§ 10.55 p.m.
§ Mr. J. W. Rooker (Birmingham, Perry Barr)
It is not without significance that the Chamber is emptying as we are about to discuss industrial matters, having discussed Church of England matters all day, although I appreciate that it has been a historic debate.
I am fortunate to have drawn the first debate on the Bill because I drew the second debate in July. I and the Minister will get an early night.
Selective assistance to industry through Government is a fairly contentious matter. The debate that I have initiated will cover many aspects of the Industry Act 1972 which my right hon. Friend the Secretary of State for Industry is showing a willingness to use in a way not contemplated by the previous Conservative Government. He promised to do so in an article in the Sunday Times 18 months ago.
There are those who violently disagree with selective assistance to industry. The CBI in its recent publication entitled "Industry and Government"—it was published in July this year—reminded us that it voiced strong objection to some of the provisions of the Industry Act 1972, notably the discretionary powers to disperse large amounts of selective aid to private industry as the Secretary of State sees fit. It urges the deletion of the very clause that my right hon. Friend has indicated that he will act upon by the publication of the Estimates.
The CBI made it clear that the previous Government did not meet its wish for the provision of clear criteria on selective assistance to industry. I hope 1700 that not before too long we might be able to say to the CBI "You ain't seen nothing yet" when my right hon. Friend publishes his proposals for the new Industry Act. Some time has passed since my right hon. Friend the Prime Minister said:The Stop-Go economy of the last 12 years failed because the expansionary phases have not created growth in those industries which could provide a permanent break-through in Britain's export trade or a lasting saving in imports. … Monetary planning is not enough. What are needed are structural changes in British industry and we are not going to achieve those on the basis of pre-election spurts every four years in our industry, or of the hope of selling the overspill of the affluent society in the high developed markets of Western Europe. What we need are new industries and it will be the job of the next Government to see that we get them. … When we set up new industries based on science there need be no argument about location, no costly bribes to private enterprise to go here rather than there. We shall provide the enterprise and we shall decide where it goes.That was my right hon. Friend's speech in October 1963. If we close our eyes and forget that 11 years have passed we may feel that we have not made much progress. However, if we consider our present proposals for selective assistance to industry by the National Enterprise Board, it is clear that not only did my right hon. Friend analyse the situation correctly 11 years ago but forecast the solution for overcoming the problem of deciding who is to be master, Government or industry.
That is the crucial question, and at the end of the day we must come up with the answer that the Government must be master of the economy. If we are to avoid stop-go once and for all, discrimination—to use my right hon. Friend's words "ruthless discrimination"—is required in the areas of import controls, planned foreign trade, capital control and, above all, the planned location of industry, building controls and Government-owned science-based industries. We know that if the whole economy is depressed by monetary and fiscal measures without selectivity, aid for investment is enjoyed by companies for doing no more than they would have done without the aid. To back that assertion we can take the evidence of the companies themselves, 1701 as given to the Trade and Industry Sub-Committee of the Expenditure Committee. I refer to a memorandum by Dr. Holland in 1973.
Unilever said that it was unable to produce evidence from its own experience that the regional employment premium had increased investment or employment in the development areas, GKN submitted that the attraction of the incentive had so far been inadequate. Tube Investments said that there were not many projects where regional policy or selective aid were of crucial importance to the strategic decision to locate. Dunlop was bare-faced enough to admit that it actually made a surplus from regional incentives which was used for investment elsewhere. That information has been published and presented in papers to the House.
That shows that it is all carrot and no stick in such a situation and that only selective assistance or intervention can bring about the structural changes about which the Prime Minister spoke 11 years ago.
At the root of the problem undoubtedly lies the fact that private industry will invest only when it sees the growth of a profitable market. No one denies that, least of all private industry. Industry clearly did not see the growth of profitable markets during the term of the previous Government. In 1972 investment in industrial manufacturing was 15 per cent. less than that of 1970. In 1973 it was 10 per cent. less than that of 1970 —taking constant prices.
As those of us on the Government side of the House see it, the extension of public sector investment is the first step towards reducing the power of private capital. The private sector in this country has still, in 1974, to be brought into the position of being a servant of the public sector. To establish the public sector as the master and not the servant is not a question of personnel, instruments or even powers. It is a question of determination, determination which will mobilise the democratic power of this House and of the Government. If we are successful, the conflicts and contradictions of our present economic system will remain—I am under no illusions about that —but the way of overcoming them can 1702 be laid only by pushing up to and beyond the limits of what is acceptable to private capital in a private capitalist economy.
However, without a major National Enterprise Board on the lines originally proposed—I stress the word "originally" —such leverage on the leading companies in the private sector of industry will not be possible. The original plan envisaged that the NEB would be represented in each of the major manufacturing sectors. Only in this way shall we be able to switch initiative in leverage from the private to the public sector—which again the Prime Minister advocated 11 years ago.
While Section 8 of the Industry Act 1972 has certainly been used, and is planned to be used, in a way that was probably never contemplated by the previous Government, although it was their Act, it is no good deluding ourselves that the mere purchase of shares—the particular point on which I have chosen to hang my speech—will solve our problem.
It is not unknown for the Government to own shares in a private company and to place a director on its board, but then to find that when that director is called for a chat about how the company is faring—that director being a Government placee, looking after the Government's shareholding—he is told by the managing director, "I am responsible for the shareholders as a whole."
The point that I want to emphasise— and I am sure that my hon. Friend the Minister of State will do this—is that a Government shareholding under our present companies laws will not bring about one iota of control of these companies. Only by changing the Companies Act shall we start to get a different system and the structural changes in industry which we have advocated for so long.
Nevertheless, we on the Government side of the House and the trade unionists to whom I have spoken, and many other people, are very pleased that the Government have at least shown a willingness to use positively the instruments placed in their possession by the previous Government.
I am glad to be able to offer to the hon. Member for Tonbridge and Mailing (Mr. Stanley) a chance to bring his contribution a few hours forward.
1703 I have made the important points I wished to make. We are 11 years overdue with these measures, and I welcome the opportunity to bring these points forward and give an opportunity to the Minister of State——
§ Mr. Cecil Parkinson (Hertfordshire, South)
May I just remind the hon. Gentleman that in a government we shared quite a few of his ambitions about changing the ownership of industry and in the Finance Act 1973 we introduced measures which would have made it possible for employees of companies to become shareholders in those companies and gave them incentives to become shareholders. We introduced, in our pension scheme, measures which would have created funded pension schemes, the funds in which would have been invested in industry. We took steps to ensure that irreversible changes in ownership took place. The hon. Member's Government, when they took office, solemnly sat on both those measures, made one most unattractive and abandoned the other, and prevented the very thing we started and which the hon. Member wants. His Government prevented the shift of ownership in industry.
§ Mr. Rooker
If it were not for the Industry Act 1972 I would not have been standing here, and I applaud those measures of the previous Government.
Dealing with the point about workers taking shares, to take one example, GKN has 83,000 separate shareholders but holds its annual meeting in a hotel which would not take more than 150 in the room, so what is the use? The whole point is to get some measure of control. It is fatuous to take one example alone, but I have made my points. I know that there are to be 14 other debates, and I do not want to delay other hon. Members longer than is necessary.
§ 11.8 p.m.
§ Mr. John Stanley (Tonbridge and Malling)
I congratulate the hon. Member for Birmingham, Perry Barr (Mr. Rooker) on his choice of subject, which is as appropriate now as it was in July. I have pleasure in following him, for the second time, in a debate on the Consolidated Fund Bill. Although I congratulate him on the subject, I would not do so on the content 1704 of his contribution. However, I would thank him for an earlier start than I would otherwise have had in my lowly position at No. 11 in the list of debates tonight.
The hon. Member for Perry Barr said that the Secretary of State for Industry was using the Industry Act 1972 in a way which had never occurred before. I would not disagree about that. I note that in a parliamentary reply on 22nd November it was stated that the estimated expenditure under the Industry Act 1972 in the current financial year totals £417 million. That is a figure to ponder.
I wish to address my remarks to a part of that Act which, in financial terms, is limited in scope; that is, to Sections 7 and 8, under which selective assistance can be given by the Secretary of State for Industry. Although the present incumbent has only been in office for nine months, some important conclusions can be drawn already from the use of those selective powers. The significance of those conclusions not merely relates to the use made of the 1972 Act but is doubly significant because it could presage the way in which much greater powers, and financially much more significant powers, may be used under the legislation which the Government have promised to introduce this Session.
I wish to set out what I understand to be the position concerning the individual interventions which the Secretary of State has made under Sections 7 and 8 of the Industry Act. Hon. Members on both sides of the House will agree that it is extraordinarily difficult in often complex and sensitive company situations for the House to follow the extent to which the Secretary of State is making commitments of public funds under those sections. I understand from the published information available to us that the Secretary of State has five on-going company situations on which he has embarked since he took office in February.
First, the right hon. Gentleman has made the offer of £4.95 million to the Meriden Workers' Co-operative. That offer represents £4.2 million of loan and £0.75 million of grant. The Secretary of State said in a parliamentary reply on 28th November that the £495 million offer to the Meriden Workers' Co-operative still represents the limit of the financial undertaking made to the co-operative. But there is a very mysterious order which 1705 is indicated on the Order Paper under which the amount which will be advanced under the Industry Act to Norton Villiers Triumph will be increased to a ceiling of £12.872 million. I presume that that sum includes the £4.872 million which was advanced by the Conservative Government in 1973. What is not clear is whether that £12.872 million includes the offer of the £4.95 million which has been made by the Secretary of State to the Meriden Workers' Co-operative.
Secondly, the Secretary of State has made a commitment to the Workers' Action Committee which has been set up to see whether the proposed Scottish Daily News can be got off the ground. Again, an offer of £1.75 million has been made and a time limit of 28th February next year has been put on the taking up of that offer.
Thirdly, the Secretary of State has made a financial commitment to the workers' co-operative at IPD (Industrial). I understand it to be a grant commitment of £3.9 million. The Secretary of State has repeatedly said that it is a once-for-all grant and that it will not be increased, but no time limit has been put on the taking up of the grant by the workers' co-operative.
Fourthly, the Secretary of State for Industry has made a commitment of a bank guarantee to Scientific and Medical Instruments Limited. One of the strange features of that commitment is that, though there has been a public commitment to that guarantee, neither its terms nor the ceiling commitment have been announced. Therefore, the Secretary of State would appear to have put himself into a singularly open-ended situation concerning his Department's liability.
Finally, there has been a public announcement of a bank guarantee made available to Alfred Herbert Limited. Here, too, though there has been a public commitment to the guarantee, as in the case of Scientific and Medical Instruments Limited, neither the amount nor the terms of the guarantee have been announced. However, the guarantee has been made available in principle.
There are conclusions which can be drawn, though I should be the first to concede that the Secretary of State has chosen, possibly not wisely, to intervene in situations which are both difficult and 1706 certainly very sensitive, and I do not under-estimate his problems in resolving the situations in which he has chosen to intervene. However, I wish to highlight three areas in which some deductions can be drawn.
The first concerns the readiness with which the Secretary of State has come forward with financial assistance to workers' co-operatives. It is significant that three out of the five cases to which I have drawn attention involve commitments to workers' co-operatives— Meriden, the Scottish Daily News and IPD (Industrial).
It is worth noting that, though these commitments have been made, in no case have the individual workers' co-operatives yet formally got off the ground in that there has been a formal conclusion of the financial arrangements between them and the Department of Industry.
The point that I should like to highlight is the singular lack of consistency, as it appears from the published information, in the terms and amount of help given to the individual co-operatives.
In the first instance, there is no consistency as to whether the co-operatives have been offered loan or grant finance. For example, the Meriden co-operative has been offered mainly loan finance—a £4.2 million loan out of a total offer of £4.95 million. The IPD (Industrial) co-operative has been offered all grant assistance—a total of £3.9 million. The workers' action committee for the Scottish Daily News has been offered all loan assistance up to £1.75 million.
If there is considerable unevenness whether grant or loan arrangements have been made with the workers' co-operatives, there is even more pronounced unevenness in the terms that have been attached to the financial undertakings given by the Department of Industry.
The £4.95 million for the Meriden Workers' Co-operative has been made available on the basis of one very important condition, that the co-operative manages to enter into a satisfactory commercial arrangement with Norton Villiers Triumph. That condition has so far not been fulfilled. The Secretary of State for Industry, in an answer on 28th November, made it clear that the satisfying of that condition was funda- 1707 mental to the honouring of the offer of the £4.95 million to the Meriden co-operative.
Even more stringent conditions have been attached to the offer of £1.75 million to the Scottish Daily News co-operative. Six detailed conditions have been laid down. It is clearly the intention of the Department of Industry that the co-operative should demonstrate that it will be able to perform in a commercially viable way.
Virtually no conditions whatsoever have however been laid down for the IPD (Industrial) co-operative. The Government have said that the £3.9 million represents a maximum commitment, but there is no time limit on the taking up of that amount, and apparently no conditions have been attached to that offer.
The reasons are emphatically set out in a Press release put out by the Department of Industry on 1st November. In that striking Press release the Department, regarding the offer of the grant to the IPD (Industrial) workers' co-operative, said:In reaching this decision the Government has taken account of the advice of the Industrial Development Advisory Board that assistance on the basis proposed could not be justified under the guiding principles that they had been asked to apply. On the other hand, the Government whilst recognising the considerations which led the Board to this view, has been greatly influenced by the resolution and determination of the workers concerned who, having campaigned for so long for the right to work in Merseyside where male unemployment is 9.5 per cent. have demonstrated their readiness to take responsibility for their own affairs and to see to it that the Co-operative is a success, an experiment in industrial organisation of great potential significance.It appears from that Press release that where workers, in an area of admittedly high unemployment, are willing to form a co-operative and to show themselves determined to try to make a commercial success of it, the Government are willing to enter into a financial commitment to that co-operative on the basis of no strings being attached.
Lastly, exactly what status do workers' co-operatives have, from a legal point of view in particular? Will they become incorporated? Will they become companies? Will they accept liabilities under the Companies Acts? What personal liabilities will be taken on by those responsible for the management of those 1708 co-operatives? What liabilities will they discharge to their employees? These are not political questions, but real practical questions which have so far been unanswered, and without answer to which no one working in a co-operative can feel his financial position to be secure. In making direct financial offers to workers' co-operatives, the Department is launching out into uncharted waters, and these co-operatives are experimental boats.
I should like to reach some preliminary conclusions, if possible, as to whether interventions so far by the Secretary of State has been beneficial or detrimental to the companies concerned. I readily concede that these are relatively early days, and that the Secretary of State has been in office for only nine months, but it is at least possible to draw some conclusions about the risks of this form of intervention from one of the five concerns I have mentioned, that at Meriden.
This not the time for a full-scale debate about the Meriden-NVT situation, but I hope that we shall shortly be able to have one. However, without doubt the intervention of the Secretary of State in that situation will result in a larger commitment of public funds, possibly a much larger commitment, than if he had not intervened. Whether the Secretary of State will be able to justify this is a matter for him and not one on which I want to dwell, but the facts are already loud and clear.
The initial commitment to Norton Villiers Triumph was in June 1973, when the then Minister for Industrial Development committed £4.872 million to the company. I was not in the House at the time, but I do not believe that it was suggested by any party that that commitment was not perfecly adequate to bring about the necessary reorganisation of the motor cycle industry and the merger of the motor cycle interests of Manganese Bronze and BSA into the new Norton Villiers Triumph company. That sum was judged by all at the time to be an adequate commitment of public funds.
§ Mr. Tom King (Bridgwater)
I was in the House at the time and, as my hon. Friend will know, somewhat involved in this. The project was submitted to the Industrial Development Advisory Board, consisting of men of great eminence in industry, and it received their approval.
§ Mr. Stanley
I am grateful. The position now is substantially different. The degree of public liability has escalated considerably. The Secretary of State has already offered £4.95 million to the Meriden co-operative. There is a figure of £12.872 million on the Order Paper, although the order has not yet been presented to the House.
Possibly more significant, the Chairman of Norton Villiers Triumph, Mr. Dennis Poore, was quoted in the Financial Times on 2nd December as saying that about £20 million would now be necessary to ensure that we maintained a viable motor cycle industry.
Certainly the financial liability on public funds is vastly greater now than it was prior to the intervention by the Secretary of State. One of the other results has been the degree of damage done to the export possibilities of this industry as a result of the protracted difficulties in resolving the situation between the Meriden and Small Heath workers.
Finally, I come to the broad question of what are the guidelines under which the Government are operating in deciding how they should make selective assistance under Sections 7 and 8 of the Industry Act 1972. It is evident that the Government do not regard the advice they receive from the Industrial Advisory Board as being in any way particularly relevant in deciding whether to intervene in a given situation. I believe I am right in saying that the advice of the board has been rejected more often than it has been accepted. [Interruption.] I look forward to hearing the Minister's comments when he replies. Of the five cases I have mentioned I believe it is right to say that the advice of the board has been rejected on more occasions than it has been accepted. I do not believe that it would be right to say that the Secretary of State is operating on the basis of essentially commercial criteria in deciding whether to intervene. One of the factors which come out again and again is that the right hon. Gentleman appears to be motivated, above all else, by the question of whether jobs should be preserved at existing places of work.
This is illustrated by the fact that offers of assistance in three out of the five cases I have mentioned have been to workers' co-operatives. It is illustrated even more graphically by the chain of 1710 events which led to the Secretary of State's offer of assistance to Scientific and Medical Instruments. In August the Department of Industry was backing, as a 24 per cent. shareholder in George Kent, the acquisition of George Kent by GEC. At that time the Department seemed to be in favour of preserving wholly British control over this important instrument group. In September the employees of George Kent indicated to the Department that they preferred not acquisition by GEC but acquisition by the Swiss group of Brown, Boveri.
On 22nd October the Secretary of State announced a complete reversal of his policy and said he had switched his support from an acquisition by GEC of George Kent to an acquisition by Brown, Boveri. The right hon. Gentleman, when he made his announcement on that day, acknowledged what was the factor chiefly responsible for his change of mind. He said in the Press release:The main factor in my mind in reaching this decision has been the preference expressed to me by the workers of George Kent, Ltd. for the Brown, Boveri proposals.I am not in any way suggesting that it may not be perfectly justifiable to expend public funds to preserve jobs as they exist. I am not in any way suggesting that it is not of the utmost importance to consult those whose livelihood may be directly affected by a particular acquisition proposal. But what I do ask the Minister to answer are these basic questions.
First, will he tell us whether job preservation is the sole criterion in determining the use of the selective assistance powers under Sections 7 and 8 of the Industry Act? Will he say whether that is the case, bearing in mind that the use of financial assistance to preserve existing jobs can be, and has already shown itself to be, directly detrimental in some cases to the viability of other jobs? Workers at Small Heath will give testimony to that danger.
The second question is: if job preservation is to be the sole criterion in using powers under these sections, will the Minister tell the House whether there is a ceiling price he is prepared to pay for the maintenance of individual jobs? How far is he prepared to go under Sections 7 and 8 in hauling public money in to maintain existing jobs at existing places of work?
1711 Sufficient money has been sent, and it is now essential for the Secretary of State to set out to the House the guidelines under which these wide, selective powers are being used. It is doubly important because the way they are being used is likely to presage the way in which the vastly greater powers, with far greater resources of public funds, may well be used under the legislation shortly to be introduced.
§ 11.30 p.m.
§ Mr. J. M. Craigen (Glasgow, Maryhill)
I am obliged to my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) for raising this subject, which enables me to raise the question of the Scottish Daily News project.
Last March Beaverbrook Newspapers Limited announced the closure of its Glasgow premises. Those of us who know the newspaper and printing industry in Glasgow do not find the closure of a newspaper a new experience. But, unlike previous occasions, this time there is limited scope for absorbing the displaced printing workers into other commercial and newspaper offices in the West of Scotland.
Only the considerable enthusiasm shown by the workers at Albion Street has kept alive the prospects of the workers' co-operative. The concept of a workers' co-operative in the newspaper industry is perhaps not the best test-bed for such a new venture. The Government have throughout shown encouragement to the workers' action group. However, I have a number of constituents who were made redundant by Beaverbrook Newspapers, and it is a fair reflection of their feeling to say that time is getting on and some of them think that they have had the run-around as far as the Government are concerned. There is no doubt that the Department of Industry is a very large building in which to get lost.
I appreciate that my right hon. Friend the Secretary of State has extended the time limit to 28th February 1975 for the loan which he is proposing to make available to the workers concerned. The hon. Member for Tonbridge and Mailing (Mr. Stanley) touched on the question of the stringent conditions laid down in the case of the Scottish Daily News project. There is no doubt that all of us as taxpayers 1712 expect our money to be carefully handled. At the same time, we are going to have to accept the risks behind the establishment of workers' co-operatives. If we are hoping to maintain a policy of full employment, we shall have to grasp at all sorts of opportunities to encourage the development of workers' co-operatives wherever they arise.
It is possible that had the workers at Albion Street enjoyed the benefit of professional assistance fairly early on in their plan, it might have reduced the period of delay. I hope in this respect that when we are setting up the National Enterprise Board, and also the Co-operative Development Agency, which I should like to see, we shall bear in mind the importance of adequate consultancy services for workers in this sort of situation, where, very often, they lack the professional skills in accountancy, finance and economics and so on. Otherwise, they have to go to outside sources for such assistance, which takes considerable time.
I have already had correspondence with the Secretary of State in connection with the proposal put forward by Mr. Frederick Smith, the General Secretary of the Scottish Graphical Association, for further Government participation in the Scottish Daily News project in the form of the acquisition of shares. I accept the point that the Secretary of State makes in his letter to me of 29th November, that the question of public participation raises special problems in the case of newspapers. I readily accept that this is a matter that the Royal Commission on the Press might well consider. But that will take time, and in the meantime it is most important that the workers in the Scottish Daily News project should not feel that they are losing out.
I want an assurance that the Government will do their utmost to assist the Workers' Action Committee in the present stage of its work, not simply as an enthusiastic supporter of the concept of worker co-operatives, but as an active centre-forward wanting to score a goal. That means, in my book, setting up the Scottish Daily News early in the new year
§ 11.37 p.m.
§ Mr. Cecil Parkinson (Hertfordshire, South)
I listened with interest to the hon. Member for Glasgow, Maryhill (Mr. 1713 Graigen). I accept his good intentions, but I hope for his sake and for the sake of the would-be workers in the co-operative that might run the daily newspaper that he does not achieve his ambition. I say that because this project has no future and the people whom he is encouraging to have hopes about the security of their jobs have no prospect of job security in that venture.
I believe that by any commercial criterion this project is bound to be a failure. Whether or not the hon. Gentleman and his hon. Friends like it, the fact is that the security of the jobs of those who might be tempted to work in that enterprise will depend on whether people want to buy what the workers produce. All the signs are—and the Beaverbrook group learned it the expensive way—that nobody wants to buy the paper, and the sooner the hon. Gentleman and his hon. Friends realise that there is job security not because the Government say so but because people want what someone is producing the better it will be for him and for those whom he might tempt into thinking they have a future in the workers' co-operative. They might produce a newspaper, but they will do so at great loss, and the project will fold up in a very short time.
Job security has very little to do with whether the Department of Industry smiles on a product. Job security depends entirely upon whether people want to buy what someone has to sell, and the signs are, as I said—and I do not want to repeat myself—that people do not want to buy. The signs are that those whom the hon. Gentleman is tempting to go into that ill-fated co-operative do not have the security that he and I should wish for them, and the sooner they accept that and find their way into profitable ventures where they have a secure future the better it will be for them and for us.
I listened with great interest to the hon. Member for Birmingham, Perry Barr (Mr. Rooker), and I found his enthusiasm for his own remarks slightly chilling. One of the tragedies of this place is that people such as the hon. Gentleman, who I suspect have never employed anybody or created anything that employs anybody, cheerfully blabber on about the idea that changing ownership does something to secure the future of those who work in an industry.
§ Mr. Rooker
Unlike most hon. Members opposite and, indeed, most hon. Members on this side of the House, I have worked on both sides of industry. I have worked with my hands. I have opened a factory and, in fact, I have closed a facory. Therefore, I speak from practical experience, but not as an owner. I was never an owner, but I have seen the effects of ownership.
§ Mr. Parkinson
All I would say to the hon. Gentleman, at the risk of sounding slightly condescending—although I do not mean to—is that he did not learn much from his experience.
I listened with great interest to my hon. Friend the Member for Tonbridge and Mailing (Mr. Stanley) speaking about the Norton Villiers Triumph venture and industrial advisory boards. I declare my interest here and now. I was a reluctant supporter of my own Government in that venture. I have never believed that one can buy X years purchase of the previous year's export orders by keeping a company in business. The £4,872,000 was in itself a trumped-up figure. I am always suspicious of figures which are just below the maximum at which discussion has to take place. I thought that in itself was some sort of comment on the quality of the decision.
I know that I am putting my hon. Friend in a bit of difficulty because he is a very loyal person whom I have known for longer than either he or I are prepared to admit, and he was very much involved in the decision which resulted. He can make a very honest case for it. But I have my reservations about the idea that one can buy the previous year's export orders five, six, seven, or 10 times, because one steps in and keeps the thing going. If I had any money to invest, the last place that I would look at would be that co-operative to which reference has been made. It does not have a future. The workers in Small Heath have an instinct for these things. Most of the people who have worked for it have left, and they will not go back. They know on which side their bread is buttered. It was an ill-fated venture. It was typical of the sort of temptation which is offered by Governments when they want the willing suspension of disbelief, about which somebody far more famous than I wrote.
As I listened to the hon. Member for Perry Barr I thought that I had never 1715 heard anybody make a better case against the acquisition by Government of shareholdings in ventures. He talked about regional policy and said that it has not worked. He is quite right; it has not. Yet Governments from both major parties have poured hundreds of millions—possibly thousands of millions—of pounds with the best of intentions into the regions. He says that by his own standards it has not worked out. He says that Governments have said to industry "We will penalise you if you do not go to the development areas. We will make it difficult for you to stay in non-development area. We will give you money if you go to the development areas. We will encourage you in every way not to do what you want to do."
Many companies have been tempted, and they have gone off to the development areas, where they have opened factories, and slowly but surely the crunch comes. The first factory that gets closed is the factory in the development area, because it finds that it can make what it wants to make in the areas such as the hon. Member represents, in Birmingham and in the Midlands area, more cheaply and more competitively than in the development areas. So, although they have been bribed, paid and encouraged in every way open to the Government, the economic facts drive themselves home, and ultimately those companies fall back to relying on their basic gut instinct and start making their products in the Midlands, near the markets and near a supply of skilled labour.
I do not decry regional policy, but whatever Governments do economic factors will in the end assert themselves and the regions will only be as well off as the country as a whole. I am an overspill man. I want to see Birmingham thriving because then the economic pressures will force firms to the regions, and it is only economic pressures which will ensure worthwhile employment in the regions.
§ Mr. Rooker rose——
§ Mr. Parkinson
I will not give way to the hon. Member. I am in danger of making a long speech, which I do not want to do.
I think it is an overstatement to say that regional policy has been a failure, 1716 but it has been disappointing. The people who are disappointed are not those in Birmingham and the other wealthy regions, but people in the development areas, like the Minister of State, who lives in one and who appreciates the urgency of helping those areas but who knows that no Government has found the answer.
The hon. Member for Perry Barr criticised the Government's nominee directors, and I could not agree more. Government after Government have pumped millions of pounds into companies which now run into a great, grotesque and boring list. On the boards of these companies sits a nominee director of the Government. He has revealed himself as a powerless and useless creature. Take the examples of Beagle Aircraft and UCS. In the case of UCS I asked for the accounts four months ago. I did not get them. When those accounts finally appeared they confirmed my worst suspicions, and so I did my bit. The hon. Member says that Government-nominated directors have no effect, but that is the best method that the Government have available to them.
The hon. Member said that the Government pump money into companies but that the monitoring machinery is not satisfactory and that there are not enough people capable of monitoring Government investments. That is a very good argument for not having more Government investments. The hon. Member pointed out the limits to the power of the shareholder, and I agree with him. Shareholding in a company is as of nothing. If the company is not successful owning shares is a burden, and if it is successful it is a problem in many ways, and I should be glad to explain them to the hon. Member in private.
The hon. Member says that ownership is not the answer. If a company is not going right, that does the owner no good. If it is going right it does not matter who owns it, because then the community as a whole benefits. That is not an argument for increasing public ownership, because if a company is successful, regardless of who owns it the State, the public or whatever it is called is the beneficiary.
I was an accountant in practice for 12 years and I saw where most of the profits of successful companies went—in corporation tax. I never complained about that. I have always listened with 1717 interest to the Secretary of State for Energy talking about a proper return on investment in North Sea oil. I could introduce him to thousands of better investments. The Government are picking up 52 per cent. of the profits of companies in which they do not have a penny—a nil investment and 52 per cent. of the profits. If the company is successful, the State and the community get the benefit. If it is unsuccessful, what does the community want with it? It is a problem, not an asset but a liability.
The hon. Gentleman said that regional policy has not worked. It has been the prime interest of Governments for many years. He talked about the Government's incapacity to monitor their investments. I agree. He also talked about the shareholders' limited rights, and he is right. He then said that we must increase the community's right to own things and have a a stake in them. Everything the hon. Gentleman said was an argument against what he wants to believe. It was a pleasant interlude in the life of the House, but a total waste of his and our time.
Over and over again Labour Members boast that what they are doing is being done under the Industry Act 1972. My hon. Friend the Member for Bridgwater (Mr. King) will not agree, but I think that it is to our shame that they can claim that. I regard it as a measure of which we have less right to be proud than many other very good things that we did in government.
§ Mr. Parkinson
That was an exceptionally good measure, which has been totally misrepresented by Labour Members. They created a myth which they are having to live with. Their problem is that they created an idea among the unions that the unions are beyond reproach and beyond the law. At the end of the day they and we will be the principal payers of the price of that myth.
I apologise, Mr. Deputy Speaker, for indulging myself in a way, but you and I know that my opportunities to do so are very limited, for various reasons known to both of us. I have picked a late hour, and I hope that you will forgive me. I shall not take much longer.
The Chancellor of the Duchy of Lancaster has come up with Finance for In- 1718 dustry. It is to be the great white hope for British investment. I do not see the Chancellor of the Exchequer as the saviour of British industry. I see him as the original snake. Having inflicted on British industry colossal tax increases and pre-payment of taxes, he has now said "I have seen the eror of my ways. I am half-convinced that I was wrong. I will remit half of my mistakes, and now the onus is on British industry to produce the investment and export-led boom." He has set industry an impossible task. At a time of world recession, we are supposed to increase exports. When there is spare capacity, industry is supposed to create more. The Chancellor has pushed over to industry the duty of saving the British economy at a time when it is impossible for it to do so.
In a few months' time the Minister of State, Department of Industry, and his Secretary of State will be yelling once again that the private sector has let us down, that this is the time for the National Enterprise Board to intervene.
§ Mr. Parkinson
The Chancellor damaged industrial confidence by a most ill-timed Budget in March, in which he set out to penalise companies for making profits. He described their profits as monstrous and obscene at the time. The profits which the Chancellor now plans to relieve from corporation tax were described by him in March, before the presentation of the Budget, as obscene. In every word that he utters the right hon. Gentleman confirms to the public at large, as well as to those who understand these matters, that everything he said in March was totally untrue. He has set British industry an impossible task. He has created a ridiculous institution, Finance for Industry, which is unwanted, unloved and unnecessary. Nobody will borrow money at commercial rates for investment now to create spare capacity which is not needed, since the world is entering a recession.
The Government have created a climate within which it is impossible for British industry to perform. The Government try to hold themselves up as the great friends of British industry, who are giving British industry a chance. The only chance they are giving British industry is the chance to have its neck wrung. 1719 Many Government supporters are waiting to do that, and British industry knows it.
Presumably the Government see the National Enterprise Board and planning agreements as the vehicle needed to monitor the new technique of acquiring or increasing their stake in British industry.
British industry lacks good management. There are not enough people around with good industrial experience. The country lacks civil servants capable of monitoring British industry. The National Enterprise Board is an organisation which assumes that there is a surplus of both kinds of people, whereas we know that there is a dearth of them.
§ Mr. Parkinson
The Government's thinking is based on the fact that there is a surplus. This House will create machinery which will be ill-manned and incapable of doing what is desired by the Government.
As for the Government's motives in their present policy, Government supporters have made it clear that their primary interest is the preservation of jobs. Not one member of the Opposition derives any pleasure out of seeing the unemployment figures rising. One of the myths that Government supporters repeat to themselves as they go to sleep is that the Conservative Members love high unemployment. We do not. We get no pleasure out of the prospect of men being out of work. However, we get no pleasure out of encouraging people to believe that they have a secure future when they will only be disappointed subsequently. This is where the Government are making their principal mistake. The Government listen almost exclusively to the TUC. The social contract was not discussed with the CBI.
Only today I was talking to the Institute of Directors about the new national insurance contributions. In that connection, I have to declare an interest, in that I am the leader of the parliamentary group dealing with this subject. For the first time in many years, the Institute of Directors has not been consulted about the incredibly complex network of national insurance contributions which has been set up. Many company directors could find themselves contributing under 1720 three different headings, and many companies could find themselves paying seven or eight companies' contributions for the same directors. For almost the first time, the Institute of Directors has not been consulted by the Government.
Over and over again we are left with the feeling that this Government believe that the TUC is the repository of all worthwhile knowledge of industrial affairs and that if they please the TUC they please everyone who matters. But I suggest that the individual unions, which are the really significant bodies, instinctively do not do the right thing. They do the wrong thing. The secretary of the boilermakers' union, seeing that boiler making is going out of fashion, naturally sets out to make sure, because the jobs of his members depend on it, that the maximum number of people continue to make boilers, even if no one want to buy boilers. It is his job to ensure that there are the maximum number of jobs for boiler makers.
The TUC put at the top of its list the preservation of jobs. It does not matter whether an industry is in a decline or on the up-grade. It is essential to keep working in that industry the number who have always worked in it, and every effort must be made to make sure that the optimum number of jobs in the industry are maintained, regardless of whether that industry has a future or a past and no future.
This Government listen exclusively to people who are imbued with that motive. They do not find out where the jobs will be tomorrow. Their main concern is to protect the jobs which were profitable yesterday. This is at the heart of so many of our industrial problems. We have managements in declining industries fighting with unions about maintaining the optimum number of jobs in their industries. The net result is the opposite of what the unions want. The result is that the industries go into decline even more quickly because, at a time when they are under pressure, they are forced to employ more people than they need.
Individual unions which are members of the TUC have strong hearts and weak heads. Their instincts are to preserve the glories of yesterday. They now have a Government who are dedicated to supporting them in their ill-thought-out objectives.
1721 Jack Kennedy, in one of his very best and most meaningful remarks, once said that an economy based on the apparently unrelated efforts of thousands of individual corporations, partnerships and individuals doing their best in the things that they knew best might not look efficient but was the most efficient basis for an economy that the world had yet worked out, because it was responsive and flexible. If the hon. Member for Perry Barr had his way, and Section 8 of the Industry Act was used more, it would do exactly the opposite of achieving the objectives of the Jack Kennedy-type economy. It would freeze people in uneconomic jobs. It would push into industry and into industrial management not commercial decisions but decisions on whether jobs could be preserved in this or that constituency. That would be the predominant feature—namely, whether we could keep the secretary general of the union representing the boiler makers happy regardless of whether in the national interest he should be unhappy. It would introduce into industry and into commerce a whole range of totally irrelevant and damaging considerations.
The hon. Member for Perry Barr and I can find some common ground. We both want to see the maximum number of people in meaningful, well-paid employment that will offer prospects. There is no difference between us on that score.
I hope that in my prolonged remarks—this is a matter which I care about passionately—I have perhaps given the hon. Gentleman cause to think that his way of going about these matters is the way that ensures that his and my objectives are frustrated. I just hope for his sake, and for the sake of the people about which he cares, working people throughout the country, that he and his right hon. and hon. Friends do not get their way. If they do, the very people they care about will suffer most.
§ 12.6 a.m.
§ Mr. Michael Grylls (Surrey, North-West)
My hon. Friend the Member for Hertfordshire, South (Mr. Parkinson) dealt somewhat cruelly with the remarks of the hon. Member for Glasgow, Mary-hill (Mr. Craigen) about the workers' co-operative in Glasgow. However, I think it was an occasion when he was right to 1722 do so. Nobody could take exception. My hon. Friend was pointing out an essential truth. He was trying to prove the fallacy of what the hon. Gentleman was putting to the House—namely, the theory that the salvation of the jobs of the people working for the Scottish Daily Express Group can be achieved by grasping at the idea of a workers' co-operative. That seems to be like throwing to a drowning man a life-raft with a hole in the bottom.
The hon. Member for Maryhill seemed to get carried away from the Glasgow scene. He suggested that the best thing for the country would be a national co-operative board. I think that those were his words. He suggested that co-operatives would be mushrooming throughout the country and that Britain's industrial problems would be solved if that were to happen. I do not know whether it is the late hour at which we are debating this matter or whether that is a flight of fancy on the part of the hon. Gentleman, but I find it hard to believe that he thinks that that is the best thing for the country. I can imagine no greater disaster than for the people who would be working in the so-called co-operatives to believe that co-operatives were salvation for the future. The future of the working people must be based on profitable industry which can pay high wages to those involved.
It seems that this debate is a dress rehearsal for the many debates that I am sure we shall have in the weeks ahead—I know that the Minister will play a prominent part in them—on the setting up of the National Enterprise Board, planing agreements and all the exciting matters to which we are looking forward so much. Rather like the threatrical dress rehearsal, this one is also sparsely attended. Never mind; perhaps it is good for all of us.
The hon. Member for Birmingham, Perry Bar (Mr. Rooker) opened the debate eloquently, but there was a certain lack of enthusiasm, or perhaps a lack of confidence that what he was saying was the salvation. However, he said one thing with very firm and clear conviction: that the Government and not industry will be in control of industry. In the whole Socialist thesis on industry, there is the most terrifying phrase. I can only imagine that the hon. Gentleman 1723 intended it. We heard it many years ago, when he and I were probably still at school, when someone else claimed, "We are the masters now" with equally disastrous consequences although in a different context. If this is continued, I can only suggest that total disaster will result.
In putting forward red-blooded Socialism for industry, as the Government put before the electorate to some extent and which we shall see developed a little more as this Parliament goes on, the burden of proof that it is right for industry lies with the Government. I hope that the Minister of State and the Secretary of State for Industry will do a little better than they did during the summer, when they trotted out a number of figures to prove that British industry had failed the nation.
§ Mr. Grylls
They trotted out untruthful remarks, such as British industry having had subsidies of £1.5 million a day. The Secretary of State would not make a very good accountant. He forgot the other side of the balance sheet—the fact that British industry pays to the Government some £6 million a day in corporation tax. He also omitted to mention that the subsidies paid by Governments of all complexions have been for specific purposes, such as regional policy, and particular projects, such as Concorde. He was trying to make this the basis of his case for nationalisation. He must do better.
Neither can the Secretary of State point to the record of the nationalised industries. Everyone with a fair experience of electioneering during 1974—certainly my hon. Friends—will have found no difficulty in convincing the electorate that, whatever arguments there may be for nationalisation, the nationalised industries did not present a good example. There have been losses and write-offs of £5 billion since 1962, and daily losses during the current year of £4 million. I do not want to give the wrong impression. I do not say that this has been entirely the fault of the nationalised industries. One accepts that all Governments have held down those industries' prices. But it is because Governments can do this that a muddle results. Therefore, this does not prove that one Government or another are right, 1724 but it proves that Governments should keep aside from industry and should not intervene except as an absolute necessity.
It is not very difficult to convince the average person—the floating person, as it were—that the nationalised industries are not among the most dynamic in Britain, to put it at its mildest. I want to quote just one industrialist, Sir Ronald Edwards, the Chairman of the Beecham Group. In a quite recent statement he said:I am convinced on stronger grounds than propaganda that we should do all in our power to prevent the growth of industrial control by the Government, because there is every reason to believe that it would reduce not merely industrial efficiency but individual freedom.I am sure that what he said is right. He went on to say that the appetite for intervention grew with what it fed upon. Having intervened in one field, the Government will find themselves forced to intervene in others. He said that as an industrialist, but as an industrialist who has led a nationalised industry for 10 years, so that he speaks with knowledge of the other side, as it were.
§ Mr. Rooker
The hon. Member quotes a former head of nationalised industry, but would he consider the remarks of Dr. Finniston, also the head of a nationalised industry, who openly advocates that it is fair game for the public to drag up an industry by its bootstraps, pouring in millions of pounds of public money, and that it should go back into private enterprise when it is making a profit? I can find one quotation for every one of his.
§ Mr. Grylls
We could spend a profitable night exchanging quotations, but Dr. Finniston was indicating that it would be better in the private sector——
§ Mr. Grylls
I do not think this is very helpful, but I was saying that here is someone who has worked for 10 years in a nationalised industry and is not a crusty industrialist only from the private sector knowing nothing outside that but perhaps a unique sort of person who has spent parts of his working life in both sides of industry.
§ Mr. Tom King
My hon. Friend will remember that the point which Dr. Finniston was making was that he felt the need for the discipline of outside shareholders in addition to the Government. 1725 That is why he was suggesting that it would be healthy for the British Steel Corporation to have the BP solution.
§ Mr. Grylls
My hon. Friend is right. The example of having some private shareholding would be good. It is no part of my case tonight to build it on Dr. Finniston or on anybody else, and certainly not on returning parts of nationalised industries to the private sector, because in some ways that is a fallow argument and we have a mixed economy of private and nationalised industries. To this extent I agree with the first few words of the fascinating document "The Regeneration of British Industry", in which the Government openly admit that we live in that situation.
I want to pluck out the industry which has been specifically selected to have its neck wrung in the spring: the shipbuilding industry. Many people would suppose that because it has been selected early in this Parliament for nationalisation it must have been failing the nation or that that is what the Government would like to suggest, but if one looks at the industry, as the Minister of State no doubt has done, and in his private moments must admit, it had a record order book of £1,426 million in August. The hon. Member for Perry Barr said something about the inefficiency of private industry, but one cannot say that about shipbuilding. In 1955, with 130,000 men, it produced 1.3 million tons of shipping, and in 1973, with only 69,000 men working in the industry, it produced 1.06 million tons. That is not a bad productivity record. It meant that there had been massive investment in a developing industry, and massive modernisation. This year—the year in which the industry's head is put on the chopping block by the Government—it will produce record shipbuilding figures of 1.5 million tons.
Where is the argument for nationalisation? We shall wait with interest to see whether the Minister of State gives us a glimpse in this dress rehearsal of the arguments which he will present when the Bill is introduced. However, I do not think that he has convinced the President of the boilermakers' union, Don McGarvey——
§ Mr. Grylls
—who was very alarmed before the list of firms was announced that possibly Upper Clyde Shipbuilders, which was being run by a Texas firm, would be nationalised. He was very anxious about the matter and said on 1st August this year:You cannot have a firm coming all the way from Texas to solve what seemed to be an impossible problem and then when things are going well nationalise it.That deal was fixed up by the last Conservative Government to maintain employment and preserve a yard. Dan McGarvey evidently agrees with that, and quite rightly so.
The same could be said of the aircraft industry, which can hardly be said to be failing the nation in view of the exports it is making and has made over the last few years.
However, one might imagine that the true reason is that a massive number of Labour voters are in favour of nationalisation. But that does not give the Minister of State very good evidence in favour of nationalisation. We are told in a poll that 48 per cent. of Labour voters are against nationalisation, and that only 30 per cent. are in favour of it. Leaving aside whether they are Labour or Conservative, over two-thirds of voters declared their firm wish not to have further nationalisation. I felt sorry for many hon. Members opposite—and it is no good the Minister of State scowling and waving his hand—who at the last election proclaimed the advantages of nationalisation. They must have had a very difficult job on the doorsteps.
However, perhaps it is not too late. There may be hope. The axe of nationalisation and the threat of increased interference were well described by Sir Ronald Edwards in a speech. He said that interference feeds on itself and goes on increasing. If that threat can be removed, the confidence which has been sapping from industry over the last few months will return, and if the Government allow it to return by changing their policies they will be justified in taking the credit for it.
§ 12.23 a.m.
§ Mr. Michael Marshall (Arundel)
I am glad to catch your eye, Mr. Deputy Speaker, at this late hour and to welcome you back to the Chair after what has been a sparkling day since half-past two.
§ Mr. Marshall
I am obliged, Mr. Deputy Speaker.
A number of important points have been made which have ranged widely over the question of general support to industry. There is every advantage in that. I am glad that the Minister of State, in his benign way, agrees with that and looks forward later to extending his repertoire to the full.
I wish to speak on the particular problems of the steel industry. In the Estimates there are one or two in-built problems, and I wish to join with my hon. Friends who have touched on some of the difficulties and drawbacks in the way in which the Industry Act 1972 is working as administered by the Government. I refer particularly to that part of Section 8 which includes the shareholding in the independent sector of the steel industry. It is the 2½ per cent. equity held in Dunford Hadfield Limited, of Sheffield. It is worth tracing to the House in a little detail how that equity shareholding came about and why it is of significance.
The 2½per cent. shareholding in that company was acquired fortuitously by taking over Brown Bailey, another Sheffield steelmaker. The Minister of State will recall that that company was to some degree a creature of the old attempt to rationalise the Sheffield steel industry when Government aid was made available.
Why do I single out what is, after all, a very small investment in that particular group? I do it for this reason. When we had the White Paper "The Regeneration of British Industry", in the list of companies shown as being put under the aegis of the NEB was Dunford Hadfield. It was listed with a Government shareholding of 2½ per cent. in the same breath as Rolls-Royce (1971) Ltd., a 100 per cent. subsidiary. In other words, it was 1728 listed as a company which, to all intents and purposes, appeared, as I shall seek to show, to be ripe for State take-over if the NEB is, as many fear, a vehicle for just that exercise.
What was the result? Within days—I cannot prove that it was so, but it was no accident—the share price for that group fell spectacularly, to the extent that it felt obliged to issue a statement pointing out the limited nature of the shareholding, the fortuitous way that it had arisen, and the fact that it had no intention of going to the Government at that or any foreseeable time in future for money. It is an unfortunate chain of events when even that type of shareholding is seen to have that range of consequences.
I have described that situation in a little detail, because my real concern is that the Industry Act 1972 is not being used in the way that was intended. It could possibly be of great value to our economy. I believe that there is a place for the Government of the day, whoever they may be, to act as bankers for industry in trouble on prescribed terms. I look to funds being made available on a loan or equity basis which can be floated off. In other words, I seek disengagement as soon as practically possible.
The difficulty—I have direct evidence from my own talks with independent steelmakers—is that they are reluctant to go to the Government for funds, because they take the example that I gave as evidence that they will automatically be branded as yet other companies on the shopping list and on the NEB route to outright nationalisation.
We have touched on nationalisation fairly widely. Therefore, I believe that the Minister of State could do this House and the country a great service if he would confirm, or give a pledge, that nationalisation of the independent sector of the steel industry will not be carried out. That would be in accordance with pledges made in this House by a distinguished predecessor of his, Richard Marsh. To many people in the steel industry who are going through a very worrying and difficult time, such a pledge would be of vital importance.
I make this point in the context of a desperate steel shortage in this country, a situation where steel today is being produced in a smaller total quantity than 1729 a decade ago when the whole industry was privately owned and was being freely criticised by hon. Gentlemen opposite. In this situation it is vital that confidence should be instilled into the independent producers, many of them small specialist alloy steel producers, who have shown consistent success over the last five years or so since the large nationalised sector grew up, and whose record of efficiency, profit and, indeed, general ability to serve the nation is an outstanding example against the nationalised sector.
Finally, I deal with the nationalised sector. If I implied criticism in comparing the independent with the nationalised sector, I should make it clear that I join those who feel that companies such as the British Steel Corporation are operating with one hand tied behind their backs. The hon. Member for Birmingham, Perry Barr (Mr. Rooker), in some generally good-humoured remarks, let himself go badly when he talked of the "master-servant relationship" between the public and independent sectors. I do not wish to hear of any such relationship in industry. "Partnership" is the word of the day, and that is the aspect that we should pursue.
But in the British Steel Corporation there are grounds for grave concern. We can see the terrible price it pays for Government intervention. I declare an interest in that I spent 16 years in the industry, leaving only at the time of nationalisation to seek my political fortune because I was so passionately opposed to nationalisation. Many of us feel that there comes a time when the "political football" argument cannot be pursued. Therefore, despite my passionate convictions, I have concluded that we must help to make the British Steel Corporation a success.
So I return to what the hon. Member for Perry Barr said about Dr. Finniston's comments. Experience shows that, having set about rationalisation, which is the primary justification for nationalisation, the next question which must be tackled is how best that industry can be run. What Dr. Finniston was suggesting was that greater flexibility and autonomy— in other words, a greater break with Government control and Civil Service intervention—was what the industry needed.
1730 I deplore suggestions that men of the calibre of Dr. Finniston and other managers of the British Steel Corporation are being created into a new breed of bogy-men. These people came in to do a job, or have served the industry for many years, with no axe to grind and no direct financial interest. They are, therefore, putting forward in good faith what they believe to be in the long-term interests of the industry.
It is this kind of long-term view that we must accept from the management of our great companies, whether nationalised or independent. This is what is now being so seriously affected by the passionate yen of Labour Members for State planning at all costs. I go along with the view that, in many ways, on both sides of the House we are striving for common objectives of full and meaningful employment, a better economy, and a sounder and greater Britain. If we are arguing about the means, we are entitled to respect one other's views. But now that the election hubbub has died down, the time has surely come when it is no longer necessary to trot out our performing sea lions, when we can look dispassionately, coldly and, above all critically at the best way of running our industry. By any objective study, by any objective attempt to see what is best in the long term, I cannot see how the depth of consideration by the Government will help our country. I hope that the Minister will be able to set our minds at rest.
§ 12.34 a.m.
§ Mr. Tom King (Bridgwater)
I congratulate the hon. Member for Birmingham, Perry Barr (Mr. Rooker) on his success in getting first place in this debate. It has had great advantage for all of us.
Perhaps the Minister of State and I share a certain disappointment that those interested in religious matters were so loquacious earlier in the day. Those matters seemed to be still before us when, by a slip of the tongue, the hon. Member for Perry Barr referred to "financial and monastery" matters. That was reminiscent of our previous debate.
I congratulate my hon. Friend the Member for Tonbridge and Mailing (Mr. Stanley) on the ingenious way in which, if not actually hitching his wagon to a star, he succeeded in attaching himself 1731 to a satellite in a rather different orbit and thus combined his subject with this debate. I welcome the spirit in which the debate has been conducted. Although we had a characteristically vigorous contribution from my hon. Friend the Member for Hertfordshire, South (Mr. Parkinson), who spread his attack rather widely and included me in the range of his bullets, the contributions have been sincere and worth while.
The note which the speeches struck, particularly that of my hon. Friend the Member for Arundel, was that of a sincere attempt to see our way as a country through these problems. It was exactly the way in which the debate should proceed. The hon. Member for Perry Barr managed to obtain this debate under Class IV, Vote 7, of the Supplementary Estimates dealing with the use of Section 8 of the Industry Act.
I had intended to suggest that this section was being used in a way never intended, and not permitted, by the Act. I thought that I might be challenged on that by the Minister. My work has been done for me, because the hon. Gentleman said that the section was being used in ways never contemplated by the Government which introduced it. We have already had a clear example of that with the Court Line episode. Then the Secretary of State proudly boasted that he was able to use the Conservative Government's legislation to achieve results. He was questioned on whether he would ensure that the shares of Court Line would be offered back to the public at an appropriate date. It may have been the Minister of State who, on that occasion, had to give the answer that the Act would have to be amended and made it clear that in its present form it did not enable the Government to achieve the sort of ambitions which they might have.
I regret that the hon. Member for Perry Barr suggested that there was somewhere a victory to be gained in the current economic situation. He said that, whereas industry had been in charge, the Government were now in charge. If there is one thing which we have learned it is that there is no question of a victory in these matters. There has to be a willing and voluntary partnership based on faith and trust. Any attempt by one 1732 side to say, "We are the masters now" leads to a spirit of divisive distrust which will utterly destroy any chance the country has of pulling through its problems. I hope that on reflection the hon. Member will feel that that was not really the message he wanted to give.
The economic situation is serious enough, and it is against that background that the use of Section 8 is critical. We are facing an industrial situation almost without parallel. The Minister will know, probably better than anyone, because he is privy to a lot of information from companies, just how serious is the liquidity position of many companies. The Chancellor made this abundantly clear in his Budget speech.
The hon. Gentleman recognised that many British companies face an almost fatal squeeze between the pressure of taxation, pressure of inflation, pressure of high wage demands and pressure of rising raw material prices. All these things have been welling up to create quite unprecedented difficulties which, as anyone with on-going commercial experience knows, are quite unknown in previous experience.
It is against that background that it is so important to know what the attitude of the Government will be. If there is one important message which should go out from the debate tonight, it is a clearer indication from the Minister of State of what the attitude of the Government is going to be.
My hon. Friend the Member for Ton-bridge and Mailing made yet another well-researched and perceptive speech. It is becoming indicative of one of his speeches that someone disappears from the official box to find the answer to a question my hon. Friend has posed and which the Department had not thought would be asked. It happened on Monday night, when we were discussing the Post Office. He made a penetrating speech then. This is a hallmark of the way in which my hon. Friend studies these matters seriously. I know that the Minister of State will not have objected to the depth of the questions asked by my hon. Friend, and I hope that he will answer them.
My hon. Friend made the point that what the Government's attitude will be is unclear. We have read in the Press about a number of matters, but they have 1733 never been announced in the House. We have read about Government assistance which will be given in one form or another, whether by guarantee of bank lending, by loan or by grant. We have read that some action is to be taken, but we do not have any clear pattern that we can identify, nor any clear criteria by which it will be applied.
I hope that the Minister of State can clarify the position, because undoubtedly British industry is in a weak position. The question is: what are the Government going to do about it? Are they going to approach the situation in a spirit of constructive support, of anxiety to help industry overcome its acute temporary difficulties? Or do they see the situation as a Heaven-sent opportunity to exploit it for their own party political advantage?
My hon. Friend the Member for Arundel (Mr. Marshall) referred to the need for confidence in industry, and the reluctance of companies to talk to the Government. This underlines some of the problems that the Government will have in reaching planning agreements. So many companies feel lack of trust in how Governments will use the information they supply and in what they will do. If I were in the Minister of State's shoes, I would feel that my biggest problem was to overcome this lack of confidence and trust and to get them to speak freely to the Government. But one can excuse British industry its lack of confidence. What is it to believe?
The Chancellor of the Exchequer, in his Budget Statement, spoke in a ringing phrase about believing in a vigorous, alert and profitable private sector. The Prime Minister has talked of a mixed economy, in which both the public and private sectors will be successful. But it took the Prime Minister himself to point out that the Chancellor's reference to the private sector had been taken from the Secretary of State for Industry's White Paper "The Regeneration of British Industry". No one had ever dreamed or supposed that a White Paper produced by the Secretary of State would talk about a profitable, vigorous and alert private sector. I think that goes some way to indicate how deep is the disbelief that that is the Secretary of State's attitude.
My hon. Friend the Member for Hertfordshire, South spoke vigorously but 1734 very much to the point about the folly of co-operatives if they are built on sand. There is no point in creating a co-operative just for the sake of having one. It must have real purpose. I am sorry to disappoint the hon. Member for Glasgow, Maryhill (Mr. Craigen). Any hon. Member will appreciate the cause of another hon. Member who is fighting for his constituents, but one of the most depressing things for the hon. Gentleman must be the knowledge that the Government have offered money provided it is matched pound for pound from outside sources.
One of the obvious sources of that money was other trade unions, but the hon. Gentleman knows that they have been singularly unforthcoming, because they have looked at the project and realised that it is an open sink. They have realised that their money might provide short-term relief in terms of employment, but they know that it will not provide a long-term salvation or prospects for the people employed.
Firms hear the Chancellor on the one hand calling for a vigorous, profitable and alert private sector, while on the other hand they see the Secretary of State for Industry apparently going off on a line on his own and pursuing these figments of co-operatives without any regard for the reality of our current industrial problems.
I remember a friend of mine at school who was once described as living in a world of his own in which he had great influence. When one sees the Secretary of State pursuing some of his propects one realises their total irrelevance to the main scale of our economic and industrial situation which is his main responsibility.
I do not mean this in any personal sense, because I know that their views are deeply held, but when one looks at the team of Ministers at the Department one realises the scale of the problem. Firms in the private sector wonder whether they can look to the Department for real help, support and sympathy in their difficulties when they realise that they have to talk to a Minister who has said—I think within the past year—that "our aim is to eliminate the basis of capitalism in this country".
1735 I respect the Minister of State as a person, and I know the strength of his feeling in this matter, but does he think that kind of statement can give private firms confidence that he is a person to whom they can talk and feel that he is on their side? That, in a sentence, encapsulates the difficulty facing private industry.
If it ever appears that the Government intend to support private industry in the present situation, there are howls of wrath from belong the Gangway, and early-day motions are tabled. This happened when the Chancellor of the Duchy of Lancaster suggested a scheme that might help private industry without throwing it into the arms of the Government. One might have reservations about how effective this assistance will be, but one is bound to notice the resentment amongst many of the Minister's supporters at the suggestion that money should be produced from a source that would mean the Government could not use the opportunity to exert the maximum influence on companies.
I move on to the question of the NEB. We see Section 8 and the NEB as items which are likely to work in parallel. I think it has already been suggested that there will be this relationship. We are conscious that the Paymaster-General, who is one of the few members of the Government with direct industrial experience, at an earlier date described the NEB as a dinosaur. He has often drawn attention to the appalling problems of bringing into the Government, the Civil Service and the Department of Industry anything like the sort of expertise and professional management skills which are needed in these fields.
Any Member of Parliament, or anyone in my own minor capacity in the last Government, who has seen the problem of recruiting chairmen and senior management to nationalised industries will know what an acute problem it is. Very often they are thankless jobs. They are not particularly well paid, and these people are very much in the public eye. Consider, for instance, the sort of ridicule and abuse which the Chairman of the Post Office has to endure and the letters which he receives when one old lady's letter takes three days to arrive and she thinks it is a matter for direct criticism of the chairman.
1736 These pressures which are borne by chairmen of nationalised industries may seem small, but they are very real, and they are much greater than those which affect chairmen of outside industries. I endorse what my hon. Friend the Member for Arundel said about the quite unjustified criticism which the hon. Member for Perry Barr made of the Chairman of the British Steel Corporation. If one has any real understanding of the difficulties and pressures of that job, one deplores the sort of easy criticism which any backbench Member, in the privilege of this House, can make. We should be very careful in the way we use that privilege, of which we should be very jealous, and not accuse people in tough jobs who work in extremely difficult circumstances.
If I were a potential adviser to the Government under the NEB and I were approached to advise on possible activities, I could not ignore the way in which the previous extremely experienced advisers of the Industrial Development Advisory Board have been treated. I put down a Question last week, which I believe the Minister of State answered, asking whether any changes were proposed. It is an insult to keep the same people on that board and studiously ignore every bit of advice which they give. The Minister challenged the amount of advice which it was suggested had been accepted. He will know that it is only certain items which reach parliamentary scrutiny. We are not aware of most of the other cases, in respect of which quarterly reports are received, as to how many times advice has been given and accepted.
The Minister knows the main cases, which are very much the subject of concern, where advice was requested. My hon. Friend mentioned them. In one case, the Court Line, advice was not even sought. In the case of the co-operative it was asked, and the advice, I understand, was strongly against, but the Government still felt that it was necessary to proceed.
My hon. Friend the Member for Surrey, North-West (Mr. Grylls) mentioned shipbuilding. It is interesting to reflect that when the Secretary of State for Industry was in the Opposition he tramped the country saying what a disaster the shipbuilding industry was and criticised the management, but when he came down to the serious proposals for 1737 the nationalisation of shipbuilding one of the first things he did was to make clear that the management would be expected to stay on because it would be needed. That, of course, was an honest realisation of the fact that there is no one else —no Ministers, no members of the Civil Service and no one in the Department— who could run a shipyard. The Government will be dependent on people with practical experience. The Minister of State could not run a shipyard.
§ The Minister of State, Department of Industry (Mr. Eric Heffer)
How does the hon. Member know? At least I have worked in one, which is more than he can say.
§ Mr. King
I have worked in a printing works, which the Minister has not. The Minister must accept that the Government will be dependent on the expertise, and it lies within the industries.
I was interested to see that in the context of worker control and worker participation Mr. Lyons, of the Electrical Power Engineers' Association, said that it was disaster to talk in such terms. He said that the unions were not ready for that, they were not prepared and were ill-equipped to cope with such a situation. If the hon. Member for Perry Barr feels that the unions have within their organisation a great reservoir of people capable of running major companies and industries he should realise that that is not the view of the Secretary of State for Industry in the case of the shipbuilding industry. The right hon. Gentleman has made clear there that the management would be needed in any nationalisation. The necessary outside reservoir of expertise does not exist.
Someone with much greater experience of the economy and industry than I told a group of us only yesterday that in the serious seituation in which we find ourselves only three things matter—manufacturing exports, invisible exports and North Sea oil. The whole economy at the moment is on a knife edge. We are at the mercy of a number of outside events, the only way in which we shall regain control of our economic destiny is by success in three spheres.
Just when all the efforts of the Secretary of State and his colleagues should be concentrated on these objectives they are indulging in divisive doctrinaire 1738 experiments in industrial reorganisation, workers' co-operatives and the backing of losers. Everything we have discussed tonight—regional policy, social policy, including the building of hospitals and schools, and everything else—depends upon the wealth we can create, retain and invest in this country. We have to earn our living in the world. The Government could not have picked a worse time to indulge in these activities.
The aims and ambitions of all hon. Members depend upon the success of public and private industry, and without that success all else is dust. Against that background, the attitude of the Government, and of the Department of Industry in particular is crucial. I hope that the Minister of State will address himself seriously to the question, as my hon. Friends have done, and do something to restore the confidence of industry that it can look to the Government for support and encouragement at a crucial time, to ensure that the private sector is indeed vigorous, alert and profitable.
§ 1.0 a.m.
§ The Minister of State, Department of Industry (Mr. Eric S. Heffer)
I am amazed at the vigour of hon. Members at this time of the morning. One o'clock in the morning is not my best time for debate. My hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) asked me a little earlier, "Is there anything you want?", and I replied, "Yes— to go home".
I congratulate the hon. Member for Bridgwater (Mr. King) not only on the vigour of his speech but on speaking from the Opposition Front Bench for the first time. I congratulate him on being, like me, in the unenviable position of speaking at this this time of the morning.
I thank my hon. Friend for raising the matter under discussion. It is regrettable that he was not able to make his speech at about 3.45 p.m. yesterday. We could have had a much better debate, not that I am criticising anything that has been said, but because we could have had the maximum publicity in the country. The issues are of the maximum importance, and need the fullest discussion.
Like me, most hon. Members do not want to be here all night, even though they like to take part in debates. Ministers, who have desks to go to in the 1739 morning, have no feeling of elation about being here at any time of the night unnecessarily.
Conservative Members are amazing. I have the impression from their speeches that all the calamities that have come upon British industry—lack of investment, liquidity problems and so on—have happened since the Labour Government took office in March. They know that that is not true. We have been discussing the matter seriously, and that sort of nonsense should be removed from the debate immediately.
It is self-evident that over a couple of decades there has been a failure in British industry to invest enough. In 1971 investment for each worker in British manufacturing industry was less than half what it was in France, Japan and the United States, and well below that in Germany or Italy. In spite of the measures since then, we have still lagged behind. Investment in 1972 and 1973 was significantly less than under a Labour Government in 1970. Therefore, to suggest that all the problems of lack of investment have arisen because of the Labour Government is not on.
When it comes to making effective use of our manufacturing equipment, we have been less successful than most of our competitors. Funds that should have been invested to improve and modernise manufacturing industries have been deployed elsewhere. During the past 10 years the rate of direct overseas investment by British firms has more than trebled.
I do not claim that the Hudson Institute's report is a bible. I do not argue that the conclusions of that report are necessarily acceptable either to me or to the Government, although it is a very interesting report. The Hudson report points out that our rate of investment has lagged behind that of our European rivals. According to the report, in 1972 the United Kingdom devoted 18 per cent. of its gross domestic product to investment, while Italy devoted 20 per cent., Holland 23 per cent., France and Germany 26 per cent. and Japan 35 per cent. On the basis of that report, it is clear that our investment rate has lagged behind those of all the other developed countries except the United States.
The Government are determined to deal with that situation. Revelant proposals 1740 have been made in the Budget by the Chancellor of the Exchequer. The Chancellor, the Prime Minister, the Secretary of State, and members of the Labour Party during the election made it clear that we intended to set up a National Enterprise Board and to establish a system of planning agreements.
The hon. Member for Bridgwater, in the most bland way, says that the Minister of State should tell us tonight that the policy upon which the Government were elected will be abandoned. I shall not do that. During the election we said we would deal with the problems of British industry. We meant that, and we intend to carry out the policy upon which we were elected.
The hon. Gentleman said that we must give confidence to private industry. That is an amazing statement. One would imagine that Ministers in the Department of Industry never met private industrialists, that there was a long line of trade unionists entering the doors of the Department of Industry and that industrialists never came. I probably meet more industrialists for discussion of their problems than I meet trade unionists. The doors of the Department of Industry are open to industrialists the whole time. There is no question of our not wanting to discuss their problems with them. We have met members of the CBI. If members of the CBI and industrialists are not convinced by what we say and are not prepared to co-operate, that is most regrettable. But I do not think it is true to say that.
Industrialists have become frightened by the type of campaign being pursued by the hon. Gentleman during and before the General Election. For example, the previous Government constantly talked about the list of firms which we intended to bring under public ownership. During the election campaign, material of this kind was fed into the constituencies saying that we were about to take almost everything into public ownership. That was not true, but I can understand why, as a result of that campaign, industrialists became upset and frightened.
One Opposition Member suggested that we should stop playing politics. I agree. But that means accepting the word of the Government about what we intend to do to deal with the problems in British 1741 industry by means of the policies on which we were elected.
§ Mr. Grylls
Is the hon. Gentleman saying that the Government have changed their mind from what they said in the White Paper about their intention to take into public ownership large sections of manufacturing industry? Has that policy now been dropped?
§ Mr. Heffer
The hon. Member for Surrey, North-West (Mr. Grylls) should listen more carefully. I said that we intended to carry out the policy which was in the White Paper and in our manifesto. I also said that there was never any list. The idea that we intended to take over 100 firms, just like that, was not true. But, in my view, it is that which has led to some companies feeling a certain amount of disquiet, to say the least, and I can understand that.
§ Mr. Tom King
I apologise for quoting the hon. Gentleman, but I seem to remember him saying that his aim was to eliminate the basis of capitalism in this country. He said that in supporting the motion which subsequently was defeated at a Labour Party conference, and that there should be a specific number of 25 companies. Perhaps other people read the newspapers, including industrialists, who are aware of this attitude of mind among certain Ministers. Might not that undermine their confidence in the Government?
§ Mr. Heffer
The hon. Gentleman must recognise that the Labour Party is a democratic organisation. Once we have decided at our conference a line of policy, and once it is incorporated in our manifesto and in Government White Papers, that is the policy upon which members of the Government and of the party base themselves. The fact that I wish to see eventually the total elimination of the capitalist system has nothing to do with the policy upon which we have been elected, and it has nothing to do with our written documents.
I remind the hon. Gentleman that there were many voices in his own party saying, long before their owners became Ministers, that in no circumstances would they ever agree to any piece of legislation like the 1972 Act. But they administered that Act, even though some of them disagreed with it previously. That is democracy and democratic politics. The hon. Gentle- 1742 man should not try to push that sort of door and suggest that that makes people uncomfortable. That is taking matters too far.
My right hon. Friend the Prime Minister spelt out the Government's policy last week at the Labour Party conference when, talking about the National Enterprise Board, he said:I believe that we have found the right approach—which for a generation we failed to find—to the problem of securing enough investment, and investment where it is most needed, in the form in which it is needed. This is a new and selective instrument for creating and financing investment where more generalised financial policies have failed. And where goes State money for investment, goes also public accountability and an appropriate public share in the equity. In place of hit-or-miss financial measures, based on vague hopes that somehow finance created will find its way into buildings and machinery and research and development, we shall inject public money, case by case, and plant by plant, where it is needed for exports or modernisation and to create new jobs in the regions.When the policy was outlined by my right hon. Friend the Prime Minister he said that it was not only good Socialist doctrine but, when the City puts in its money, good capitalist doctrine to suggest that there should be some accountability as to where the money was going. That is precisely what the Government are proposing.
§ Mr. Tom King
The Minister has fairly said that he meets a lot of industrialists who come to the Department. In a minor capacity I have knowledge that that is true. The problem is that the Department tends to meet the people with problems. The Prime Minister has said that the money will be put where it is needed and where it can be most effective. The problem is that the money tends to go to those with the biggest problems. They may represent the dying industries, the losers that are on the way out. How does the Minister suggest that the Government can identify the winners and ensure that the money goes to the winners? They are the people who are doing all right but who do not have the confidence to get involved with Government. They may be the people with whom the greatest opportunities lie.
§ Mr. Heffer
If the hon. Gentleman and his party had stopped making rubbishy noises about planning agreements many industrialists would have been 1743 happy to discuss planning agreements with the Government. That would not necessarily be—I hope that it would not be—with firms faced with difficulties. That is why we need to have planning agreements. We need to get right the location of industry along with the financial backing for the location and the investment required. Those matters must be based upon discussions with the Government and the trade unions. The agreements will be between the Government and the companies concerned.
Planning agreements operate in a number of countries. We are talking about not Eastern Europe but Western democratic capitalist countries. Planning agreements are operating successfully in many Western countries. Conservative Members have not done British industry any good by the campaign that they have developed not only against the NEB—I can understand that campaign —but against the concept of planning agreements. We believe that we have the answers provided that people are prepared to discuss their problems with us sensibly and honestly. I think that the Prime Minister was right when he said that the NEB was the biggest leap forward in economic thinking and economic policy since the war.
§ Mr. Heffer
Since the Second World War. Between the two world wars there was the Keynesian doctrine. That emerged not from the Conservative Party but from the recession and the ensuing crisis. It had to be developed to save industry and to deal with unemployment. I do not deny Mr. Macmillan's policy when he was Prime Minister—the policy of the middle way. To some extent that policy was related to the Keynesian doctrine-. Mr. Macmillan was the only economic thinker in the Tory Party who had any ideas on how to begin to deal with the problems of industry.
§ Mr. Nigel Lawson (Blaby) rose——
§ Mr. Heffer
No, I shall not give way. It is now 20 minutes past one o'clock. The hon. Member for Blaby (Mr. Lawson) came in towards the end of the debate. I do not wish to give way to anyone who has come in only for the end 1744 of the debate. Some hon. Members have been here throughout the debate, and if they wish to intervene I shall willingly give way. It is getting late. Some serious questions have been put to me——
§ Mr. Heffer
The hon. Gentleman really ought to stop being rude. He should learn, having returned to the Chamber again, to contain himself and to behave in a civilised fashion. I have seen him in the House for some time, and I have yet to see him behave in a decent, civilised manner during any debate in the House.
I shall deal with the point raised by the hon. Member for Tonbridge and Mailing (Mr. Stanley). It is true that I went to the box to consult a departmental official, but that was to clear up for my own benefit the point raised about NVT and Meriden. The position is that the £8 million for NVT asked for in the order— which has quite rightly been withdrawn at present because there are problems which we are endeavouring to sort out— was quite separate from the money advanced by the Conservative Government—£4.8 million. The £4.9 million for Meriden was in addition to the £8 million for NVT. I hope that I have clarified the position about that money.
On the question of co-operatives in general, a number of hon. Members spoke as though the idea of producer co-operatives was a totally uncharted water and that there had never been any producer co-operatives previously.
§ Mr. Heffer
That was more or less suggested. Perhaps the hon. Gentleman did not say it, but some of his hon. Friends said that these were uncharted waters. I think that those were the exact words.
The facts are that producer cooperatives have existed for many decades. If we examined the position we should find that whole numbers of these were formed under the Industrial and Provident Societies Acts. I think that about 1745 30 producer co-operatives are in operation at present. Therefore, it is wrong to say that these co-operatives are new as such. As a Government, we have suggested financial aid in certain cases to certain worker co-operatives. This has arisen out of the situation which developed in a number of companies.
§ Mr. Stanley
I take the hon. Gentleman's point entirely and I accept that producer co-operatives as such are not new. But as he himself acknowledged, what is wholly new is an offer of public funds to a co-operative. The points that he has not been able to answer so far are these. Exactly what is the legal status of that co-operative? In whom, within that co-operative lies the legal liability for the assets? Who has the responsibility legally, within the Companies Acts or outside them, for the management of the co-operative, and for those who are employed in it? What sort of normal statutory protection do people have in a co-operative compared with what they would have if they were working in a normally incorporated body?
§ Mr. Heffer
The co-operatives concerned have been having discussions with the co-operative movement. They have drawn up constitutions which are very similar to those of existing co-operatives. That will put them very much on the same basis as the existing co-operatives, so the protection will be similar to that of other co-operatives. They have not just done this out of the blue. Obviously they have had lengthy consultations and have gone into the whole legal basis. I am certain that they will be happy, sooner or later, to let the whole world see their constitutions, and so on, and how the undertakings will operate.
I shall deal with the Government's attitude towards the three applications from worker co-operatives. The Scottish Daily News and Kirkby are under Section 7 and Meriden under Section 8. The Government have taken specially into account the importance of these projects as experiments in industrial organisation. They are of great potential significance for industry generally, as well as for the determination and enthusiasm of the workers concerned and for their willingness to assume responsibility for making these projects successes.
In the Government's view, these factors provide important reasons for assisting 1746 certain workers' co-operatives. In addition to those reasons, there are important employment consequences in the case of the Scottish Daily News and Kirkby, in view of the high male unemployment in Glasgow and Liverpool. There is the export potential for the motor cycle industry in the case of Meriden.
The hon. Member for Bridgwater spoke as if the Government had totally ignored, overthrown, and got rid of the viability criteria. If we had done so, and the viability criteria did not come into our thinking at all, there are a number of other cases which I personally would be much more sympathetic towards and could help more than I have been able to, precisely because we operate under the viability criteria laid down in the 1972 Act.
That is not spelt out in the Act but there was a criterion which has been accepted as that which is worked upon. We are not, in that sense, working upon a criterion different from that of the previous Government, but we cannot give support only on the basis of viability. One has also to take into account employment, and I understand clearly that we cannot keep people in employment when there is no market for their goods. That is perfectly understandable; otherwise, if there is a massive recession, there could be between two and three million workers kept in employment without a market for their goods.
On the other hand, we, as a Government, are not going to allow a situation to develop where workers are put out of work purely on market considerations without endeavouring to deal with that in a way different from that in which it has been done in the past.
Unfortunately, I cannot deal with all the points raised, but I will try to deal with those raised by the hon. Member for Tonbridge and Mailing, whose speech was interesting, well-documented, and of a kind which makes most Ministers shudder, because they are crossing swords with someone who has done his homework. His point was about Scientific and Medical Instruments Limited. As my right hon. Friend's Press statement on 22nd October made clear, the Government intended to explore the best way to secure the firm future of the scientific and medical instrument activities of the George Kent group, which would be 1747 hived off into a separate company, Scientific and Medical Instruments Ltd. This company would face difficulties at its inception, and, in view of its importance, my right hon. Friend agreed to make available a bank loan under Section 8 to enable SMI to continue in business normally while arrangements are worked out to meet the long-term needs. As announced, the guarantee will come into effect only on the formation of the company, and it is currently stipulated as a maximum of £1.25 million. I cannot go beyond that.
On the question of Alfred Herbert, the Government have agreed to guarantee——
§ Mr. Stanley
Will the Minister of State confirm that the guarantee to SMI is still conditional on the successful acquisition of the George Kent Group by Brown, Boveri?
§ Mr. Heffer
If the workers, management and shareholders approve it, I do not know why the hon. Gentleman should say that the Secretary of State is wrong. Anyone can change his mind. The person who never changes his mind never does anything. That is a fair observation in relation to any Minister. If a Minister cannot change his mind when new facts are placed before him, there must be something wrong with him.
No new Government money has been involved with regard to George Kent. At a meeting on 14th November the shareholders accepted the proposals.
It is most regrettable that I cannot deal with all the points which have been raised. I have spoken for much too long, and there are other debates to follow this one. We have had a very good innings on this debate. I apologise for speaking at such length, but many issues have been raised.