention of the House. It is about all kinds of investment: in buses, for bus services; in stores, if one is to have stores; even in nightclubs, if one is to have nightclubs. In modern society a lot of capital investment which creates work will go increasingly into the service industries. When it does, it will provide employment.

It all reminds me of the old expression which used to haunt this House and the country, "the white man's burden", arising from our responsibilities to the Empire. We should talk more today about the politician's burden and the way in which this House becomes more deeply involved every year with economic management. It would be foolhardy to suggest that any one political party has the complete answer to the economic management of an industrial society as complex as ours. Every time one thinks about this subject one comes up against the term "business confidence". About 10 years ago I said in the House that I was delighted that the term had become part of our political language because it matters when we are considering unemployment and economic growth.

When I look at the performance of the Labour Party in Opposition and at their desire to replace the present Government, I must say that they go about it in a very odd fashion. How it can help business confidence in industry when the Labour Party draws up a shopping list for nationalisation is totally beyond me. I cannot see how nationalisation and the further centralisation of production and services will solve any of our problems. I ask the Labour Party to get up to date and drop some of the nationalisation outlook because I do not think that it is relevant today, for the rest of the century, or at any time in the future.

Mr. Leadbitter

In that case, will the hon. Gentleman give us an idea of the extent to which he would denationalise undertakings and what his view was towards the Rolls-Royce affair?

Mr. Proudfoot

I am delighted that the hon. Gentleman asked me that. I did not vote to nationalise Rolls-Royce. Two hon. Members on this side of the House abstained; I was one of them. When Rolls-Royce went bankrupt, I immediately bought three small parcels of shares, at £5 per parcel, and presented them to my children. I wrote on them "The day Britain came to its senses". That was a flagship operation. The directors believed that Rolls-Royce could not be sunk because it was Rolls-Royce. They owned only 0.008 per cent. of the stock. Nothing beats ownership. When one owns something, one will look to the future. Too many people in big business are not entrepreneurial-minded. Too much time is spent on office politics. I want to see more owners in control of business so that they will look more to the future and at how to invest and get more productivity. Too many entrepreneurs today have to spend too much time trying, quite legally and quite rightly, to avoid tax. Thus, if we get a simplified tax structure and a lower rate of taxation it will help.

Business confidence does matter. But business could not have confidence during this last year. I identify the right hon. Member for Bristol, South-East (Mr. Benn) as one of the people who hurt confidence; I identify my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) as another. They got the public to start believing that there was a possibility of our not going into Europe once the bargain had been struck with Europe. That was unhealthy for the business community. I apologise to my hon. Friend the Member for Banbury (Mr. Marten) for not including him among those who gave doubt on the Common Market issue. Six months ago businessmen, certainly in my constituency, faced by so many elements of doubt, had no confidence that we would definitely enter the Common Market.

Mr. Neil Marten (Banbury)

They were perhaps justified in doing so because there had been an assurance that we would not go into the Common Market unless the people were in favour. They have never been in favour of it. Do not blame the politicians; just blame the people.

Mr. Proudfoot

I think that the majority of 112 for entry was a fair reflection. If there had been a free vote on both sides of the House, I am sure that the majority would have been about 200. The first thing I did when I get into my constituency was to conduct my own local referendum. The Common Market was not even an issue then. I sent an inquiry to all the industrialists in the constituency, and their support for the Common Market was overwhelming. I was surprised to find how many had done research. They were very much in favour of going in. My constituency will benefit. My right hon. Friend the Secretary of State mentioned the wool textile industry in this context.

Mr. Benn

Is the hon. Gentleman saying that where great issues of policy fall to be debated in Parliament those debates should be suspended or curtailed or avoided altogether if the fact that they are being publicly debated is likely to have an effect on business confidence? Such a thing might restore business confidence but it would utterly destroy confidence in Parliament.

Mr. Proudfoot

I would not suggest that at all, but the right hon. Gentleman made some remarks at the Labour Party conference at Blackpool about what the newspapers printed and I could draw exactly the same picture in this case. I sat through most of the debates on Europe, including the Committee stage of the European Communities Act. How I wish the television cameras had been here! The debates were repetitive and dull. The same people made the same speeches over and over again. There was tedium and repetition. All those who sat through the debates know that. Indeed, some of the opponents of entry are probably still making the same speeches in their sleep because they repeated them so many times. Of course it had to be done that way, and so it was. But it did not do business confidence any good.

Another thing which makes the business community a little nervous and lacking in confidence is the question of how to handle value added tax. I think that businessmen will take it in their stride and find it simple. The tax will clear away some cobwebs on industrial investment, put there by the outdated purchase tax, because there will be freer choice by customers in the market place, which will not be deflected by high rates of purchase tax on things which were laughingly called "luxuries" but which have now become the things that everyone wants to buy. Certainly, the ordinary working class girl can certainly buy what were yesteryear luxuries. To pretend that we politicians tell each other that we can get growth by pushing button "A" and button "B" is nonsense.

I am convinced that one of the excellent measures we shall pass is the Fair Trading Bill, which has its Second Reading tomorrow. I am referring not to the part which deals with consumer protection but the part that really matters, about monopolies and mergers. That is the meat of the Bill. I hope that tomorrow we shall send business to the health farm. That is what it requires. The United States has a history of 60 years' anti-trust legislation. Management in this country needs aggressive competition within its own ranks to keep it up to date. I am not saying that it will dislike it; I am sure that in the end it will gain zest from it and will welcome it.

The business community watches the approach of more legislation on monopolies and mergers with confidence, knowing that the House has the capacity to pass such legislation. Let us compare that attitude with the approach of the trade unions, with Mr. Scanlon not going to a properly constituted court. We can knock the entrepreneurs and capitalists about with legislation, quite correctly, for it is the duty of the House to make sure that there is competition, but as soon as we implement legislation on trade unions, 60 years late, legislation which is also about monopolies, they want to take their bats home and not play. Messrs Jones, Scanlon and Vic Feather have lost the capacity to laugh at themselves. They would find it much healthier to take a good look at themselves and have an outright laugh.

Everyone thinks "If I am caught riding my bicycle without a lamp it will be unfair, and I am not going to court." Mr. Scanlon is only saying the simplistic things that come into everybody's head. He should look at the situation calmly and admit that Parliament is sovereign, that it has passed an Act, and that he will have to obey it as surely as the entrepreneurs and the capitalists have had to obey legislation over the centuries when the House has enacted it. Both sides have passed legislation affecting entrepreneurs and capitalists, and they expect that private enterprise will automatically obey. It has always done so. There has been no strike or sit-in by the entrepreneurial section of our society. Tomorrow we send business to the health farm.

The other point I want to make is about small business. I am sorry that the Minister primarily responsible is not present. I am amazed that the Opposition do not have in their motion about industrial investment at least one sentence mentioning small business. Its absence is absolutely crazy. Small business accounts for half the employment in this country. If the Government do not look after small business—not for any political reason, but purely for the health of our economy—they will make a terrible mistake.

The Government have done a great deal already. They have implemented a colossal number of recommendations in the Bolton Report. I thank them for that, but I want them to consider the point made since by the Chairman of the Small Business Association, at a recent conference run by the Department of Trade and Industry. I attended part of the conference, and also read about it. The chairman pleaded for the Chancellor to reconsider the new system of corporation tax. I add my voice to his plea. The Government must look again at the incidence of corporation tax on small business.

Big business can go to the market place for capital to expand. That is what industrial investment is about. It can obtain money by Government grant. Small business can also obtain Government grants, but it obtains its money mainly from its profits, which it ploughs back. The new system starts on 1st April. There is a case for lowering corporation tax on small business because it will plough money back and use it for more capital investment, which is exactly what we all want.

A small business is generally run by the man who started it, and he has problems of succession, of passing his business on to his children. He is frightened of death duties, a subject on which we have a Green Paper. If he runs short of capital because of his very success, which often happens, he is forced to sell some of his business. Tomorrow's Bill is important, because if we get our policy on monopolies and mergers right, and get our taxation policy right, small business can increase investment and production and be very effective in the Common Market.

The Small Business Association made its mark in Europe a few short weeks ago when it sent a delegation there. Small business has a terrific part to play in industrial investment in this country and in Europe. It is only a pity that we cannot think of a better name for it. "Dynamic business" is probably much better. The term "small business" conveys an image of what it is not really about.

Business confidence is well on the way to being restored, because it comes first from sales, from profits. When the profits are there, reinvestment can be carried on. The Government carry a great deal of responsibility here. I am glad that they do because we in this House and in my party have worked incredibly hard over the past two-and-a-half years. My right hon. Friend the Prime Minister said that he wanted to be a reforming Prime Minister. My goodness! He is in the history book as a reformer right now, and he is also in the history book for the European venture.

We have done a colossal amount, but I am sure that the public and businessmen do not know all we have done. We have been so radical and reforming and have done so much that they are panting along behind us to catch up. I say to the Government, and certainly to the Department of Trade and Industry, "For the next couple of years, run the country. Do not reform it, and we shall be O.K. Let the accountants, the lawyers and the rest of us in business, and certainly the public, catch up with all the good things we have done. We shall have the right out-turn in the end."

7.27 p.m.

Mr. Arthur Blenkinsop (North Shields)

We have heard a lively and entertaining speech from the hon. Member for Brighouse and Spenborough (Mr. Proudfoot). We all enjoyed it, with his impassioned plea for the market place. It is well worth while that it should be made in that lively way.

But what rather worried me was the apparent complete agreement of the one representative of the Treasury Bench, the Minister for Industry, who was so eager to express his good will and support that he was even nodding his support for the proposal that the whole Rolls-Royce operation was nonsense. All the hon. Gentleman's decrying of the possibilities of national and governmental intervention received the accolade of his hon. Friend, who holds a highly responsible position. It must be responsible, because he is the only one on the Government Front Bench. Therefore, he is obviously expressing the Government's good will for his hon. Friend's extreme point of view, which we all know the hon. Gentleman honestly holds and vigorously expresses. We had thought the present Government—not the one that was elected but the one that now appears to be in office—had dismissed those views and were now following in some respects a more intelligent interventionist policy. But we must acknowledge the Minister's apparent view that that is not so.

The concern felt by many hon. Members on the Opposition side, which I think has been expressed by Conservative Members as well, is about the wholly unsatisfactory opening speech for the Government by the new Secretary of State. All of us are deeply concerned lest the kind of facade which he put up in his previous responsibilities is to be extended into his new area of responsibility. As has been pointed out, the right hon. Gentleman left his former Ministry shortly before the announcement of a pretty grim picture there. The whole house-building programme had completely collapsed. Many other damaging social events have taken place.

The right hon. Gentleman was always able to paint a jolly picture in the House, and at the start some people believed him. I fear that his selective account today was on similar lines. It contained nothing to encourage my constituents on Tyneside who are deeply concerned about what is happening in the shipbuilding and ship repair industry. It will not do to have the vague statements we heard today. Many of us were buoyed up, if that is the right word, into believing that we would get a clear and definite Government statement about the kind of support that the shipbuilding industry could expect in the immediate future.

We firmly believe that many orders are being held back because of doubts about the Government's policy and their attitude towards the industry. Very few people are willing to place orders when they believe that the Government may come along and make some fresh statements that may be of value. Therefore, we had anticipated that we would get a vigorous statement from the Secretary of State today. Instead we had some rather clouded and uncertain comments about the assistance that the Government are prepared to give to high technology ships and a few other statements of this kind which might in some cases be of value. I hope that this will prove to be so. However they did not meet the major point.

The right hon. Gentleman must know that on Tyneside the yards have certainly not been major recipients of Government aid. It cannot be said that they, unlike certain other yards, have been making exceptionally heavy claims upon the Government's coffers. The Tyne shipyards have a proud record of development. The Minister quoted the number of people employed in the industry and took pride in the fact that the numbers had remained reasonably high. That situation is in danger of changing fairly rapidly unless we have greater clarity in the wind-up speech.

The jobs of thousands of men on Tyneside are in danger unless the position of the Government towards the shipbuilding industry can be clarified more fully than it has been so far. I say that with deep concern because many of my constituents and those of my colleagues on Tyneside and on the Wear and elsewhere are affected. The right hon. Gentleman made great play of the way in which the previous Government, according to him, had been prodigal of our money and resources, how we had assisted to a very large measure building in foreign yards. There is some truth in this; but when these decisions were taken did the then Opposition express dissatisfaction with that policy? Not a bit. Non-discrimination was a common view at that time. It is ridiculous and misleading for the right hon. Gentleman now to make great play of this, as though he stood in a white sheet.

Mr. Fernyhough

The right hon. Gentleman made clear that the position has got worse. On his own admission there were £1,600 million worth of orders for British ships, yet only £400 million worth are being built in this country. In other words, British shipowners have placed orders for £1,200 million worth of ships abroad under this Government.

Mr. Blenkinsop

I welcome my right hon. Friend's intervention. If the Minister's tirade had been justified, what action has he or the Government taken? They have been in office for some time now. One thing we can be proud of on Tyneside is that while the previous Government inherited a very unsatisfactory situation in shipbuilding—we all knew employment was dropping and that our work force was in peril—they managed to rebuild the position and provide a sense of security. All the measures may not have been satisfactory. We all, rightly, have our own criticisms. But the previous Government took action to ensure that there was work on Tyneside, that orders went there when they might not otherwise have done. That is something I welcome. I wish the same were being done today, but it is not. We have not had an order on the Tyne for a long time.

Mr. Stanley R. McMaster (Belfast, East)

I expect that is why the hon. Gentleman applauded the previous Government when they allowed British Railways to place two shipbuilding orders in Italy.

Mr. Blenkinsop

If the hon. Member had done me the kindness of listening to what I said earlier he would know that I said that it had been common policy to avoid discrimination and to allow orders to placed elsewhere. We are now questioning this policy.

My right hon. Friend the Member for Sunderland, North (Mr. Wiley) raised the point in a clear and practical way. He has raised the same point many times in the past. We cannot be satisfied with the position when such a high proportion of orders are being placed overseas by British shipowners. It is not true that our yards are uncompetitive. The Guardian recently pointed out that some of the difficulties on the Tyne had arisen partly because of the great improvement in productivity in the yards there. It said that this had brought nearer in some respects the danger of running out of orders. The improvement in productivity, which we all welcome and for which we have all striven, is in danger of having that effect unless the Government can make a much clearer statement.

I agree with my right hon. Friend who pointed out that the success of Japan has been built up on the fact that there was a guaranteed home market. Although the Japanese Government are altering their position on the rates of interest on loans to the encouragement of home development rather than export, there are grave doubts about how far this policy will be implemented in shipbuilding. There have been suggestions that orders are being taken in Japan by Japanese registered companies which are then leasing the ships to other companies abroad. So this new statement for shipbuilding would appear to be no more than a facade. That may or may not be true, but it is of the greatest importance that we should understand our Government's attitude to the situation.

None of us on Tyneside, including the hon. Member for Tynemouth (Dame Irene Ward), is prepared to let the work in our shipyards dwindle. We believe that we have some direct responsibility for ensuring that a higher proportion of the orders placed by our own shipowners comes into our own yards. That is the issue which has to be faced, and I ask whoever is winding up tonight for the Government to make sure that that is answered.

7.41 p.m.

Mr. Peter Rost (Derbyshire, South-East)

I hope that the hon. Member for South Shields (Mr. Blenkinsop) will forgive me for not following his theme. Shipbuilding in South-East Derbyshire is limited to a flourishing but relatively small leisure boat industry. Nevertheless, the East Midlands has an engineering and machine tool industry. The hon. Member for Coventry, North (Mr. Edelman) referred to the recession in the machine tool industry. I am sorry he is not now present and I hope he will forgive me for taking up that point. He was justified in saying that the machine tool industry had suffered a serious and prolonged recession. He is right in suggesting that there is room for improvement. I take issue with him on the remarks he made about the industry's prospects.

I have studied in detail the report recently published by the National Economic Development Office on the machine tool industry's prospects in the EEC. It is a comprehensive analysis which shows little cause for pessimism and a great deal of justification for optimism. The British machine tool industry's competitive position vis-à-vis the EEC is improving steadily and there is now a credit balance of trade between Britain and the EEC in machine tools, whereas several years ago there was a large negative balance of trade. It does the industry no service to exaggerate the problems or the difficulties which the industry may face in the future. The prospects are far more hopeful than has been indicated. We have already heard from my right hon. Friend the Secretary of State about the substantial pick-up in orders in the machine tool industry in recent weeks.

That brings me to my main theme. I always find it a sobering and educational experience to take part in a debate which has been initiated by the right hon. Member for Bristol, South-East (Mr. Benn). It is valuable because it reminds me of the reason why this country was in such a mess when the Conservative Government took over. The right hon. Gentleman's opening remarks confirmed to me that he still lives, as he lived when he was in charge of the nation's industrial affairs, in a "Pinky-Perky" dreamland. He put before us another bogus motion, and the debate has been bogus. A tremendous amount has been said by Opposition Members about capital investment and the serious worries that exist. Where are all the Opposition Members with their worries and their constituency problems? We have not seen more than half a dozen of them here to discuss this so-called censure motion. It does no good for hon. Gentlemen opposite continuously to be criticising the Government when all they are doing is trying to conceal their failures for which they should be making apologies.

Mr. Robert Hughes

I hope that the hon. Gentleman will understand that many of us have problems in our own constituencies. I have had a crisis telephone call about difficulties in a shipyard in my constituency, and these problems must have precedence over the debate.

Mr. Rost

I am not trying to suggest-that there are not some hon. Gentlemen opposite who do not have specific problems of which shipbuilding is one.

The motion is severely critical of the Government for their policies in not promoting more capital investment. Is it not about time that hon. Gentlemen opposite faced the basic cause for the present unsatisfactory level of capital investment? What was particularly noticeable about the remarks of the right hon. Member for Bristol, South-East was that they contained not a word about the genuine cause of the present situation, not a murmur about the five years of stagnation which the country suffered, not a word about the freeze and the money squeeze to which industry was subjected by the Labour Government, not a word about the crippling high interest rates which led to numerous bankruptcies in industry and not a word about the severe taxation which was imposed over several years by the Labour Administration.

Mr. Leadbitter

Does the hon. Gentleman refer to those five years as stagnant years when they were the years in which a Tory balance-of-payment deficit of £800 million was transformed into a surplus of £800 million which in the first year of office of the Conservative Government rose to £1,100 million? Were those stagnant years?

Mr. Rost

Yes, I am afraid they were and the facts prove it. They were stagnant years, and we are now entering a phase of expansion. It is unsatisfactory that the right hon. Member for Bristol, South East in opening his critical attack should completely ignore the basic cause of the present situation, which is the result of the Labour Government's policies which led to a decline in profitability in industry.

It is no use denying that business confidence took a severe knock in the years up to 1970 because of the economic measures which I have outlined. As a result of increased taxation, squeeze, freeze and lack of confidence, profits in industry declined and cash flow was severely curtailed. It is all very well Labour Members living in a kind of dream world and suggesting that industry should invest. But why should industry invest when any incentive to do so is removed and there is little prospect of a reasonable return on that investment? This was the situation under the Labour Government. We have only to examine the statistics of the capital market during those five years to find the evidence. It was difficult for a business to raise the money to invest in new plant. Profits were squeezed and they were regarded as immoral, as they still are, by the Labour Party.

Mr. Ron Lewis (Carlisle)

Never.

Mr. Rost

Profits were squeezed and it was difficult to raise money through the Stock Exchange or through the banking system, either privately or through the joint stock banks, because the money was not being made available. As a result of the loss of business confidence and of the squeeze on money supply, the cash flow of British industry took a severe knock. If the confidence of British industry and its profitability are clobbered, we can hardly expect anything but a steady decline in capital investment. I am sure that the right hon. Member for Bristol, South East would be the first to say "Yes, but that was three years ago"—

Mr. Benn

If the hon. Gentleman considers that he has given all the reasons for saying that investment was lower under the Labour Government, can he explain why it was higher in 1967, 1968, 1969 and 1970 and why it is now 18 per cent. below the level of the last quarter of the Labour Government's term of office?

Mr. Rost

The right hon. Gentleman is so anxious to intervene that he has failed to wait for me to make that very point. Before I was interrupted I was about to say that the right hon. Member would no doubt jump up at any moment to say "That was three years ago, and the rate of capital investment is now lower than it was three years ago." We are not denying this. I am saying that the right hon. Gentleman and the Labour Party should know the reasons why the investment cycle in industry requires a period of four to five years. Because the Labour Government did not appreciate this point, and indeed refused to understand it, we are in the present mess.

It takes four to five years for an investment decision to be initiated and translated into new plant which is productive. First, sufficient business confidence must be generated to allow business managers to make a decision. Then the money must be raised with which to provide the investment. The money having been raised, the plant must be ordered and then industry has to wait for delivery and installation. I am sorry that I have to spell out these matters in such naÏve terms, but hon. Members opposite do not appreciate that the investment cycle in capital investment runs over a period of four to five years.

Mr. Edward Milne (Blyth)

The hon. Gentleman mentioned a four-year cycle in terms of investment coming to reality and beginning to function. Is he not aware that he has destroyed his own argument, because his right hon. Friend the Chancellor of the Exchequer has been going round the country talking about a booming Britain in which every industry is on an expansion course? Does he not realise that if the four-year cycle is working it is as a result, as my right hon. Friend the Member for Bristol, South-East (Mr. Benn) said, of the 1968–69 investment rather than as a result of anything done by the Conservative Government?

Mr. Rost

I am sorry that I gave way to that intervention because it displays the ignorance which I was hoping could be concealed by the Opposition side of the House until I had finished making my argument. It is true that the first stage of an investment cycle has to be a consumer boom. We have first to provide the incentive for a capital investment decision to be taken. This is the reason why the Government first had to get away from the stagnation psychology which had become part of this country's way of life.

The second stage—the stage of providing the capital in the market to be used by industry—is now halfway completed, and that capital is beginning to be available to industry for the investment to be made soon. This will mean greater profitability through self-generating cash flow and a liberalisation of the money supply in the capital markets, so that industry once again can go into the market to raise the money which it needs for investment. That stage has now been completed. We are now, in terms of capital investment, halfway through the five-year cycle.

The third stage is now beginning and involves the ordering of plant. I am sorry that the hon. Member for Blyth (Mr. Milne) is not listening to my answer to his intervention, because it means that next time that he raises this point in ignorance he will not know the answer.

As I have said, the third stage of the investment cycle—the ordering of plant—is now beginning. It will be another year or so before we see the fruition of policy which takes four to five years—in the same way that it took four to five years, despite everything the Labour Government managed to throw at British industry, before British industry finally gave up and surrendered beneath the clobbering it received. This was why the bottom of the cycle came well after the Labour Government were finally removed from office.

I have devoted my remarks almost entirely to pointing out that the motion is completely bogus, like others we have had in this House in recent months. It is bogus because it fails to face the real cause of the present situation and attempts to conceal the Labour Government's incompetence which led to the situation we are now facing. The motion has not helped to make the Labour Party any more credible either in this House or in the country. The motion is a complete charade; it is negative, irrelevant and unrealistic, just like the party which has deployed it.

8.0 p.m.

Mr. Ted Leadbitter (The Hartlepools)

It has been interesting in the last half hour to have the benefit of hearing the comments of the hon. Member for Brighouse and Soenborough (Mr. Proudfoot), the Danny Kaye of the grocery trade in which 20,000 price increases have been recorded this year, and to move from that speech to the speech made by the undertaker of the Conservative Party, the hon. Member for Derbyshire, South-East (Mr. Rost). He who shall undertake to give hon. Members of this House elementary and potted lessons on investment shall surely bury himself. I was pleased that, before that stage was reached, my hon. Friend the Member for Blyth (Mr. Milner) put a straitjacket on the hon. Gentleman.

It is clear from the way in which the hon. Gentleman spoke about the motion that he does not understand what is happening in the development areas. It is difficult to envisage any hon. Member putting himself in a position where he openly admits in describing a serious motion that he does not comprehend what is happening to people. Here in this House we are not talking about the fanciful notions of laissez faire. We are not talking about the archaic and outdated pronouncements of Adam Smith. We are not dealing with the romanticism of the early nineteenth century. We are not trying to recall the great and difficult when people are suffering far too much, years which followed the Malthus teachings. We are talking about the 1970s,

Over many decades in the development areas we have had the gospel that hope springs eternal. We are for ever saying to people who suffer "We are getting to a point where we can see the light at the end of the tunnel". Then, after the debate is over, we leave this Chamber to go to bed and wait for the next debate.

The hard fact is that we have had two years of wasted time. Much more could have been done. To be fair, and without trying to make a party point, more might have been done in the years of the Labour Government. It is interesting that those who served in that Government wanted to do more. It is the wanting part which really matters. In those years, with the terrible economic situation that we inherited, we were not talking of a five-year investment cycle. As described by the hon. Member for Derbyshire, South-East we had just been through 13 years of a horrifying kind of cycle where the Tories were running round in circles, getting nowhere fast and ending up with the worst deficit in the history of our country. In 1962 and 1963 The Times forecast that in the years to come the Tories would work their hardest to try to impress upon the people that it had never really happened. Right hon. and hon. Gentlemen opposite have been doing it now for two years.

Before I deal with the attitudes of Governments, let me say how grateful I am to the Minister for Industrial Development and to the Secretary of State for the courtesy that they have accorded me personally in what I consider to have been extremely useful discussions. I am especially grateful for a recent long letter in which the Secretary of State addressed himself to a number of matters that I had placed before him. I say that because I believe that this debate should not dwell upon personalities. It ought to dwell upon the general attitudes of Governments and upon the efficacy of the legislative body in meeting the outstanding persistent malaise in the economy. Therefore, it is right that I should point out how over the past two years this Government have proceeded in fits and starts. That has been the whole problem.

Let me give one or two interesting figures to support what I say. In the last year of the Labour Government we had an investment programme for the construction of new roads in the Northern Region running at the rate of £50 million. That had never been known before. It will not be sufficient for the Minister to say later in the debate that his Government are spending a little more than that now. We set the pace and began the cycle to which the hon. Member for Derbyshire, South-East referred. It is difficult to interfere with such a programme, and we set the programme and the pace of it. The figures are there to prove it.

In the same year we were able to record that more than 160 new manufacturing industries had been attracted to the Northern Region as a result of Labour's regional policies. We were able to say, too, that more than 15,000 new jobs per year had been made available. Whereas there had been a virtually nonexistent training and retraining programme, especially for young people and for men displaced in industry, we were able to say that to rehabilitate and to provide new occupations for them in our five years in office we increased the rate of training and retraining to an output of about 3,000 per year. Naturally, we also increased the number of training centres. This was to be set against the record of Tory Governments, especially following the war when they closed down nearly every training centre in the United Kingdom. They left only 17.

My mind is precise about these details. I have no one to prepare a brief for me about these matters. Indeed, I require no brief. I have lived all these years in the field where the effects of Government policy have impinged hardly upon my people.

We had a policy for the ports. The hon. Member for Tynemouth (Dame Irene Ward) is not present at the moment. I was glad to hear her still telling this Government about her worries. If the policy for the ports devised by the Labour Government had been allowed to proceed there would have been less anxiety in United Kingdom ports today.

We had a policy for the utilisation of our fuel resources. We had a fuel policy. It is not sufficient for anyone to say that it did not work. In the circumstances that we had to deal with, it worked quite well. At least we had those responsible for the fuel industries working together. We had the nuclear power, oil, coal and gas industries, those responsible for the distribution of fuels such as those at present being exploited in the North Sea, and that section of the British Steel Corporation concerned with the provision of pipes, working together and producing papers which were the format for our White Paper seeking how best to develop our fuel resources.

At this point, I must comment on yesterday's statement and on the Government's proposed coal Bill. We were pleased with that in the sense that this industry needs Government intervention. The Conservative Party has learned that lesson, but it has taken a long time. The Government should have made the statement some time ago. However, the things which are missing from that statement are just as impo0ant to this House as to the industry. There has now been a propping up of the industry, because it has to conform to commercial criteria quite different from those in any other industry. It is an extracting trade; every ton of coal gained produces extra cost for the next ton of coal to be got.

But the Government have failed to let us have their views on a review of the industry. They have failed to tell us what the redundancy levels are likely to be. No estimating of any pertinent kind has been done to try to create confidence in the industry. There is no White Paper on the industry. The Government persist in not having a White Paper on fuel policy. Certainly the House appears to be denied a debate on this whole general question, although we shall have a debate on the Second Reading of the Coal Industry Bill.

I said that the Government had been proceeding in fits and starts. The formula appears to be to do nothing, in the meantime to tell the world at large that we believe in competition and that industry can stand on its own two feet, and, if anything goes wrong, to blame the Labour Government.

The electorate is beginning to realise that two and a half years in office is now whittling away that explanation for the Government's weakness in this sphere: namely, whenever they can, to refer to the Labour Government for the situa- tions in which they find themselves. So we have the "do nothing" stage.

Then the pressure builds up. The unions, Members of Parliament or the electorate, or all of them together, have to press the Government, so they say "We will have a review." They have a review, and it takes a long time. However, the point is reached when they just have to do something, and they say "We will now help." A Minister rushes to the Clyde, a Minister rushes to the Tyne and a Minister rushes to Glasgow, and we have announcements telling us "We will provide you with some form of subsidy."

That is not the way to deal with the affairs of a country. The last thing the Government will admit is that they have slowly and quietly found themselves carrying out the Labour Party's policy in so many spheres. They have certainly not carried them out in the way that we would carry them out, but we cannot escape the fact that they are subsidising right, left and centre and still cannot get the economy right.

Earlier today I said that one of the consequences of the Government policy was the creation of a particular problem in my constituency. I remind the House that there are 35 Department of Employment areas in the Northern Region. Of those, 27 have 22 or fewer men and boys wholly unemployed for every vacancy on their registers. Blythe has 42 men and boys wholly unemployed for every vacancy on its register. I believe that Ashington has 52 men and boys wholly unemployed for every vacancy. Hartlepool, my constituency, has 72 men and boys wholly out of work for every vacancy. With 3,500 people wholly unemployed, it is intolerable, and no Government in these circumstances should be allowed to say "We are entering a period of boom. Confidence is now at large. We have done our job. We are now approaching Christmas." The hard fact is many of my constituents will not find Christmas too easy. I have been looking at many of the prices in the shops recently. I have already referred to 20,000 increases in prices in the grocery trade alone. We are all aware that house prices have gone up by 45 per cent. in 15 months. The House will be aware that the cost of living is impinging hard on many people who are at work, irrespective of those who are out of work. For Christmas many of my constituents will have to find credit somewhere—not like one of the big bastions of the economy who, as one hon. Member said, can get cash to start oft with in his potted and elementary lesson in economics. My unemployed constituents have nothing but the dole. They ask somebody "How can we pay our gas and electricity bills?"

The Government have put up rents by 50p. Next April they will do the same again. They say to my constituents "Even if you are getting the work, my dear chaps, do not start going around asking for an increase in wages, because that is inflationary." At the same time, when it comes to the Common Market they say "When we get into the Common Market in January, in order to meet the higher prices that will bring to us all, your real wages will go up just like wages in the Common Market." But when applications for rises are made—only a few weeks away—that apparently will not be inflationary.

It is time that Parliament realised we have an educated electorate who will not put up with this kind of talk much longer. We cannot expect industrial health in a country where the people who create the wealth in our factories are treated in this way.

I will give another example of what is wrong. Large industries make decisions affecting their future capacity and involving large-scale reductions, but they do not seem to take that situation into account. Only this week I asked about redundancies in the Northern Region. There were 13,000 redundancies between January and November of this year—

Mr. Chataway

The hon. Gentleman will not forget the other half of the answer he received: that, despite those 13,000 redundancies, unemployment fell by 12,000.

Mr. Leadbitter

The right hon. Gentleman allowed me to get only as far as the comma. When I get to the full-stop he can jump and intervene. The fact is that he has got even that figure wrong. For his information, the correct figure is 12,900.

Mr. Chataway

It was modesty on my part.

Mr. Leadbitter

I am giving the right hon. Gentleman a bonus.

In a further letter I was told by the Department of Employment that the unemployment figure in Hartlepool had fallen by 1.2 per cent. This is an area in which, when the Tory Government were last in power for 13 years, there were the highest unemployment figures in the United Kingdom.

What I am trying to say to the House is that if we debate the Government's policies it is not sufficient for the Government to be complacent and say that they are doing all that they can and that they are having meetings. We must get down to the nitty-gritty of the business and ask whether we have the capacity to solve the problem. The question that we have to answer is whether it is cheaper to keep men at work or to keep them in the unemployment queue.

I should have thought that it was cheaper to keep men at work; but when I look at the position in some industries, particularly in Scotland and similar areas, I find that I have to resort to language which I never thought I should have to use. Why are the Government so insensitive to the surgical operation that is taking place in the British Steel Corporation? Why are they so insensitive to the arguments that are put to them in order to try to save the shipbuilding industry? Why are they so insensitive to the possible collapse of the marine engineering industry?

From time to time responsible industries have appealed to the Minister. Why are the Government not prepared to understand that they cannot go on saying "We shall have a commission for this, and a review for that"? It is much better for the Government to go one step further. They have gone in the right direction by listening to us and retracting their "lame duck philosophy, but they should go one step further. We want more Government intervention. We want the Government to sponsor factories in development areas. We want them to invest sufficient money and bring in sufficient expertise to enable sophisticated industries to be set up in the development areas.

I hope that the Minister will in future accord me the courtesy that he has extended to me on a personal plane in the past. I hope that there will be continuing discussions on the lines that have been suggested, and certainly on the ideas put forward by my right hon. Friend the Member for Sunderland, North (Mr. Willey). If the right hon. Gentleman does that I shall be content because, in parliamentary terms, if a debate forces the Government to go one step further it can be said that Parliament has done its job.

8.24 p.m.

Mr. Stanley R. McMaster (Belfast, East)

I am pleased to follow the hon. Member for The Hartlepools (Mr. Lead-bitter) because in many ways my constituency is similar to his. We, too, suffer from high unemployment, and we do not have vacancies to enable us to offer work to our unemployed.

As hon. Members on both sides of the House know, over the last three years the situation in Northern Ireland has been aggravated by the difficulties that are peculiar to the area, but I feel that tonight I can speak with a little more optimism than I have been able to display in the past. There are signs of an improvement in the security situation. The Army has rounded up a large number of terrorists, and with the passage of the order that went through the House yesterday it will be possible to bring these men to justice and perhaps at long, last see a break in the clouds which for so long have cast a shadow over ow industrial future.

Reference has been made to Harland and Wolff. This is probably the largest shipbuilding company in the United Kingdom, and the facilities there are as good as any to be found elsewhere in Europe or the world. They have been created lamely as a result of the assistance given by the last two Governments. The previous Labour Government and the present Government have enabled us to lay down and provide in Belfast a massive shipbuilding dock which is sufficient for the requirements of today and for 10 or 12 years ahead. It has a capacity for building ships of up to 1 million tons, which is larger than the biggest tanker afloat today.

I welcome the statement by my right hon. Friend the Secretary of State that further money is to be made available for new metal fabrication shops at Harland and Wolff, and on behalf of my constituents in East Belfast I thank the Government for this support. Because of the situation in Ulster, to which I have already referred, this assistance is particularly welcome.

This kind of investment in the shipbuilding industry is not unique to Harland and Wolff. I know that, under the Industry Acts over the next two years assistance by way of tapered grants is to be made available to the shipbuilding industry. In addition, Govan Shipbuilders on the Upper Clyde has been allocated about £35 million, on top of the assistance previously given to Upper Clyde Shipbuilders, and Cammell Laird has received about £14 million. I welcome the help that has been given to these two leading shipbuilding yards.

I am pleased to say that as a result of the new investment, productivity has increased considerably in our yards in Northern Ireland. This is reflected in substantial new orders, some of which have been signed while others are in the pipeline. These new orders reflect confidence in the ability of our yards, despite the security problems of Ulster, to build some of the finest ships in the world.

In the past the assistance that has been given to our shipbuilding industry, following the Geddes Report, has been spread too thinly over too many yards. It is clear that if shipbuilding in this country is to survive we must rationalise. We must concentrate on one or two shipbuilding sites alone.

In an interesting speech, in which he recommended the green field site policy of Japan, my hon. Friend the Member for Portsmouth, Langstone (Mr. Ian Lloyd) said that if too many shipyards were supported in this country, along with other shipbuilding capacity in Europe—particularly in France, Italy and Spain, which are competing in this field—we should certainly have surplus capacity. As a result, every yard might suffer in the long run.

Having listened carefully to the debate and knowing the feelings of those from Clydeside and Tyneside, I know the problems of the implications of my suggestion—that is, that those areas which are favoured will benefit while the shipbuilding regions, particularly in development areas, where this industry has concentrated for many years and which are not supported will suffer high unemployment with little prospect of alternative employment for the men thrown out of work. So my solution is not an easy one for any Government to undertake. The right hon. Member for Bristol, South-East (Mr. Benn) hinted at this. I had many conversations with him when he was the Minister responsible for this sector in pressing the case of my own shipyard.

We must now look to the future. Many hon. Members have spoken of the past, but if we look too much to the past we may jeopardise our future as a shipbuilding nation. I would suggest, as I have often done in the past, that as a maritime nation, we cannot afford to lose our shipbuilding and ship repairing capacity. With the advent of high technology and high capital investment in our shipyards, we cannot afford to go on supporting all the yards which have been built up over the past 50 years or more.

Therefore, perhaps my right hon. Friend the Minister will consider the suggestion, irrespective of whether he mentions it tonight, that we should rationalise, concentrating on perhaps two or three sites alone and building them up at all costs, so that they can compete with the best Swedish and Japanese yards.

Mr. Fernyhough

Suppose that the Government took the hon. Member's advice and decided that Harland and Wolff should close. Would he be as enthusiastic for his policy then?

Mr. McMaster

Speaking with the hat that I wear when I make this suggestion, I stick to everything I say. There are not the number of orders in the world today to keep all the yards in this country going. Rather than see shipbuilding in this country—I am referring to the United Kingdom because first, foremost and last I must support my own country—go to the wall, as would happen if too many yards were supported by the Government, I would prefer this policy to be followed even at the expense of the yards in Belfast.

But I must add in complete honesty that with the capital which is now being placed in a yard like Harland and Wolff it can now produce, with the same labour force, three or four times the tonnage that it produced four or five years ago. This adds point to my remarks. If the yards are properly modernised, fewer yards and a smaller labour force will be able to produce an even higher tonnage. Unless we do this, we will not be able to compete with the Japanese and Swedish yards.

After all shipbuilding, like shipping, is a world trade. It cannot be fostered, for instance, by requiring British shipowners to place their orders with British yards. The effect of such a policy would be to cause British shipowners either to move the domicile of their companies abroad or to lose money because they would have to buy ships which had to face open corn-petition in world markets over the odds—that is, at prices higher than those at which their competitors were buying from Swedish and Japanese yards. So we must be competitive.

But I hope that the Minister will consider the position of Japan. Japan has been able to build up her shipbuilding industry largely because Japanese shipbuilders were obliged to build their ships at home. If they built them abroad, I believe that they would face a 15 per cent. import duty on them. If large sums of public money are to be invested in our shipyards it is scandalous, as I said in an intervention, that a nationalised industry like British Rail should be allowed to go to Italy to have two of its passenger ships built.

Mr. Fernyhough

Or Shell tankers.

Mr. McMaster

Yes. Any shipowner who is earning the major part of his income in this country by carrying oil to Britain and who is indirectly employed by the Government, through the nationalised industries, should not be allowed to order his ships, all other things being equal, abroad. We must be careful not to place British shipowners in an uncompetitive position. But we have to weigh up the position and, having invested in the re-equipping and modernisation of our yards, be prepared to put into practice the corollary, which is to require British companies to place their orders at home.

There are other ways in which our shipbuilding industry may be assisted. One way in particular is to assist our colleges of technology to set up, in collaboration with our shipyards, special courses for apprentices, for training in the new skills which are being used and which are necessary in order to make full use of the equipment which is being installed in our yards. New methods of shipbuilding are being adopted and will require a fresh approach by the Government to the policy of technical training and retraining of men already in the yards.

The corollary of this proposition is that the trade unions should be prepared to be more flexible in their approach. I have seen in the past, not only in Northern Ireland but also in other yards in Britain, resentment when it is suggested that modern cutting equipment and so on should be installed even though it will lead to redundancies. One understands that resentment in view of the length of time some of the men who will become redundant have been employed and the difficulty of finding alternative employment. But some sacrifice must be made in the interests of shipbuilding in Britain as a whole. Therefore, I hope that any practices of over-manning or demarcation which stand in the way of the survival and, indeed, the expansion of shipbuilding will be abandoned by the trade unions in an effort to support the industry.

8.32 p.m.

Mr. Gordon A. T. Bagier (Sunderland, South)

It is not often that I get the opportunity of speaking immediately following the hon. Member for Belfast, East (Mr. McMaster) but, as one shipbuilding constituency Member to another, I can say that it gives me a certain amount of pleasure. The hon. Gentleman will forgive me if I start by disagreeing violently on what I take to be his policy of contraction within the industry, which strikes me as a policy of despair. My right hon. Friend the Member for Sunderland, North (Mr. Willey) said earlier in the debate that if we are to have a viable industry capable of taking on its competitors throughout the world it has to be a growth industry, in exactly the same way as every other industry which expects to be viable and successful in every other factor of our industrial life.

I should be churlish if I did not congratulate the hon. Member for Belfast, East on the fact that his constituency is about the only constituency to get a crumb of comfort from what the Secretary of State had to say.

The policy of expansion should be pursued by aiming for a much greater share of the available shipbuilding capacity in the world. I see no future in a rationalised approach, which I understood the hon. Gentleman to be advocating, even if it affects the various shipbuilding concerns in the other development areas. I oppose that policy.

Immediately after the Secretary of State spoke, I had to leave the debate for about an hour and a half because I had been asked to appear on television for Tyne-Tees of the North-East, which was very interested in what announcements would be made in the debate. It was one of those interviews at which one sticks in the earplug and does not see the interviewer but merely hears his introduction. His introduction was something like this: "Today the North-East is sitting with fingers crossed waiting for the announcement expected from the Government as to what the Government will do for the shipbuilding industry. Today we have in our Westminster studio Mr. Gordon Bagier, who will tell us of the exciting things which have been announced in the Secretary of State's opening speech." I did not reply lightly. I did not want to say it, but I said "I am afraid you must uncross your fingers because it has been a very disappointing afternoon. There is nothing in it for us."

I have analysed closely what the Secretary of State said about how his proposals would help Tyneside, Wearside, Teesside and shipbuilding in general. I found nothing in that speech that would help. There was nothing new except the possible crumb of comfort which the hon. Member for Belfast, East obtained. We heard that £1,600 million worth of shipping was being built for United Kingdom shipowners, of which £1,200 million was being spent on ships built abroad. That is a sorry state of affairs and should call for active participation from the Government.

We heard nothing about aid to be given to shipowners if their ships are built in this country. The Japanese are the most successful shipbuilders in the world. It is very easy to build a fleet, which is rapidly becoming one of the foremost fleets in the world, on a policy of "Build at home". When we do such things we find that our shipowners go abroad to have their ships built. We know that nearly all our competitors, in Germany, Sweden, Lisbon, or Japan, are underpinning their shipbuilding industries to some extent. We expect our shipbuilding industry to plod along on its own.

Mr. Chataway

Even at this stage, that is too much to take from the hon. Gentleman. If he said that on television, he was spreading misinformation. I hope he will not overlook the six major forms of support which the Government give to the shipbuilding industry and the tens of millions of pounds now involved in support.

Mr. Bagier

I have not overlooked that point.

In my constituency on Wearside we have approached the Government for aid but have not received any. We have a successful shipbuilding industry on Wear-side. Austin Pickersgill carried out some market research. It found that the SD14 ship was required throughout the world to replace the tramp steamers in the post-war period and very successfully exploited that market. We have one of the best shipbuilding complexes in that part of the river.

So far as Doxford is concerned, the Secretary of State said that the Court Line proposals for the expansion of shipbuilding at the new complex had been formally agreed. I should like some further information from the Minister. This is of great concern to my constituency and affects the future employment prospects there. These people seek a crumb of comfort. I hope that the Minister may be able to enlarge a little on this. I know that in some ways he has been very good, deputations have met him to discuss this matter and I am certain that the Government try to be sympathetic, but since this is a shipbuilding debate I should be grateful if the Minister could spell out what agreement is reached in private with the Court Line so that the employees in the industry may know more about it.

The Seahorse marine engine being made at the Doxford marine engineering works will be one,of the biggest technical innovations in the marine engineering world. A tremendous amount of money is needed to develop a marine engine of that type. I hope that attention will be paid to ascertaining whether it will be commercially viable and acceptable to the shipping world. I hope that the Government will use their influence to convince the shipping industry that the Seahorse marine engine is a good thing for the future of the industry and that they will assist in its development.

I hope that the Minister will enlarge on those two aspects that were referred to by the Secretary of State. We should like to know something about the scheme being agreed with the Court Line, what time scale is envisaged and whether the Government would be prepared to assist Doxford with the Seahorse marine engine scheme.

Will the Minister enlarge on what is meant by the term "high technology content" which is necessary before Government aid can be given to shipbuilding in certain circumstances? This is an appropriate debate in which to explain what it means because there seems to be a genuine lack of knowledge about it among shipbuilders. How great does the technological content need to be? What criteria do the Government demand before giving aid under this heading? I hope that the criteria are not too stringent and that the Government will willingly provide aid in this category.

I turn briefly to the machine tool industry. We can argue about what the last Government did and what the Government before them did not do, and so on. As the Secretary of State said, however, there is in the machine tool industry a sign of reawakening and growth. What part are the publicly-owned industries playing in this new growth? Are they ordering machine tools? According to my information, no new machine tools have been ordered by the nationalised industries for the last two years. If that is so, would it not be a good thing for them to be encouraged to invest in new machine tools, thereby helping both themselves and the machine tool industry?

What plans do the Government have to assist the industry in its market research and with its system of marketing? This is one of the extremely costly burdens that the industry has to bear. Manufacturers who wanted to exhibit at the recent Earls Court exhibition found the cost prohibitive, yet such exhibitions are necessary for customers to see the industry's wares. If the British industry is to sell anywhere in the world its products must he seen, judged and sold. I hope therefore that the Government will consider assisting marketing and market research with subsidies from Government agencies. One suggestion might be to have permanent exhibition centres in, say, the United States and Common Market countries. Those centres could have Government assistance, although I am sure that the machine tool industry would be only too happy to provide a hefty chunk of the finance. Such exhibition centres would aid exports.

Far from indulging in the masochistic activity that the British enjoy with regard to British products, I believe that we have a first-class shipbuilding industry which can compete with any industry in the world, and I believe also that our machine tool industry is among the best in the world. Some of the large companies do extremely well abroad. If other companies are not doing so well it may be because they have a marketing problem, a management problem or a financial problem in getting their product marketed abroad. I hope that the Government will take note of my remarks and throw some light on the position of Doxford and also of Court Lines as well as answer my other queries.

8.49 p.m.

Mr. Patrick Wolrige-Gordon (Aberdeenshire, East)

I will not follow the hon. Member for Sunderland, South (Mr. Bagier) into the shipbuilding aspects. After all, this debate is on the important matter of industrial investment as a whole. The key to it is confidence. That is not a political question alone. This is an era of increasing cynicism about almost everything, from Governments to trade unions, from big business to local authorities. That is a much more important, if neglected, factor in encouraging investment than shifts of economic policy from time to time.

One result of the experience of the last two years has been the end of any attempt by any British Government for a long time to come to stand clear of anything short of the fullest responsibility for and involvement in British industry. This Government's effort was a brave and exciting one, but it failed to break the inertia of past practice. So we are struck with the alternative.

Conservatives should do more than recognise and accept what has happened. They determine to make the best of it. My right hon. Friend the Secretary of State gave a splendid example of that earlier. He made much of the fact that he was spending more money more sensibly on shipbuilding than the Socialist Government had done. This does not mean that we cannot make far better use of Government involvement in industry.

My constituency is distant from the main centres of power and population. In the past its industrial economy has been wholly dependent on small companies and on such indigenous raw materials as we have been fortunate enough to possess. Many of the small companies were encouraged to grow into much larger companies by the original incentives for local development and industrial expansion brought in by the Conservative Government in the early 1960s.

There is a kind of sound barrier between a small company, perhaps owned and directed by one man and employing, say, 20 people and making a very valuable contribution in a rural economy at any rate, and a large company employing many more people. It is not just an extension of present practice into longer production lines, although many of those who undertake such expansion start by thinking that it is.

Although the Government supply large sums of money to make such extension possible, no thought or advice seems to be given on how the investment can be most effectively used. This is a blanket policy of help. The 40 per cent. allowance goes to new buildings with no guarantee that they will be used effectively. There are new buildings in my constituency—I imagine that this applies to many other constituencies—which were designed to increase employment opportunities and were built largely with Government help but which now stand derelict and empty.

In business there is obvious merit in the fact that individuals carry the can for their investment decisions; they reap the profit or they lose their jobs depending on how wise their judgments have been. When the Government enter the picture there is no longer any question of that. It is the taxpayers' money. Few people care much about the taxpayers' money once it has been extracted from the Treasury.

There is much that Government officials could do to help private companies, particularly small companies, from giving advice about their bookkeeping methods to suggestions about their labour relations policy. I would never argue for control just because Government money is involved. However, when these enterprises fail it is because of the mistakes of individuals. Those mistakes could have been avoided if closer attention had been paid by skilled people working for the Government to those carrying the burden of responsibility.

The increasing professionalism of management, which I welcome in Britain as long overdue, in my constituency is left to the private companies. The Government could, and should, do more to encourage it. No one wants to invest money at a loss, not even the taxpayer, and some of the resources could have been put to much better use than they have been in the past.

In my area we are fortunate now to have acquired or developed one of the most professional and competitive industries of all—the oil industry. The investment required is massive and on a totally different scale to anything to which we are accustomed. A fairly average kind of estimate is £2,000 million for one oilfield. The money is available because there is the scent of a profit at the end of the day.

We also seem to be getting what we failed to achieve in Scotland with the motor car, namely, the addition of supporting industry. It has already transformed the economy of the North-East of Scotland. But even now there is criticism about whether British industry is getting enough from it and has enough chance to participate.

The oil industry is operating in the North Sea at the limit of modern technology in marine work. There will be a tremendous future in that kind of work, not only in the North Sea but all over the world. We must get into that work in the biggest possible way. We should become the best in the world at it. Part of our present troubles is that we seem to have given up thinking that we can ever be best at anything. We have stopped wanting to do so. However, there are many people in Britain who are fed up with that attitude and who would like to do the finest possible job that they can achieve. We should become the best in the world at this sort of work. I hope that the Government are considering their investment and educational policies in North Sea oil in that light.

8.57 p.m.

Mr. Robert Hughes (Aberdeen, North)

We have been discussing the large shipbuilding industry in this country, and when we think of shipbuilding in Britain we think of big yards like Swan Hunter, Harland and Wolff and the big yards on the Clyde, UCS, Yarrow and others. Although I am naturally interested in those yards, we should pay some consideration to the smaller yards around our coast which in comparison employ small numbers of men—for example, 750 or 1,000. Nevertheless they are important yards.

As time is so short, I make no apology for beginning with a constituency point and referring to a shipbuilding yard in my constituency, Hall Russell and Company. Although it is a small yard, it passes whatever test is applied. If one is asked whether there are good industrial relations at the yard, it is fair to say that a decade ago that was not the case but that good management and good trade unions have developed a good relationship so that the yard has virtually been strike-free over the last few years. There is a great spirit of co-operation at the yard which has helped it to be a success.

Good industrial relations can exist even without high productivity, but the output per man at the yard is the highest it has ever been. The men are buckling to, pulling their weight and showing that they have confidence in the future. If one thinks about the ending of demarcation disputes, to which the hon. Member for Belfast, East (Mr. McMaster) referred, one recognises that there has been great progress towards the ending of such disputes. The yard passes all these tests.

The management has at last moved into the twentieth century and has realised that management is concerned not simply with moving materials from place to place or moving men from one job to another but with the importance of good relations. The shipyard is successful. On the criterion that a shipyard should modernise and meet the new challenges, again the yard does well because it has agreed and is negotiating to build its own dry dock so that it can do other things besides simply building ships. It is willing to risk capital, and that criterion goes to the nub of the constituency point I want to make.

The hon. Member for Aberdeenshire, East (Mr. Wolrige-Gordon) has pointed out that one of the things we in Scotland have been concerned about is the way in which British industry in general and Scottish industry in particular can benefit from North Sea oil. Many of us have felt that businessmen in Scotland have been too lackadaisical in their attitude. I do not know whether they have lost the spirit of adventure or whether things have been going reasonably well and they have forgotten how to go out and compete, but some of us feel that they have not really taken the plunge. Here, however, is a shipyard where the management has taken the plunge.

Faced by falling order books and the difficulty of keeping the men in employment, the firm decided to build an oil rig supply vessel and has designed one. It is not, however, a purely speculative venture because the firm researched the market, designed well, has had one or two nibbles at the bait and is confident of selling the vessel. Indeed, the manager hopes that it will be sold before it is built. Because he has confidence and wishes to promote confidence within the industry, if he sells the vessel before it is built he will, he has told me, lay down another; if that is sold before it is finished, he will lay down a third. That is the kind of rolling confidence and rolling programme we want to see.

But the firm is advised by the Department of Trade and Industry that in the construction grant and through the loss of shipyard relief it will lose £50,000. This means that in a competitive market, instead of selling the vessel at £950,000, it will have to sell at just over £1 million. The firm believes that at this stage this figure is uneconomic. The manager has told me today that at least for a week—I hope that is the shortest period—he will have to stop work on the vessel and get things sorted out.

Mr. Chataway

Perhaps I can reassure the hon. Gentleman. He raised the matter earlier and I am advised that the firm has not made any formal application for construction grant on an oil rig supply vessel. However, it recently inquired how it would be able to fulfil the conditions laid down in the Industry Act when building on speculation rather than for a definite customer. A grant has not been refused and if the firm sees any difficulty about meeting the statutory conditions, which are laid down for everyone, I hope that it will have further discussion with my officials. The present position is that it has not made an application as yet.

Mr. Hughes

I am grateful to the right hon. Gentleman for that intervention. I will be on the telephone to the manager first thing tomorrow morning. He is certainly under the impression that he will not get the grant. It seems that there is a misunderstanding somewhere about how far the application has gone. I hope that the apparent anomaly here will be dealt with and that building on speculation as opposed to building for a definite buyer will not prevent the firm from getting assistance when it is doing the sort of thing we want it to do and is taking the plunge.

I was interested in the Secretary of State's comments about the number of vessels built overseas with the aid of Government grants. He said that some overseas registered companies had got the British grant to build outside Britain. This is not a new topic. It has been argued in the north-east of Scotland for years. Not long ago, when Shetland County Council decided to order ferries from the Thorshavn yard in the Faroes and representations were made to the Scottish Office and the Department of Trade and Industry, we were told "There is nothing we can do about it. Things go out to competitive tender and we will not intervene in relation to where these orders go". The right hon. Gentleman should tell us clearly whether he will stop that. If he is to insist that all companies receiving grants from the British Government shall have their vessels built in this country or not receive the grant, or that they will otherwise be penalised, that is very welcome news, but I did not understand that from his statement.

I know that other hon. Members wish to speak, so I end by saying that in their amendment the Government in effect state that they have pumped millions of pounds into the shipbuilding industry. They say it with great glee, as though they had invented the idea of putting money into the industry. But in Scotland in particular we have long memories of the way in which the Minister's predecessor acted with regard to shipyards. The Government were content to see the UCS yards go to the wall, with massive redundancies. But for the epic struggle of the shop stewards and the men on the Upper Clyde, the position would have been entirely different.

The Government face the motion with their tongue in their cheek to some extent, making a virtue of necessity. We in Scotland have not forgotten what they have done. They have a great deal to do before they work their passage and end the blots on the Scottish economy of the past decades.

9.6 p.m.

Mrs. Elaine Kellett-Bowman (Lancaster)

I am grateful to be called to speak in this important debate on industrial policy.

As my constituency was bitterly disappointed when the last Socialist Government, despite urgent entreaties from everyone in the constituency, refused to implement the Hunt Report, we were naturally delighted when the present Government included us in an intermediate area. Even more important for us was the widening of the benefits of intermediate status, about which we were very glad, because it means that resident industry wishing to expand is equally assisted and is no longer at a disadvantage compared with incoming industry. As a result, unemployment has been falling steadily in the constituency, but it is still too high.

There is one thing that would greatly assist us in our effort to combat that unemployment. Sometimes when we are trying to attract a new industry speed is very much of the essence. A local council in the constituency has used its own initiative with great determination in developing two useful industrial estates. But, although we have been very successful in attracting a number of small, varied firms which have settled down well and are growing, on the odd occasion we have been pipped at the post by other areas with an advance factory to offer so that an industrialist could move in and start production virtually right away. Therefore, I ask my right hon. Friend to consider sympathetically and positively our request for an advance factory. It would greatly assist us in expanding job opportunity and widening the base of our local economy, which is still too narrow, and help us, therefore, to continue to a successful conclusion our fight against the unemployment which has dogged us in the past.

9.8 p.m.

Mr. Tom Normanton (Cheadle)

I thank you, Mr. Deputy Speaker, for giving me the opportunity to take part in this debate. I am grateful for many reasons.

At this late stage, I shall not take up more than a few minutes, but there are some points which have not been adequately dealt with and which should form part of our deliberations on this vital subject.

I refer first to the question of liquidity, which has been mentioned by one of my hon. Friends but has not been touched on sufficiently within the context of the small business, the private company. I earnestly hope that the House will never be tempted, for partisan or other reasons, to fall into the trap of ignoring the vital significance from every point of view of the small business, the private individual entrepreneur who injects his own personality, vitality and energy into everything he does. He does it for many reasons. One of them must be profitability.

I ask my right hon. Friend to draw to the attention of the Chancellor of the Exchequer the importance of dealing with this aspect of the problems of the economy and to do it particularly within the context of this debate. I would not attempt to deal with the problems of the shipbuilding industry because it is outside my personal and constituency interest. However, we must be continuously alert to its problems.

I restrict my remarks to the machine tool industry, and in accordance with parliamentary tradition I declare an interest. I have an interest in the machine tool trade, not in the manufacturing section directly. I also have an interest in the machine tool industry, as a consumer of its products, from the point of view of manufacturing productive industry. One of the many obstacles standing in the path of an adequate acceleration in technological growth on the engineering shop floor is the inadequate level of skill and training. I have stressed this in other debates and will continue to do so.

I earnestly hope that the Secretary of State for Employment will be encouraged not to relax any measures which he can take to increase the standards of quality and training in all sectors of British industry. Upon this depend the levels which users of machine tools can acquire, not only in direct technical terms but in attitudes of mind. This applies just as much to management as to those working with hand and brain on the shop floor. If we cannot raise those standards the industry will continue to be inhibited in achieving the standard of growth and technological progress upon which the country will depend.

1 hope that my next point will not be deemed to be partisan. It is an expression of profound sincerity, and I direct it to hon. and right hon. Gentlemen opposite. I plead with them, as I do through this House to the country as a whole, that we would be ill-advised if we did not recognise the extent to which we have, throughout all sectors of industry regrettably, far too many restrictive practices. I could give examples if time permitted.

I earnestly plead that hon. and right hon. Gentlemen opposite should, through their party political channels or through the channels of the great trade union movement about which we have heard so much, use their earnest endeavours to bring about a recognition in industry at all levels, even management, that we cannot expect growth in the machine tool industry and progress in technological processing if we stick to some of these restrictive practices. While they exist for a host of reasons, human and perfectly understandable, they are mostly unacceptable today.

1 therefore ask my right hon. Friend the Secretary of State for Employment to give serious consideration to this facet of the obstacles which stand in the path of the acceptance by industry as a whole of the placing of more orders for machine tools.

I urgently hope that my right hon. Friend the Secretary of State for the Environment will give serious consideration to the nature of the orders which he may be intending to place or encouraging nationalised State enterprise to place with the machine tool industry. I ask him to make sure that the orders are not for hammers and chisels—which we make well and export—in the sense of unsophisticated machine tools but for purchases of the highest technical sophistication.

I ask my right lion. Friend to press the Chancellor of the Exchequer to have another look at the implications of the Finance Act as it applies to the taxing of undistributed profits. At the end of the day it is the liquidity, the cash availability, which in the mass of British industry is the dominant factor. Without cash we cannot buy, and unless we have a fiscal climate in which we can and will buy I do not look forward with tremendous confidence to the developments that lie ahead. I have studied carefully what was said by my right hon. Friend. He indicated certain broad lines which commend themselves to British industry. I hope that he will add the points I have made to the package which he has unfolded.

9.17 p.m.

Mr. Eric G. Farley (Chesterfield)

This has been a wide-ranging debate. I congratulate the hon. Member for Sutton and Cheam (Mr. Tope), who delivered an impressive maiden speech. He asked for the indulgence of the House, and he received it. He had some controversial things to say about the Industrial Relations Act; I think he called it irrelevant. The next time he addresses the House, as I am sure he will, if he returns to the Industrial Relations Act some of my hon. Friends will no doubt remind him that the Liberal Party voted for it on Second Reading.

The speeches of the Secretary of State and some of the Government backbenchers are the latest contribution to the orchestrated euphoria about the economy which has been the Government's theme for the last couple of weeks. I say "some" Government back-benchers. Those who represent constituencies where the harsh realities are being felt have sung a different tune, notably the hon. Member for Tynemouth (Dame Irene Ward). The Secretary of State added his voice to the recent claim of the Home Secretary of what he called an economic miracle. The Chancellor of the Exchequer in robust exhortation has told us all to bang the drum. That drum has a hollow sound.

The Government have produced out of so much financial aid and human suffering not a bombastic boom but a bubble. All informed opinion, right up to the verdict of economic commentators in the past few days, is that even the bubble is in danger of bursting. As the latest edition of the Economist puts it, the Government may be on the road to "consumer-led growth to nowhere". Even the consumer boom could fizzle out at any time. The Times put the matter ominously the other day when it said It is accepted that consumer spending can no longer make as much of the running as it did earlier in the year. The reason for the economic ills from which the country is suffering is the Government's industrial policy, and it is the reverse of what they have tried to claim over the past few weeks.

The Home Secretary in his Horncastle speech, imaginatively described what he called "the strategy" of the Government. But there has been no strategy. Instead, we have had 30 months of Tory muddle, policy reversals which have embarrassed and enraged Conservative back-benchers, and panic responses to Opposition censure motions. Indeed, Press reports at the weekend gave the impression that the Government would respond to this censure motion with an announcement of a new kind of aid for the shipbuilding industry. The right hon. Gentleman the Minister for Industrial Development shakes his head.

According to the Daily Telegraph and the Daily Mirror on 9th December—and this matters was also reported extensively in the regional Press—the Minister for Industrial Development made it known to trade unionists that in this debate he would unveil aid for ships with high technological content. This is what my right hon. Friend the Member for Sunderland, North (Mr. Willey) was referring to earlier when he said that the Chairman of the Tyne-Tees Television Service wanted him to make a regional broadcast to say whether this great plan was to be revealed.

Instead, what we have had from the Secretary of State was a whole series of platitudes. I do not know whether the Minister for Industrial Development will reveal some plan when he replies. Will he spell it out tonight—or, indeed, does any plan exist at all? Even if there is a plan, it is as well to remember that seven weeks ago The Times warned that, even if aid for high technology projects comes, it will fall far short of the required new investment in merchant shipping over the next decade. We have seen this kind of feverish but potentially fruitless activity over the past few weeks. This is why we have had the recent thumbs-down sign from British industry when it saw the latest figure published by the Secretary of State's Department only the other day showing that the figures are 11 per cent. down on the catastrophic figures of the first nine months of 1971.

For far too long our major industries have been in a parlous state as a result of meddling and lack of strategy by Ministers in the Department of Trade and Industry. We understand that the new Secretary of State for Trade and Industry is trying to pull the situation together. It is said that he orders his ministerial colleagues to be on parade at 9.30 sharp every morning—

Mr. Peter Walker

Nine fifteen.

Mr. Varley

Very well, at 9.15 sharp every morning.

Mr. Dan Jones

I hope that at the next 9.15 session the right hon. Gentleman will discuss with his colleagues the situation of the cotton textile industry—for if they do not discuss the matter they certainly will hear about it from me. In regard to areas which have suffered because the textile industry has gone down—and this is no laughing matter—cannot the Government do something for that industry as well as for shipbuilding?

Mr. Varley

The Secretary of State ought to invite my hon. Friend the Member for Burnley (Mr. Dan Jones) to one of his 9.15 mornings.

It goes even further. This weekend the Secretary of State imprisoned all his ministerial colleagues at a teach-in conducted in the stately home owned by the hon. Member for Southgate (Mr. Berry). It is a wise Secretary of State who appoints as his Parliamentary Private Secretary an hon. Member who happens to own a stately home.

Despite all the pantomime efforts of the Secretary of State, we have to look at the incompetence of the Minister for Industrial Development, which has been well illustrated by all the fumbling which has occurred on Teesside over the weekend and by all the false impressions given by the right hon. Gentleman. Indeed, we on this side begin to wonder whether the right hon. Gentleman does not spend much of his time telling his Press Office to get matters straight. He goes up and down the country making statements, following which other statements of clarification are issued and letters go out from the right hon. Gentleman's regional directors clearing up his mistakes. No wonder there are many baffled industrialists up and down the country.

Even worse and more serious, we remember the sorry saga of investment grants—now we see them; now we do not see them. A great deal of damage was inflicted by their abolition. Now they are back in a new form and with a new name. We welcome their return.

When his party was in opposition the present Secretary of State for Social Services dreamt about unshackling us from the automatic nature of huge taxpayers' grants to capital intensive industry. That dream has been replaced now by the new gospel according to St. Christopher, the Minister for Industrial Development. On capital grants the right hon. Gentleman now says: Capital intensive investment is highly desirable because simple cost-job evaluations overlook the secondary effects that these industries contribute to the local community. In that way, everything that was said by Members of the Conservative Party when they were in opposition has been stood on its head.

We have investment grants back. We have the Industrial Reorganisation Corporation back with a different name and without parliamentary accountability. We are now awaiting the reprieve of the regional employment premuim.

The Minister for Industrial Development assured us in that same interview: Few people now believe that regional employment premium is a very effective way of spending £100 million a year. Apparently the right hon. Gentleman still believes that. I do not know to whom he can have been talking—

Mr. Fernyhough

Certainly not the shipbuilding industry.

Mr. Varley

Certainly not to the shipbuilding industry, nor to the Department of Applied Economics at Cambridge University, which approves of the regional employment premium and says that it should be kept. So do The Times, the Financial Times and Professor Alan Day, who until recently was economic adviser to the Secretary of State's Department. So does Frances Cairncross, writing in the Observer only two days ago. So do the motor manufacturers, who were reported yesterday as wanting to keep some form of REP. I understand that they have given similar evidence to a Select Committee of this House. So does the hon. Member for Tynemouth, who said as much today, not to mention Mr. Nigel Lawson, who is a prospective Conservative parliamentary colleague of the right hon. Gentleman and who wants not only to keep REP but to double it.

There is no doubt that the loss of REP will be a bitter blow to the shipbuilding industry, which in the past two financial years has received more than £13½ million in REP. That represents a good deal of the aid that has gone to the shipping industry. The loss of that aid will be a devastating blow to an industry which has suffered more than any other from the Government's abolition of investment grants.

In the absence of investment grants, orders secured by the industry between June and September this year are estimated to have been at their lowest peacetime level for half a century. The crucial importance of investment grants to the industry can be shown by the fact that almost half our merchant fleet, described as "the most modern and efficient ever to sail under the Red Ensign", was ordered when the investment grants scheme was in operation. An authoritative world report—by the Fair Play International Records and Statistics organisation—warns that Britain's record "leaves no room for complacency".

As for aid to new ships of a high technological content, even if the Government have a genuine plan to provide such aid, the United Kingdom Chamber of Shipping takes the view that such ships represent too small a proportion of Britain's fleet to make the necessary impact. I think that the Secretary of State is well aware of that view.

Since this Government came to power more than 16,000 redundancies have been announced in the shipbuilding industry. In the past two years unemployment in the industry has risen by 40 per cent. This is especially serious when we recall that over 90 per cent. of shipbuilding employment is in the development areas. So that Government must stop fiddling about with high technology aid. It is good, but let us know what we are having. It is only a palliative. The same goes for tapering grants; they are only palliatives. The Government must recall that statement of the President of the United Kingdom Chamber of Shipping, that investment grants have been "a most effective stimulus to re-equip British shipping." They must bear in mind that it was the absence of these grants which caused the loss to Swan Hunter of a £20 million order to a West German shipyard. They must recall, as has been said again and again by my hon. Friends, that the United States and Japanese shipyards give much greater help to their shipbuilding industries. The Government must swallow their pride—they have done it before; they did it yesterday with the coal industry—and bring back investment grants for shipbuilding.

Under this Government shipbuilding has seen its lowest order book since the 1920s. Machine tools have been going through their worst slump since the 1930s. As my hon. Friend the Member for Coventry, North (Mr. Edelman) said, in an industry which is the thermometer for taking Britain's economic temperature, there has been a grim story of closures, redundancies and grave financial losses.

Last year Alfred Herbert Ltd., Europe's biggest machine tool producer, last £4 million. In July this year the industry's order book was little more than half the July 1970 level. Employment has fallen in the last two years from 98,700 to 74.700, and unemployment has almost doubled. The Vice-Chairman of Alfred Herbert Ltd. has warned that the industry could lose much of its home market when we enter the European Economic Community. I hope that that is not true, but this is what somebody who presumably knows something about the industry is on record as having said.

What have the Government done to help? Certainly until the scheme for £16 million worth of public sector orders, announced this year, hardly anything else. Government aid to the machine tool industry in the last two years fell from more than £5½ million to only £750,000. Even the belated aid provided this year is only half the amount called for by the Machine Tool Trade Association. In any case, it regards that amount as a matter of tiding the industry over a difficult period.

There are those who argue that the answer is rationalisation. However, we on this side of the House believe that rationalisation has gone as far as it could go at the moment. Control already rests in a very few hands. In any case, the Government removed the prime instrument for rationalisation when they abolished the IRC in a fit of dogmatic spite. Others champion diversification in the machine tool industry. But diversification has already been tried—into machine tool accessories, plastics, and that kind of thing. We do not think that salvation lies in that direction. Short of public ownership—and, after all, we are looking at hon. Gentlemen who nationalised Rolls-Royce—we think that the Government must accept much greater responsibility, on a continuing basis, for help to that industry.

The Secretary of State this afternoon announced some new ventures, but not enough for the machine tool industry. We think that the Government should consider setting up a controlled investment reserve scheme. They could provide incentive bonuses on contracts for continuous plant replacement. They could consider financing machine tools for stock. If they are short of ideas they could set Lord Rothschild to work on this matter. We understand that he is at work on many things, but he could look at this, too.

At the end of the day the health of the British machine tool industry depends on the strength of British industry as a whole, and by holding up the British Steel Corporation's long-term plan the Government have damaged the whole of British industry. British steel contributes 50 per cent. to British exports, and only last week the Secretary of State was present when the President of the Metallurgical Plant Makers' Association said that they must have the British Steel Corporation's full plan, not the 28 million-ton plan which up to now is what the Government have said is their objective. Without that full plan we shall be in difficulties. Mr. Michael Clapham, the President of the CBI. has warned that, while in his view a 5 per cent. growth is attainable next year, it can be sustained only by a major shift of resources from consumption to investment. Yet even consumption does not look as though it will hold up. CAP and VAT are still to come.

We are faced with declining investment—it is 11 per cent. down—and unemployment of 800,000; yet the Government boast about that as some kind of achievement. The balance of payments surplus is down from £782 million in the first nine months of last year to £16 million in the first nine months of this year, and the OECD is forecasting a deficit for 1973.

That is the achievement which makes the Chancellor of the Exchequer want to bang his drum. The Government have desperately reversed their policies and poured millions of pounds into the economy; yet even today their regional incentives have proved to be less effective than those of the Labour Government. As my hon. Friend the Member for Whitehaven (Dr. John A. Cunningham) and others have said, to get a really effective policy we need a Government who believe in such a policy, not a band of incompetent men reluctantly carrying out policies against which they fought an election only two years ago.

9.38 p.m.

The Minister for Industrial Development (Mr. Christopher Chataway)

The hon. Member for Chesterfield (Mr. Varley) has enlivened an interesting but, up to now, quiet day. I should like to follow him in at least one thing, and that is in congratulating the hon. Member for Sutton and Cheam (Mr. Tope) on his maiden speech. The hon. Gentleman comes here from a famous victory, fresh from the hustings, and although some of us may not be able to share to the full the exhilaration that must be his, I am sure that everybody recognises that for him it must have been a memorable day. Although it was a short speech, the hon. Gentleman threatened us longer ones in the future. Despite that, I think we all look forward to hearing him again.

The debate has ranged over a number of industries but, probably because of the terms of the motion, and because of the concern of hon. Members on both sides, it has focussed to a large extent upon machine tools and shipbuilding. There is no question but that the machine tool industry, both here and abroad, has been through some very difficult years indeed. No one will have doubts about that. But it would be wrong to paint our machine tool industry in the black terms that one or two hon. Members—not everyone; not the hon. Member for Sunderland, South (Mr. Bagier), for instance—have done. It should be remembered that, despite all the difficulties—there has been a great deal of talk about them—it is a favourable trade balance in machine tools which we hold, with substantially more exported than imported. In the difficult times over the past two or three years, that is a substantial achievement.

My right hon. Friend the Secretary of State was able to announce today the provisional figures for net new orders for machine tools in the third quarter. At £50.8 million, these are substantially higher than in any quarter for a very long time, and, as he said, the home orders were a record. In the machine tool industry, there is a feeling that they have seen one or two false dawns. In fact, there has been a fairly steady improvement throughout this year, and there can be little doubt, from those figures of the third quarter, that the industry is definitely set now on an up- turn, and perhaps a rapid one.

Mr. Dan Jones

Would that be due to the Government's agency?

Mr. Chataway

I do not wish to exaggerate the claims that I make for the Government, but the hon. Member for Coventry, North (Mr. Edelman) called, in respect of the machine tool industry, for wider action in the frame- work of stimulating the national economy. That, of course, is the principal way in which we have sought to help that industry. When the Chancellor introduced his Budget in March, it was a Budget to stimulate investment.

We had already, over the previous two years, done our best to breathe back life into the economy, to bring back confidence. The House will know, of course, of the substantial stimulation of demand which has consistently been given by my right hon. Friend. Over most of this year we have now been achieving a growth rate faster than anything that has been achieved for many years— about twice as fast as the average achieved during the years of Labour Government.

Obviously, therefore—I think that the House recognised this in the debate that we had about the machine tool industry—the principal means by which the Gov- ernment can help that industry is by establishing a more rapid rate of growth. If our machine tool industry is not expanding as fast as many others, it is principally because over a very long period, and particularly during the late 1960s, we have had a very low rate of economic growth.

The hon. Member for Coventry, North asked, particularly about this third quarter's figures, whether the upturn could be accounted for entirely by the action that the Government have taken to stimulate orders. We have, as one or two hon. Members have said, brought forward orders for some £16 million, and the greater part of that fell in the third quarter. But, even without that figure, this is still one of the best quarters for a long time, and it is clear evidence of an upturn. So the House can take a great deal of encouragement from the trends there.

Mr. Dan Jones

I think that I am entitled to ask the Minister now, since he feels that those efforts have produced such a result in the machine tool industry, whether he could not be persuaded to do something similar for the textile industry.

Mr. Chataway

I was coming to the subject of the North-West. In case I do not get the opportunity to say it, perhaps I could tell the hon. Gentleman that in the North-West as a whole and in his area it is clear from the returns that we are now getting, which of course cover cotton textiles as well as the other major industries in the region, that inquiries from industrialists are running at a very high order—in fact, 50 per cent. above last year. It is significant, too, that since late March IDC approvals in the North-West—[Interruption.] The hon. Member asked me a question. Just because the answer happens to be one that does not suit the hon. Member, I hope he will not prevent me from giving it. He asked about last year. It is significant, too, that, since late March IDC approvals in the North-West, compared with the same period in 1971. are 50 per cent. higher in number and represent 80 per cent. more factory space and even more new jobs. That, allied to the reduction in unemployment in the North-West, will be welcomed. [Interruption.] A large number of questions have been asked and I hope that hon. Members will allow me to reply.

The hon. Member for Coventry, North asked me about imports from India. I can understand the feeling of his constituents if there are imports and if manufacturing under licence or any arrangement of that kind takes place on the Indian continent. But it must be remembered that India is an important export market for our machine tools, and perhaps a market of growing importance. The right hon. Member for Bristol, South-East (Mr. Benn), when he was Minister of Technology, set up the Indo-British Technological Collaboration Group. I believe that he was absolutely right to do so. That group has the specific intention of trying to foster collaboration between our machine tool industries. It means that there will be manufacturing under licence and that some less sophisticated machines will be imported from India; but the hope is that we shall capture a still larger share of the Indian market. The belief, which I share, was and is that that is a market of increasing importance for our more sophisticated machine tools.

Mr. Edelman

Is the right hon. Gentle- man aware that what is happening is that machines are being made under licence in India, and in Spain as well, and are manufactured at cut-price wage rates and then shipped back to the parent company in England and sold as British machines? This is reprehended by the trade unions and I hope that the Minister will do the same.

Mr. Chataway

I am advised that there is certainly no question of any deceit about the origin of the goods. I am advised that the value of the company's export business with India considerably exceeds the value of its imports. Therefore, this is an arrangement which can be of substantial benefit to the company, as well as being of benefit to a developing country. Nevertheless for the company—Herbert's—as a whole the underlying trend of its order book is up, and has been for the past three months. I am told by the company that all the indications are that this upward trend will, in common with the rest of the machine tool industry, continue during 1973.

A wide range of questions were asked about the shipbuilding industry. My right hon. Friend the Secretary of State explained why the Government have not felt it right to reintroduce grants for ship-owners. He gave figures which probably startled many right hon. and hon. Members present. At the time when investment grants to shipowners were in operation under the previous Government, no less than £350 million in grant went to foreign yards. This is the overwhelming disadvantage of an investment scheme of that kind. When the hon. Member for Chesterfield asks us to reintroduce that, I am not sure whether he carries even most of his right hon. and hon. Friends with him.

What we have said—we made this clear in August, not merely last week in anticipation of this debate—is that we were prepared to assist the placing of orders for high technology and improved technology ships in British yards. We spelt out our ideas to the Chamber of Shipping and the Shipbuilders and Repairers National Association in the summer. Those organisations have had further discussions with us. As my right hon. Friend said, we have had six proposals already for individual ships, which will require further discussion with those two bodies before we are ready to finalise the criteria. I believe that this can be of value to the shipbuilding industry.

Mr. Ian Lloyd

Does my right hon. Friend agree that there is a slight danger in suggesting that the ship-owning industry is in a unique position in that respect? Would he not agree that wherever there is a high technological content in any goods qualifying for investment grants, the same basic economic effect has taken place, for instance in the case of computers, in respect of which a large proportion of investment grants will ultimately have effects abroad?

Mr. Chataway

I agree.

The broad position regarding the current order book is that most of the large shipbuilding companies now have order books which are virtually full until the end of 1974 and later. Harland and Wolff, Scott Lithgow, Cammell Laird and Austin Pickersgill have order books which broadly speaking will keep them fully employed until the end of 1974 and beyond. There is a problem which is largely confined to Swan Hunter and some of the builders of smaller ships. With smaller ships, the lead times are shorter. Even when demand is high those shipbuilders will not necessarily be carrying long order books. It is not denied that there is a problem in respect of Swan Hunter. In the last month or two, during which the position of world shipbuilding has improved very substantially, the number of inquiries made of British shipbuilders has increased dramatically.

I was asked about the Booz-Allen report and about our plans for the further modernisation of the British yards—

Mr. Willey

The Minister has said that the Government are prepared to give aid on technological grounds. He says that discussions are continuing with the Chamber of Shipping. That has created the impression that there is a possibility of aid being given on wider grounds. I should like the Minister to clarify this. That factor discourages the signing of orders.

Mr. Chataway

I am grateful to the right hon. Gentleman for raising the question. I said that we were continuing discussions about the scheme for aiding high technology ships, not about any other scheme. We have no intention of reintroducing any general grant scheme. It is important to make that clear.

A number of hon. Gentlemen asked questions about the Booz-Allen report, which we hope to have within the next week or two. My Department has been working closely with the consultants in conducting an appraisal of the long-term prospects of the shipbuilding industry. We are near to being able to compare the major United Kingdom shipbuilders with some of their foreign competitors and to ascertain the long-term world market for the ships which can be produced in this country. On the basis of that work, which has been done by the consultants in my Department, we shall be ready to come to decisions on modernisation proposals put to us by people in the North East. Shipbuilding firms such as those situated in the constituency of the right hon. Member for Sunderland, North (Mr. Willey) have firm modernisation proposals.

I agree with my hon. Friend the Member for Portsmouth, Langstone (Mr. Ian Lloyd) that it is essential for us to concentrate our resources on those areas where we can compete and be successful. Our determination is to ensure that we have a shipbuilding industry which is able to compete in markets where it has a long-term chance of success.

I was asked a number of questions about the regions. In every region there are now clear signs of increases in investment. Each region is now reporting far higher levels of inquiries than last year and the combination of the national incentives introduced in the Budget and the regional incentives, together with the new machinery for implementing regional policy, is unquestionably having an effect in stimulating investment.

Mr. Benn

Will the right hon. Gentleman say whether the Government's mind is wholly closed on REP or whether they are prepared to look at this again in view of its importance to the regions and their prosperity?

Mr. Chataway

My right hon. Friend the Chancellor of the Exchequer made clear our position on REP. We have honoured the undertaking given by the Labour Government and we are carrying the REP through to 1974. [Interruption.] There is no question of its being cut off suddenly. It will be phased out after that date, and the Secretary of State is discussing the method of doing that with industry. [Interruption.]

Mr. Speaker

If some hon. Members want to hold a private conversation, they should do so outside the Chamber.

Mr. Chataway

After the long years of relative stagnation it has taken time, perhaps not unnaturally, to revive confidence. There is no doubt that we are now setting out on a path to faster growth. There are clear signs of rising investment. The strategy spelled out by the Chancellor in the Budget is working. With greater incentives to invest, nationally and regionally, than ever before, reductions in taxation, opportunities in Europe with the prospects of faster growth, and the determination to curtail inflation, industry is responding to these measures.

But we are discussing a censure motion which offers some kind of an alternative which the Opposition appear to have in mind. That alternative is difficult to define. It seems to consist of encouraging industry to turn its back on Europe, of placing new controls on foreign investment, of controlling prices but not wages and of introducing substantially higher taxes on industry. All of those were major ingredients of the policy put forward by the Opposition before their last party conference. It is not surprising that the right hon. Member for Grimsby (Mr. Crosland) should suggest that it is time for a little serious thought by the Opposition, and until that takes place I am confident that the House will have no hesitation in rejecting the motion.

Question put, That the amendment be made:—

The House divided: Ayes 294, Noes. 264.

Division No. 32.]	AYES	[10 p.m.
Adley, Robert	Edwards, Nicholas (Pembroke)	King, Evelyn (Dorset, S.)
Alison, Michael (Barkston Ash)	Elliott, R. W. (N'c'tle-u-Tyne, N.)	King, Tom (Bridgwater)
Allason, James (Hemel Hempstead)	Emery, Peter	Kinsey, J. R.
Amery, Rt. Hn. Julian	Eyre, Reginald	Kitson, Timothy
Archer, Jeffrey (Louth)	Farr, John	Knight, Mrs. Jill
Astor, John	Fell, Anthony	Knox, David
Atkins, Humphrey	Fenner, Mrs. Peggy	Lamont, Norman
Awdry, Daniel	Finsberg, Geoffrey (Hampstead)	Lane, David
Baker, Kenneth (St. Marylebone)	Fisher, Nigel (Surbiton)	Le Marchant, Spencer
Baker, W. H. K. (Banff)	Fletcher-Cooke, Charles	Lewis, Kenneth (Rutland)
Balniel, Rt. Hn. Lord	Fookes, Miss Janet	Lloyd, Ht. Hn. Geoffrey (Sut'nC'dfield)
Barber, Rt. Hn. Anthony	Fortescue, Tim	Lloyd, Ian (P'tsm'th, Langstone)
Batsford, Brian	Foster, Sir John	Longden, Sir Gilbert
Beamish, Col. Sir Tufton	Fowler, Norman	Loveridge, John
Bell, Ronald	Fox, Marcus	Luce, R. N.
Bennett, Sir Frederic (Torquay)	Fraser, Rt. Hn. Hugh (St'fford & Stone)	McAdden, Sir Stephen
Bennett, Dr. Reginald (Gosport)	Fry, Peter	MacArthur, Ian
Benyon, W.	Galbraith, Hn. T. G D.	McLaren, Martin
Berry, Hn. Anthony	Gardner, Edward	Maclean, Sir Fitzroy
Biffen, John	Gibson-Watt, David	McMaster, Stanley
Biggs-Davison, John	Gilmour, Ian (Norfolk, C.)	Macmillan, Maurice (Farnham)
Blaker, Peter	Gilmour, Sir John (Fife, E.)	McNair-Wilson, Michael
Boardman, Tom (Leicester, S.W.)	Glyn, Dr. Alan	McNair-Wilson, Patrick (New Forest>
Body, Richard	Goodhart, Philip	Maddan, Martin
Boscawen, Hn. Robert	Goodhew, Victor	Madel, David
Bossom, Sir Clive	Gorst, John	Maginnis, John E.
Bowden, Andrew		Marples, Rt. Hn. Ernest
Braine, Sir Bernard	Gower, Raymond	Marten, Neil
Bray, Ronald	Grant, Anthony (Harrow, C.)	Mather, Carol
Brewis, John	Gray, Hamish	Maude, Angus
Brinton, Sir Tatton	Green, Alan	Maudling, Rt. Hn. Reginald
Brown, Sir Edward (Bath)	Griffiths, Eldon (Bury St. Edmunds)	Mawby, Ray
Bruce-Gardyne, J.	Grylls, Michael	Maxwell-Hyslop, R. J.
Bryan, Sir Paul	Gummer, J. Selwyn	Meyer, Sir Anthony
Buchanan-Smith, Alick (Angus, N&M)	Gurden, Harold	Mills, Peter (Torrington)
Buck, Antony	Hall, Miss Joan (Keighley)	Mills, Stratton (Belfast, N.)
Bullus, Sir Eric	Hall, John (Wycombe)	Miscampbell, Norman
Burden, F. A.	Hamilton, Michael (Salisbury)	Mitchell, Lt.-Col. C.(Aberdeenshire, W)
Butler, Adam (Bosworth)	Hannam, John (Exeter)	Mitchell, David (Basingstoke)
Campbell, Rt. Hn. G.(Moray & Nairn)	Harrison, Brian (Maldon)	Moate, Roger
Carlisle, Mark	Harrison, Col. Sir Harwood (Eye)	Molyneaux, James
Cary, Sir Robert	Haselhurst, Alan	Money, Ernie
Channon, Paul	Hastings, Stephen	Monks, Mrs. Connie
Chapman, Sydney	Havers, Sir Michael	Monro, Hector
Chataway, Rt. Hn. Christopher	Hawkins, Paul	Montgomery, Fergus
Chichester-Clark, R.	Hay, John	More, Jasper
Churchill, W. S.	Hayhoe, Barney	Morgan-Giles, Rear-Adm
Clark, William (Surrey, E.)	Heath, Rt. Hn. Edward	Morrison, Charles
Clarke, Kenneth (Rushcliffe)	Heseltine, Michael	Mudd, David
Cockeram, Eric	Hicks, Robert	Murton, Oscar
Cooke, Robert	Higgins, Terence L.	Nabarro, Sir Gerald
Coombs, Derek	Hiley, Joseph	Neave, Airey
Cooper, A. E.	Hill, John E. B. (Norfolk, S.)	Nicholls, Sir Harmar
Cordle, John	Hill, James (Southampton, Test)	Noble, Rt. Hn. Michael
Corfield, Rt. Hn. Sir Frederick	Holland, Philip	Normanton, Tom
Cormack, Patrick	Holt, Miss Mary	Nott, John
Costain, A. P.	Hordern, Peter	Onslow, Cranley
Critchley, Julian	Hornsby-Smith, Rt. Hn. Dame Patricia	Oppenheim, Mrs. Sally
Crouch, David	Howe, Rt. Hn. Sir Geoffrey	Osborn, John
Crowder, F. P.	Howell, Ralph (Norfolk, N.)	Owen, Idris (Stockport, N.)
Dalkeith, Earl of	Hutchison, Michael Clark	Page, Rt. Hn. Graham (Crosby)
Davies, Rt. Hn. John (Knutsford)	Iremonger, T. L.	Page, John (Harrow, W.)
d'Avigdor-Goldsmid, Sir Henry	Irvine, Bryant Godman (Rye)	Paisley, Rev. Ian
d'Avigdor-Goldsmid, Maj.-Gen. Jack	James, David	Peel, John
Dean, Paul	Jenkin, Patrick (Woodford)	Percival, Ian
Deedes, Rt. Hn. W. F.	Jennings, J. C. (Burton)	Peyton, Rt. Hn. John
Digby, Simon Wingfield	Jessel, Toby	Pink, R. Bonner
Dixon, Piers	Johnson Smith, G. (E. Grinstead)	Pounder, Rafton
Dodds-Parker, Douglas	Jopling Michael	Powell, Rt. Hn. J. Enoch
Douglas-Home, Rt. Hn. Sir Alec	Joseph, Rt. Hn. Sir Keith	Price, David (Eastleigh)
Drayson, G. B.	Kaberry, Sir Donald	Prior, Rt. Hn. J. M. L.
du Cann, Rt. Hn. Edward	Kellett-Bowman, Mrs. Elaine	Proudfoot, Wilfred
Dykes, Hugh	Kershaw, Anthony	Pym, Rt. Hn. Francis
Eden, Rt. Hn. Sir John	Kimball, Marcus	Quennell, Miss J. M.
Raison, Timothy	Skeet, T. H. H.	Trew, Peter
Ramsden, Rt. Hn. James	Smith, Dudley (W'wick & L'mington)	Tugendhat, Christopher
Rawlinson, Rt. Hn. Sir Peter	Soref, Harold	Turton, Rt. Hn. Sir Robin
Redmond, Robert	Speed, Keith	Vaughan, Dr. Gerard
Reed, Laurance (Bolton, E.)	Spence, John	Waddington, David
Rees, Peter (Dover)	Sproat, Iain	Walker, Rt. Hn. Peter (Worcester)
Rees-Davies, W. R.	Stainton, Keith	Wall, Patrick
Renton, Rt. Hn. Sir David	Stanbrook, Ivor	Walters, Dennis
Rhys Williams, Sir Brandon	Stewart-Smith, Geoffrey (Belper)	Warren, Kenneth
Ridley, Hn. Nicholas	Stodart, Anthony (Edinburgh, W.)	Wells, John (Maidstone)
Ridsdale, Julian	Stoddart-Scott, Col. Sir M.	White, Roger (Gravesend)
Rippon, Rt. Hn. Geoffrey	Stokes, John	Wiggin, Jerry
Roberts, Michael (Cardiff, N.)	Stuttaford, Dr. Tom	Wilkinson, John
Roberts, Wyn (Conway)	Sutcliffe, John	Winterton, Nicholas
Rost, Peter	Tapsell, Peter	Wolrige-Gordon, Patrick
Royle, Anthony	Taylor, Sir Charles (Eastbourne)	Wood, Rt. Hn. Richard
Russell, Sir Ronald	Taylor, Edward M.(G'gow, Cathcart)	Woodhouse, Hn. Christopher
St. John-Stevas, Norman	Taylor, Frank (Moss Side)	Woodnutt, Mark
Sandys, Rt. Hn. D.	Taylor, Robert (Croydon, N.W.)	Worsley, Marcus
Scott, Nicholas	Tebbit, Norman	Wylie, Rt. Hn. N. R.
Scott-Hopkins, James	Temple, John M.	Younger, Hn. George
Shaw, Michael (Sc'b'gh & Whitby)	Thatcher, Rt. Hn. Mrs. Margaret
Shelton, William (Clapham)	Thomas, John Stradling (Monmouth)	TELLERS FOR THE AYES:
Shersby, Michael	Thompson, Sir Richard (Croydon, S.	Mr. Bernard Weatherill and
Simeons, Charles	Tilney, John	Mr. Walter Clegg.
Sinclair, Sir George	Trafford, Dr. Anthony
NOES
Abse, Leo	Davies, G. Elfed (Rhondda, E.)	Huckfield, Leslie
Albu, Austen	Davies, Ifor (Gower)	Hughes, Rt. Hn. Cledwyn (Anglesey)
Allaun, Frank (Salford, E.)	Davis, Clinton (Hackney, C.)	Hughes, Mark (Durham)
Allen, Scholefield	Davis, Terry (Bromsgrove)	Hughes, Robert (Aberdeen, N.)
Archer, Peter (Rowley Regis)	Deakins, Eric	Hughes, Roy (Newport)
Armstrong, Ernest	de Freitas, Rt. Hn. Sir Geoffrey	Hunter, Adam
Ashley, Jack	Delargy, Hugh	Jay, Rt. Hn. Douglas
Ashton, Joe	Dell, Rt. Hn. Edmund	Jeger, Mrs. Lena
Atkinson, Norman	Dempsey, James	Jenkins, Hugh (Putney)
Bagier, Gordon A. T.	Doig, Peter	Jenkins, Rt. Hn. Roy (Stechford)
Barnes, Michael	Dormand, J. D.	John, Brynmor
Barnett, Guy (Greenwich)	Douglas, Dick (Stirlingshire, E.)	Johnson, Carol (Lewisham, S.)
	Douglas-Mann, Bruce	Johnson, James (K'ston-on-Hull, W.)
Barnett, Joel (Heywood and Royton)	Duffy, A. E. P.	Johnson, Walter (Derby, S.)
Beaney, Alan	Dunn, James A.	Jones, Barry (Flint, E.)
Benn, Rt. Hn. Anthony Wedgwood	Eadie, Alex	Jones, Dan (Burnley)
Bennett, James (Glasgow, Bridgeton)	Edelman, Maurice	Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)
Bidwell, Sydney	Edwards, Robert (Bilston)
Bishop, E. S.	Edwards, William (Merioneth)	Jones, Gwynoro (Carmarthen)
Blenkinsop, Arthur	Ellis, Tom	Jones, T. Alec (Rhondda, W.)
Boardman, H. (Leigh)	English, Michael	Kaufman, Gerald
Booth, Albert	Evans, Fred	Kelley, Richard
Bottomley, Rt. Hn. Arthur	Ewing, Harry	Kerr, Russell
Boyden, James (Bishop Auckland)	Faulds, Andrew	Kinnock, Neil
Bradley, Tom	Fitch, Alan (Wigan)	Lambie, David
Broughton, Sir Alfred	Fletcher, Ted (Darlington)	Lamborn, Harry
Brown, Hugh D. (G'gow, Provan)	Foley, Maurice	Lamond, James
Brown, Ronald (Shoreditch & F'bury	Foot, Michael	Latham, Arthur
Buchan, Norman	Ford, Ben	Lawson, George
Butler, Mrs. Joyce (Wood Green)	Forrester, John	Leadbitter, Ted
Callaghan, Rt. Hn. James	Fraser, John (Norwood)	Lee, Rt. Hn. Frederick
Campbell, I. (Dunbartonshire, W.)	Freeson, Reginald	Leonard, Dick
Cant, R. B.	Galpern, Sir Myer	Lestor, Miss Joan
Carmichael, Neil	Garrett, W. E.	Lewis, Arthur (W. Ham, N.)
Carter, Ray (Birmingh'm, Northfield)	Gilbert, Dr. John	Lewis, Ron (Carlisle)
Carter-Jones, Lewis (Eccles)	Ginsburg, David (Dewsbury)	Lipton, Marcus
Castle, Rt. Hn. Barbara	Golding, John	Lomas Kenneth
Clark, David (Colne Valley)	Gourlay, Harry	Loughlin, Charles
Cocks, Michael (Bristol, S.)	Grant, George (Morpeth)	Lyon, Alexander W. (York)
Cohen, Stanley	Grant, John D. (Islington, E.)	Lyons, Edward (Bradford, E.)
Coleman, Donald	Griffiths, Eddie (Brightside)	Mabon, Dr. J. Dickson
Concannon, J. D.	Griffiths, Will (Exchange)	McBride, Neil
Conlan, Bernard	Hamilton, William (Fife, W.)	McCartney, Hugh
Corbet, Mrs. Freda	Hamling, William	McElhone, Frank
Cox, Thomas (Wandsworth, C.)	Hannan, William (G'gow, Maryhill)	McGuire, Michael
Crawshaw, Richard	Hardy, Peter	Mackenzie, Gregor
Cronin, John	Harper, Joseph	Mackie, John
Crosland, Rt. Hn. Anthony	Harrison, Walter (Wakefield)	Mackintosh, John P.
Crossman, Rt. Hn. Richard	Hart, Rt. Hn. Judith	Maclennan, Robert
Cunningham, G. (Islington, S.W.)	Healey, Rt. Hn. Denis	McMillan, Tom (Glasgow, C.)
Cunningham, Dr. J. A. (Whitehaven)	Heffer, Eric S.	McNamara, J. Kevin
Dalyell, Tam	Hilton, W. S.	Mahon, Simon (Bootle)
Darling, Rt. Hn. George	Horam, John	Mallalieu, J. P. W. (Huddersfield, E.)
Davidson, Arthur	Houghton, Rt. Hn. Douglas	Marks, Kenneth
Davies, Denzil (Llanelly)	Howell, Denis (Small Heath)	Marsden, F.

Marshall, Dr. Edmund	Perry, Ernest G.	Stoddart, David (Swindon)
Mason, Rt. Hn. Roy	Prentice, Rt. Hn. Reg.	Stonehouse, Rt. Hn. John
Mayhew, Christopher	Prescott, John	Strang, Gavin
Meacher, Michael	Price, J. T. (Westhoughton)	Strauss, Rt. Hn. G. R.
Mellish, Rt. Hn. Robert	Price, William (Rugby)	Summerskill, Hn. Dr. Shirley
Mendelson, John	Probert, Arthur	Swain, Thomas
Mikardo, Ian	Reed, D. (Sedgefield)	Thomas,Rt.Hn.George (Cardiff, W.)
Millan, Bruce	Rees, Merlyn (Leeds, S.)	Thomas, Jeffrey (Abertillery)
Milne, Edward	Rhodes, Geoffrey	Thomson, Rt. Hn. G. (Dundee, E.)
Mitchell, R. C. (S'hampton, Itchen)	Richard, Ivor	Tinn, James
Morgan, Elystan (Cardiganshire)	Roberts, Albert (Normanton)	Tomney, Frank
Morris, Alfred (Wythenshawe)	Roberts,Rt.Hn.Goronwy(Caernarvon)	Tope, Graham
Morris, Charles R. (Openshaw)	Robertson, John (Paisley)	Torney, Tom
Morris, Rt. Hn. John (Aberavon)	Roderick, Caerwyn E. (Brc'n&R'dnor)	Tuck, Raphael
Moyle, Roland	Rodgers, William (Stockton-on-Tees)	Varley, Eric G.
Mulley, Rt. Hn. Frederick	Roper, John	Wainwright, Edwin
Murray, Ronald King	Ross, Rt. Hn. William (Kilmarnock)	Walden, Brian (B'm'ham, All Saints)
Oakes, Gordon	Rowlands, Ted	Walker, Harold (Doncaster)
Ogden, Eric	Sandelson, Neville	Weitzman, David
O'Halloran, Michael	Sheldon, Robert (Ashton-under-Lyne)	Wellbeloved, James
O'Malley, Brian	Shore, Rt. Hn. Peter (Stepney)	Wells, William (Walsall, N.)
Oram, Bert	Short, Mrs. Renée (W'hampton, N.E.)	White, James (Glasgow, Pollok)
Orbach, Maurice	Silkin, Rt. Hn. John (Deptford)	Whitehead, Phillip
Orme, Stanley	Silkin, Hn. S. C. (Dulwich)	Whitlock, William
Oswald, Thomas	Sillars, James	Willey, Rt. Hn. Frederick
Owen, Dr. David (Plymouth, Sutton)	Silverman, Julius	Williams, Alan (Swansea, W.)
Padley, Walter	Skinner, Dennis	Williams, Mrs. Shirley (Hitchin)
Paget, R. T.	Small, William	Williams, W. T. (Warrington)
Palmer, Arthur	Smith, Cyril (Rochdale)	Wilson, Alexander (Hamilton)
Pannell, Rt. Hn. Charles	Smith, John (Lanarkshire, N.)	Wilson, Rt. Hn. Harold (Huyton)
Pardoe, John	Spearing, Nigel	Wilson, William (Coventry, S.)
Parker, John (Dagenham)	Spriggs, Leslie
Parry, Robert (Liverpool, Exchange)	Stallard, A. W.	TELLERS FOR THE NOES:
Pavitt, Laurie	Steel, David	Mr. James Hamilton and
Peart, Rt. Hn. Fred	Stewart, Rt. Hn. Michael (Fulham)	Mr. Tom Pendry.

Question accordingly agreed to.

Main Question, as amended, put—

The House divided: Ayes 294, Noes 264.

Division No. 33.]	AYES	[10.15 p.m.
Adley, Robert	Channon, Paul	Fookes, Miss Janet
Alison, Michael (Barkston Ash)	Chapman, Sydney	Fortescue, Tim
Allason, James (Hemel Hempstead)	Chataway, Rt. Hn. Christopher	Foster, Sir John
Amery, Rt. Hn. Julian	Chichester-Clark, R.	Fowler, Norman
Archer, Jeffrey (Louth)	Churchill, W. S.	Fox, Marcus
Astor, John	Clark, William (Surrey, E.)	Fraser, Rt.Hn.Hugh(St'fford & Stone)
Atkins, Humphrey	Clarke, Kenneth (Rushcliffe)	Fry, Peter
Awdry, Daniel	Cockeram, Eric	Galbraith, Hn. T. G. D.
Baker, Kenneth (St. Marylebone)	Cooke, Robert	Gardner, Edward
Baker, W. H. K. (Banff)	Coombs, Derek	Gibson-Watt, David
Balniel, Rt. Hn. Lord	Cooper, A. E.	Gilmour, Ian (Norfolk, C.)
Barber, Rt. Hn. Anthony	Cordle, John	Gilmour, Sir John (Fife, E.)
Batsford, Brian	Corfield, Rt. Hn. Sir Frederick	Glyn, Dr. Alan
Beamish, Col. Sir Tufton	Cormack, Patrick	Goodhart, Phillp
Bell, Ronald	Costain, A. P.	Goodhew, Victor
Bennett, Sir Frederic (Torquay)	Critchley, Julian	Gorst, John
Bennett, Dr. Reginald (Gosport)	Crouch, David	Gower, Raymond
Benyon, W.	Crowder, F. P.	Grant, Anthony (Harrow, C.)
Berry, Hn. Anthony	Dalkeith, Earl of	Gray, Hamish
Biffen, John	Davies, Rt. Hn. John (Knutsford)	Green, Alan
Biggs-Davison, John	d Avigdor-Goldsmid, Sir Henry	Griffiths, Eldon (Bury St. Edmunds)
Blaker, Peter	d'Avigdor-Goldsmid,Maj.-Gen.Jack	Grylls, Michael
Boardman, Tom (Leicester, S.W.)	Dean, Paul	Gummer. J. Selwyn
Body, Richard	Deedes, Rt. Hn. W. F.	Gurden, Harold
Boscawen, Hn. Robert	Digby, Simon Wingfiel-d	Hall, Miss Joan (Keighley)
Bossom, Sir Clive	Dixon, Piers	Hall, John (Wycombe)
Bowden, Andrew	Dodds-Parker, Douglas	Hamilton, Michael (Salisbury)
Braine, Sir Bernard	Douglas-Home, Rt. Hon. Sir Alec	Hannam, John (Exeter)
Bray, Ronald	Drayson, G. B.	Harrison, Brian (Maldon)
Brewis, John	du Cann, Rt. Hn. Edward	Harrison, Col. Sir Harwood (Eye)
Brinton, Sir Tatton	Dykes, Hugh	Haselhurst, Alan
Brown, Sir Edward (Bath)	Eden, Rt. Hn. Sir John	Hastings, Stephen
Bruce-Gardyne, J.	Edwards, Nicholas (Pembroke)	Havers, Sir Michael
Bryan, Sir Paul	Elliott, R. W. (N'c'tle-upon-Tyne, N.)	Hawkins, Paul
Buchanan-Smith, Alick (Angus, N&M)	Emery, Peter	Hay, John
Buck, Antony	Eyre, Reginald	Hayhoe, Barney
Bullus, Sir Eric	Farr, John	Heath, Rt. Hn. Edward
Burden, F. A.	Fell, Anthony	Heseltine, Michael
Butler, Adam (Bosworth)	Fenner, Mrs. Peggy	Hicks, Robert
Campbell. Rt.Hn.G. (Moray & Nairn)	Finsberg, Geoffrey (Hampstead)	Higgins, Terence L.
Carlisle, Mark	Fisher, Nigel (Surbiton)	Hiley, Joseph
Cary, Sir Robert	Fletcher-Cooke, Charles	Hill, John E. B. (Norfolk, S.)
Hill, James (Southampton, Test)	Mitchell, Lt.-Col. C. (Aberdeenshire, W)	Scott-Hopkins, James
Holland, Philip	Mitchell, David (Basingstoke)	Shaw, Michael (Sc'b'gh & Whitby)
Holt, Miss Mary	Moate, Roger	Shelton, William (Clapham)
Hordern, Peter	Molyneaux, James	Shersby, Michael
Hornsby-Smith. Rt. Hn. Dame Patricia	Money, Ernie	Simeons, Charles
Howe, Rt. Hn. Sir Geoffrey	Monks, Mrs. Connie	Sinclair, Sir George
Howell, Ralph (Norfolk, N.)	Monro, Hector	Skeet, T. H. H.
Hutchison, Michael Clark	Montgomery, Fergus	Smith, Dudley (W'wick & L'mington)
Iremonger, T. L.	More, Jasper	Soref, Harold
Irvine, Bryant Godman (Rye)	Morgan-Giles, Rear-Adm.	Speed, Keith
James, David	Morrison, Charles	Spence, John
Jenkin, Patrick (Woodford)	Mudd, David	Sproat, Iain
Jennings, R. C. (Burton)	Murton, Oscar	Stainton, Keith
Jessel, Toby	Nabarro, Sir Gerald	Stanbrook, Ivor
Johnson Smith, G. (E. Grinstead)	Neave, Airey	Stewart-Smith, Geoffrey (Belper)
Jopling, Michael	Nicholls, Sir Harmar	Stodart, Anthony (Edinburgh, W.)
Joseph, Rt. Hn. Sir Keith	Noble, Rt. Hn. Michael	Stoddart-Scott, Col. Sir M.
Kaberry, Sir Donald	Normanton, Tom	Stokes, John
Kellett-Bowman, Mrs. Elaine	Nott, John	Stuttaford, Dr. Tom
Kershaw, Anthony	Onslow, Cranley	Sutcliffe, John
Kimball, Marcus	Oppenheim, Mrs. Sally	Tapsell, Peter
King, Evelyn (Dorset, S.)	Osborn, John	Taylor, Sir Charles (Eastbourne)
King, Tom (Bridgwater)	Owen, Idris (Stockport, N.)	Taylor, Edward M.(G'gow, Cathcart)
Kinsey, J. R.	Page, Rt. Hn. Graham (Crosby)	Taylor, Frank (Moss Side)
Kitson, Timothy	Page, John (Harrow, W.)	Taylor, Robert (Croydon, N.W.)
Knight, Mrs. Jill	Paisley, Rev. Ian	Tebbit, Norman
Knox, David	Peel, John	Temple, John M.
Lamont, Norman	Percival, Ian	Thatcher, Rt. Hn. Mrs. Margaret
Lane, David	Peyton, Rt. Hn. John	Thomas, John Stradling (Monmouth)
Le Marchant, Spencer	Pink, R. Bonner	Thompson, Sir Richard (Croydon, S.)
Lewis, Kenneth (Rutland)	Pounder, Rafton	Tilney, John
Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)	Powell, Rt. Hn. J. Enoch	Trafford, Dr. Anthony
Lloyd, Ian (P'tsm'th, Langstone)	Price, David (Eastleigh)	Trew, Peter
Longden, Sir Gilbert	Prior, Rt. Hn. J. M. L.	Tugendhat, Christopher
Loveridge, John	Proudfoot, Wilfred	Turton, Rt. Hn. Sir Robin
Luce, R. N.	Pym, Rt. Hn. Francis	Vaughan, Dr. Gerard
McAdden, Sir Stephen	Quennell, Miss, J. M.	Waddington, David
MacArthur, Ian	Raison, Timothy	Walker, Rt. Hn. Peter (Worcester)
McLaren, Martin	Ramsden, Rt. Hn. James	Wall, Patrick
Maclean, Sir Fitzroy	Rawlinson, Rt. Hn. Sir Peter	Walters, Dennis
McMaster, Stanley	Redmond, Robert	Warren, Kenneth
Macmillan, Rt. Hn. Maurice (Farnham)	Reed, Laurance (Bolton, E.)	Wells, John (Maidstone)
McNair-Wilson, Michael	Rees, Peter (Dover)	White, Roger (Gravesend)
McNair-Wilson, Patrick (New Forest)	Rees-Davies, W. R.	Wiggin, Jerry
Maddan, Martin	Renton, Rt. Hn. Sir David	Wilkinson, John
Madel, David	Rhys Williams, Sir Brandon	Winterton, Nicholas
Maginnis, John E.	Ridley, Hn. Nicholas	Wolrige-Gordon, Patrick
Marples, Rt. Hn. Ernest	Ridsdale, Julian	Wood, Rt. Hn. Richard
Marten, Neil	Rippon, Rt. Hn. Geoffrey	Woodhouse, Hn. Christopher
Mather, Carol	Roberts, Michael (Cardiff, N.)	Woodnutt, Mark
Maude, Angus	Roberts, Wyn (Conway)	Worsley, Marcus
Maudling, Rt. Hn. Reginald	Rost, Peter	Wylie, Rt. Hn. N. R.
Mawby, Ray	Royle, Anthony	Younger, Hn. George
Maxwell-Hyslop, R. J.	Russell, Sir Ronald
Meyer, Sir Anthony	St. John-Stevas, Norman	TELLERS FOR THE AYES:
Mills, Peter (Torrington)	Sandys, Rt. Hn. D.	Mr. Bernard Weatherill and
Mills, Stratton (Belfast, N.)	Scott, Nicholas	Mr. Walter Clegg.
Miscampbell, Norman
NOES
Abse, Leo	Boyden, James (Bishop Auckland)	Cronin, John
Albu, Austen	Bradley, Tom	Crosland, Rt. Hn. Anthony
Allaun, Frank (Salford, E.)	Broughton, Sir Alfred	Crossman, Rt. Hn. Richard
Allen, Scholefield	Brown, Hugh D. (G'gow, Provan)	Cunningham, G. (Islington, S.W.)
Archer, Peter (Rowley Regis)	Brown, Ronald (Shoreditch & F'bury)	Cunningham, Dr. J. A. (Whitehaven)
Armstrong, Ernest	Buchan, Norman	Dalyell, Tam
Ashley, Jack	Butler, Mrs. Joyce (Wood Green)	Darling, Rt. Hn. George
Ashton, Joe	Callaghan, Rt. Hn. James	Davidson, Arthur
Atkinson, Norman	Campbell, I. (Dunbartonshire, W.)	Davies, Denzil (Llanelly)
Bagier, Gordon A. T.	Cant, R. B.	Davies, G. Elfed (Rhondda, E.)
Barnes, Michael	Carmichael, Neil	Davies, Ifor (Gower)
Barnett, Guy (Greenwich)	Carter, Ray (Birmingh'm, Northfield)	Davis, Clinton (Hackney, C.)
Barnett, Joel (Heywood and Royton)	Carter-Jones, Lewis (Eccles)	Davis, Terry (Bromsgrove)
Beaney, Alan	Castle, Rt. Hn. Barbara	Deakins, Eric
Benn, Rt. Hn. Anthony Wedgwood	Clark, David (Colne Valley)	de Freitas, Rt. Hn. Sir Geoffrey
Bennett, James (Glasgow, Bridgeton)	Cocks, Michael (Bristol, S.)	Delargy, Hugh
Bidwell, Sydney	Cohen, Stanley	Dell, Rt. Hn. Edmund
Bishop, E. S.	Concannon, J. D.	Dempsey, James
Blenkinsop, Arthur	Conlan, Bernard	Doig, Peter
Boardman, H. (Leigh)	Corbet, Mrs. Freda	Dormand, J. D.
Booth, Albert	Cox, Thomas (Wandsworth, C.)	Douglas, Dick (Stirlingshire, E.)
Bottomley, Rt. Hn. Arthur	Crawshaw, Richard	Douglas-Mann, Bruce

Duffy, A. E. P.	Lamond, James	Price, J. T. (Westhoughton)
Dunn, James A.	Latham, Arthur	Price, William (Rugby)
Eadie, Alex	Lawson, George	Probert, Arthur
Edelman, Maurice	Leadbitter, Ted	Reed, D. (Sedgefield)
Edwards, Robert (Bilston)	Lee, Rt. Hn. Frederick	Rees, Merlyn (Leeds, S.)
Edwards, William (Merioneth)	Leonard, Dick	Rhodes, Geoffrey
Ellis, Tom	Lestor, Miss Joan	Richard, Ivor
English, Michael	Lewis, Arthur (W. Ham, N.)	Roberts, Albert (Normanton)
Evans, Fred	Lewis, Ron (Carlisle)	Roberts, Rt. Hn. Goronwy (Caernarvon)
Ewing, Harry	Lipton, Marcus	Robertson, John (Paisley)
Faulds, Andrew	Lomas, Kenneth	Roderick, Caerwyn E.(Brc'n&R'dnor)
Fitch, Alan (Wigan)	Loughlin, Charles	Rodgers, William (Stockton-on-Tees)
Fletcher, Ted (Darlington)	Lyon, Alexander W. (York)	Roper, John
Foley, Maurice	Lyons, Edward (Bradford, E.)	Ross, Rt. Hn. William (Kilmarnock)
Foot, Michael	Mabon, Dr. J. Dickson	Rowlands, Ted
Ford, Ben	McBride, Neil	Sandelson, Neville
Forrester, John	McCartney, Hugh	Sheldon, Robert (Ashton-under-Lyne)
Fraser, John (Norwood)	McElhone, Frank	Shore, Rt. Hn. Peter (Stepney)
Freeson, Reginald	McGuire, Michael	Short, Mrs. Renée (W'hampton, N.E.)
Galpern, Sir Myer	Mackenzie, Gregor	Silkin, Rt. Hn. John (Deptford)
Garrett, W. E.	Mackie, John	Silkin, Hn. S. C. (Dulwich)
Gilbert, Dr. John	Mackintosh, John P.	Sillars, James
Ginsburg, David (Dewsbury)	Maclennan, Robert	Silverman, Julius
Golding, John	McMillan, Tom (Glasgow, C.)	Skinner, Dennis
Gourlay, Harry	McNamara, J. Kevin	Small, William
Grant, George (Morpeth)	Mahon, Simon (Bootle)	Smith, Cyril (Rochdale)
Grant, John D. (Islington, E.)	Mallalieu, J. P. W. (Huddersfleld, E.)	Smith, John (Lanarkshire, N.)
Griffiths, Eddie (Brightside)	Marks, Kenneth	Spearing, Nigel
Griffiths, Will (Exchange)	Marsden, F.	Spriggs, Leslie
Hamilton, James (Bothwell)	Marshall, Dr. Edmund	Stallard, A. W.
Hamilton, William (Fife, W.)	Mason, Rt. Hn. Roy	Steel, David
Hamling, William	Mayhew, Christopher	Stewart, Rt. Hn. Michael (Fulham)
Hannan, William (G'gow, Maryhiil)	Meacher, Michael	Stoddart, David (Swindon)
Hardy, Peter	Mellish, Rt. Hon. Robert	Strang, Gavin
Harper, Joseph	Mendelson, John	Strauss, Rt. Hn. G. R.
Harrison, Walter (Wakefield)	Mikardo, Ian	Summerskill, Hn. Dr. Shirley
Hart, Rt. Hn. Judith	Millan, Bruce	Swain, Thomas
Healey, Rt. Hn. Denis	Milne, Edward	Thomas, Rt. Hn. George (Cardiff, W.)
Heffer, Eric S.	Mitchell, R. C. (S'hampton, Itchen)	Thomas, Jeffrey (Abertillery)
Hilton, W. S.	Morgan, Elystan (Cardiganshire)	Thomson, Rt. Hn. G. (Dundee, E.)
Horam, John		Tinn, James
Houghton, Rt. Hn. Douglas	Morris, Alfred (Wythenshawe)	Tomney, Frank
Howell, Denis (Small Heath)	Morris, Charles, R. (Openshaw)	Tope, Graham
Huckfield, Leslie	Morris, Rt. Hn. John (Aberavon)	Torney, Tom
Hughes, Rt. Hn. Cledwyn (Anglesey)	Moyle, Roland	Tuck, Raphael
Hughes, Mark (Durham)	Mulley, Rt. Hn. Frederick	Varley, Eric G.
Hughes, Robert (Aberdeen, N.)	Murray, Ronald King	Wainwright, Edwin
Hughes, Roy (Newport)	Oakes, Gordon	Walden, Brian (B'm'ham, All Saints)
Hunter, Adam	Ogden, Eric	Walker, Harold (Doncaster)
Jay, Rt. Hn. Douglas	O'Halloran, Michael	Ward, Dame Irene
Jeger, Mrs. Lena	O'Malley, Brian	Weitzman, David
Jenkins, Hugh (Putney)	Oram, Bert	Wellbeloved, James
Jenkins, Rt. Hn. Roy (Stechford)	Orbach, Maurice	Wells, William (Walsall, N.)
John, Brynmor	Orme, Stanley	White, James (Glasgow, Pollok)
Johnson, Carol (Lewisham, S.)	Oswald, Thomas	Whitehead, Phillip
Johnson, James (K'ston-on-Hull, W.)	Owen, Dr. David (Plymouth, Sutton)	Whitlock, William
Johnson, Walter (Derby, S.)	Padley, Walter	Willey, Rt. Hn. Frederick
Jones, Barry (Flint, E.)	Paget, R. T.	Williams, Alan (Swansea, W.)
Jones, Dan (Burnley)	Palmer, Arthur	Williams, Mrs. Shirley (Hitchin)
Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)	Pannell, Rt. Hn. Charles	Williams, W. T. (Warrington)
Jones, Gwynoro (Carmarthen)	Pardoe, John	Wilson, Alexander (Hamilton)
Jones, T. Alec (Rhondda, W.)	Parker, John (Dagenham)	Wilson, Rt. Hn. Harold (Huyton)
Kaufman, Gerald	Parry, Robert (Liverpool, Exchange)	Wilson, William (Coventry, S.)
Kelley, Richard	Pavitt, Laurie
Kerr, Russell	Peart, Rt. Hn. Fred	TELLERS FOR THE NOES:
Kinnock, Neil	Perry, Ernest G.	Mr. Donald Coieman and
Lambie, David	Prentice, Rt. Hn. Reg.	Mr. Tom Pendry.
Lamborn, Harry	Prescott, John

Main Question, as amended, accordingly agreed to.

Resolved, That this House fully supports the massive measures which the Government has taken to stimulate the economy so as to achieve a growth rate of 5 per cent., and in particular the greatly increased incentives to invest, and welcomes the recent indications of an encouraging upturn in manufacturing investment intentions.