INDUSTRY

HC Deb 04 November 1974 vol 880 cc700-830

Mr. Speaker

I have selected the amendment standing in the name of the right hon. Gentleman the Leader of the Opposition and the names of his right hon. and hon. Friends.

4.5 p.m.

Mr. Michael Heseltine (Henley)

I beg to move, at the end of the Question, to add: But humbly regret the disastrous proposals for the nationalisation of the aircraft, shipbuilding and off shore oil industries, the establishment of a National Enterprise Board and the imposition of planning agreements, which will lead to bureaucratic interference, further loss of confidence, damage to investment and rising unemployment. The House will agree that it has now become a statement of the obvious to refer to the crisis of liquidity and profitability facing British companies, and any last lingering doubts must have been dispelled by the Survey of Business Opinion in the Financial Times today. But perhaps only this Government could so firmly come to the House committed in the Gracious Speech to an expansion of …pvigorous and profitable public and private sectors of industry believing that this could be achieved by further nationalisation and State control.

The crisis in part is of world proportions but the factors that, in countries broadly similar to ours, have led to anxieties deeper than anything we have seen since the end of the Second World War have been deepened in this country by the squeeze of the last Budget and the intensification of price control which followed. The CBI, the TUC and the Bank of England only reinforce the Government's own statistics demonstrating beyond question that the shortage of cash is now imperilling investment and employment.

If we can agree that the patient is ill—and everyone does—we cannot, however, agree on the diagnosis or, indeed, on which doctor to send for. I suspect that many hon. Members opposite have a political vested interest in ensuring that the patient does not recover. Even the magnitude of the current crisis must not obscure the underlying debilitation that years of inadequate investment in this country have produced. We have consistently spent more and invested less than the equivalent economies of Europe. The latest forecasts indicate that even in the current situation facing us all, the growth rates will be higher in Germany, France and elsewhere in Europe than here. As the real wages in Europe outstrip our own, as the evident capital investment by other European countries manifests itself, and as the gap between the standards of living here and on the Continent widens, so we are faced not only with the need to restore industry's ability to invest but, equally important, to restore the will of industry to invest.

We are faced with the unpalatable duty to tell our people that, if we are to have a hope of keeping our place as a significant European Power, we have to forgo many of the things we want today in order to provide for ourselves a sense of purpose tomorrow. It is always easier for politicians in a democratic society to provide bread and jam today, but we shall not be forgiven if we preside in this House over a society that, year after year, has consumed and now borrowed its way to poverty.

The outdated factories, the slums, the hospital queues, the bitterness of the regions, are the prices that our people pay because, year after year, we have chosen to spend and not save some 5 per cent. more than our neighbours. The overwhelming criticism of the Gracious Speech is that it could have been delivered by any other Labour Government at any time in a good year or bad, in crisis or out of crisis. It sees and sets no challenge, offers no leadership and provides no hope. Nowhere in it are the real problems of industry even hinted at.

Yet the bad industrial relations, low productivity, restrictive practices, the need for a different quality of dialogue between board room and shop floor, and the harsh, unavoidable impact of competitive economics are the issues we should be discussing here. All we are offered is the delusion that more absolute State ownership can protect us and keep us immune from a world in which we have no choice but to compete. After 30 years of experimentation with State ownership, the aggregate of public endeavour is measured by capital losses of over £5,000 million and revenue losses in excess of £2,000 million.

Nationalisation has a record of Government interference for the short-term purpose of achieving political aims. Let us listen to the words of Richard Marsh, speaking in May of this year, when he said: None of the five-year investment plans we have produced has remained intact for more than six months because of the inability and unwillingness of Government to settle investment plans for more than an inadequate period ahead.…The cost to the taxpayer of the present short-term nature of the Government's method of allocating investment to the nationalised industries is frightening. That is the record of reality to which this Government now intend to commit yet further large sectors of British industry.

It is the Secretary of State for Industry who has pointed out that Whitehall lacks entrepreneurial flair—and no man in this House has greater cause to know that! The first priority today is to restore industrial confidence. No matter how careful the figuring or how sophisticated the calculations, there is a critical moment in any investment decision when the cold, arid facts give way to human judgment. That judgment depends upon confidence. That confidence in industry today has gone. Even if next week tax cuts restore the liquidity of companies and industries, they will not restore industry's confidence.

For that to happen there must also be restored the expectancy of profit. No one underestimates the difficulties of bringing this about when world conditions are so uncertain. But world conditions are no longer responsible for the danger that Britain is now moving into its worst-ever period of home-bred inflation which the Government seek to justify as part of a contract recognisable only in the eyes of its architect.

There are four reasons why profitability must be restored to industry. First, without it industry is unable to raise the cash for further investment and there is no way to restore the ability to invest in profitable undertakings without at the same time restoring the working of the capital markets. Secondly, no system of centralised bureacracy can prove so responsive or sensitive to the genuine requirements of industry and consumers. Thirdly, in practice we in Britain know that the machinery of government has proved incapable of exercising effective control of the public sector either for the public at large or even for Members of this House.

The final and most important reason of all is that the strength of the private corporate sector is the only guarantee we have of the widespread distribution of power throughout the community. It is the tragedy of this country that we are the only advanced economy where the sterile arguments for more State ownership are paraded so regularly before us. The most prosperous country in Europe, Sweden, after 42 years of Socialist Government, has achieved its prosperity because it left 95 per cent. of its industry in private hands.

Mr. John Tomlinson (Meriden)

Would the hon. Gentleman agree that when he talks about 95 per cent. of the Swedish economy being in private hands he has totally ignored the 30 per cent. of the Swedish economy in co-operative ownership?

Mr. Heseltine

I will come to the question of co-operation. It is an important point. [Interruption.] Very well, let me deal with it now. I see no fundamental objection to the concept of co-operation but my concern—[Interruption.] I am not denying the figures. My concern is that the experimentation with co-operation in this country is being built upon fragile and genuinely uneconomic projects which the Secretary of State picks up from the debris of companies in collapse.

There are five areas referred to in the Gracious Speech which have a major im- pact on industry. They concern the small businessman, the aircraft and ship manufacturing industries, listed for direct nationalisation, the establishment of a National Enterprise Board and the imposition of planning agreements.

The small businesses already employ 6 million people and account for 20 per cent. of our gross national product. Already rising bankruptcy rates reflect the pressures loading upon this sector. The Gracious Speech heralds the arrival of the wealth tax, which makes numbers of people wonder "Was it really worth the effort after all?" The insurance increases which are threatened in other legislation add to the burden of the self-employed as further Government imposts are put upon them.

There are two industries listed for nationalisation. Perhaps it will be appropriate to deal with the details of those proposals when the Bills are published. Suffice it to say that the presumption upon which these proposals are based must be that the real problems of those industries can be better solved when there is greater Government influence and control. If we look at the second argument —I do not believe there is evidence anywhere in the way we run our public sector that Government ownership or control has led to dramatically effective results. The Government argue that the shipbuilding industry has received £156 million in grants and, therefore, ought to be brought into public ownership.

There is no greater distortion of this argument than the "realities" which the Secretary of State has sought to build into it. Of the £156 million, £109 million has gone to those three shipbuilding companies that are either totally or largely owned by the Government. This leaves £47 million which has gone to the rest. Of that, £12 million has gone in loans at arm's length at market terms of interest and £25 million went on grants to protect our industry against subsidised competition from overseas. At the end of the day we are left with only £9 million to £10 million which has gone to the private sector.

That is the total financial case for bringing 13 companies into public ownership. It totally ignores the fact that virtually no help has been given to the ship repair or marine repairing industries which are also listed for public ownership.

In aerospace the record of Government intervention has been no more successful. Let us be clear that there is without doubt a need for a close relationship between the Government and that industry. It happens wherever the industry exists throughout the world. There is not a shred of evidence that public ownership will add one real dimension to the problems confronting the aerospace industry.

If we look at the areas where the partnership between Government and industry has been closest, in Concorde and the RB211, the reality is that Government and industry have been equally wrong in the forecasts they have made about the costs likely to emerge. The record of British European Airways over the Trident or BOAC over the VC10 destroys the myth of the real benefits that can come from taking companies over and trying to impose State-oriented plans upon the industries.

The damage to the mutual trust between Government and industry—and that trust has been gravely worsened by the threat of nationalisation—cannot be divorced from the difficulties facing Hawker Siddeley in its relationship with the Government. I listened to the Secretary of State for Industry this afternoon saying that he wanted written notice to answer a question about how many meetings he had had on this urgent matter. I was not surprised he sought to avoid answering the question. I should have thought that the right hon. Gentleman would have had a pretty good idea of how urgently he had dealt with the news which had reached him early in July that the Hawker Siddeley project was in real danger.

I should have thought that the right hon. Gentleman would have wanted to tell the House that it was weeks before he even held a meeting with the company and that nearly four months later he has stood back, aloof, more concerned to try to make a point which might have a certain relevance—I do not dispute it —in terms of relationships with the trade unions but which has no relationship to the urgency with which the Secretary of State should have dealt with the prob- lems facing the HS146 once they were drawn to his attention.

I suppose that it is arguable at least that a certain circumspection has come to the Secretary for Industry in the way in which he handles industrial affairs. Gone is the old panache with which he rushed in, without time to consult the industrial advisers provided under the Industry Act, to rescue, we were told, the holidaymakers booked through Court Line. Gone is the old spirit with which the Secretary for Industry regarded his enthusiastic partnership with Rolls-Royce. We have the Secretary for Industry's own words to describe the speed with which he was able to act in relation to Rolls-Royce and its negotiations with the Americans. The House may remember the words. This is the way in which he told it: At 5.30 on Wednesday 27th March, Rolls-Royce came to me and said that Lockheed had decided to go ahead with only two airline orders, and it required another £20 million, which it must have five hours later if it was not to withdraw altogether from the race…I have heard it said many times—…and seen it on television in 'The Power Game' and 'The Plane Makers '—that Governments are very slow when it comes to major industrial decisons, that only businessmen can take big risks at critical moments. Because my memoirs are not appearing in the Sunday Times, perhaps I can he allowed to give them to the House. In fact, five-and-a-half hours later—I noted the time in my diary—at four minutes past 11 that night I rang Rolls-Royce and authorised a guarantee not for £20 million but for £9 million to carry it over that four-week period.…That is the reality of Government-industry relations."—[OFFICIAL REPORT, 23rd November 1970; Vol. 807, c. 39] What a pity the Hawker Siddeley board was not treated with the same dispatch when it appealed for help. The reality has always been the same. The closer the relationship the larger the loss, and corporate wisdom has hardly been enhanced when it has been added to collective wisdom.

Anyone who really wants to understand the fundamental difference between private enterprise and what the Government describe as" vigorous and profitable public sector activity" should have come with me to the last day of the Farnborough Air Show this autumn. I do not need to remind the House of the major international significance of Farnborough to British aerospace. Every chalet was thronged with visitors from all over the world except for one chalet which dominated the show, perched high in the most conspicuous position. That chalet, and it was the chalet of the Secretary for Industry, had closed down—bolted and barred—a defiant tribute to the difference between private enterprise and public apathy.

The argument about public ownership has followed the course that could long have been expected of it. It is no longer enough to conduct frontal assaults on chosen industries. Now the State has to be armed with the ability to pick off individual companies for the National Enterprise Board. There is no more effective way to prepare the ground for this than to suggest that the whole of private enterprise is being subsidised by the taxpayer.

A figure of £2 million a day is produced as the psychological background against which to justify the latest addition to the weaponry of Socialism. Forget for one moment that industry contributes £8 million a day in taxes to the central Exchequer. Forget that private enterprise is a major contributor whilst the nationalised industries are a major liability. It is the underlying fallacy that I resent. For what is this £2 million a day? It is investment grants, which have now been abolished, it is Concorde and the RB211, which are special cases. Other than that it is largely development grants, Local Employment Acts, regional employment premium for industry and help to the regions. In other words, it is the social and political expenditure of Governments to subsidise our regions, to balance the economic compulsion of the South-East, to counteract the decline of traditional industrial patterns and to spread employment more evenly throughout Britain.

No one questions those objectives, but if anyone should be called to account for that expenditure it is we in this House as politicians. Indeed, it is worth while to reflect just how ineffective the House is in monitoring the money which is spent by Governments on our behalf in this way.

It is necessary for the image of industry to be redrawn to pave the way for the new approach which the Government seek to introduce. The rewriting of the language is an important aspect of the attempt to persuade a reluctant public to stomach the Socialist dogma so few people want. A new vocabulary is the familiar tool of propagandists the world over. The term "nationalisation" is unpopular, so let it be renamed "public ownership". The ragbag of earlier State excursions into British companies is glamourised under the heading "National Enterprise Board". Grants to the regions become "subsidies to private enterprise", and a bureaucratic system of planning agreements becomes "the regeneration of British industry". Perhaps most incredibly of all, the Secretary for Industry on television last week told the public that even if his planning agreement covered the top 100 companies, only 1½ per cent. by number of British companies would be affected. That is to equate ICI with the local window cleaner, or Unilever with the family business in which the Secretary of State for Industry learnt the first tricks of salesmanship.

Mr. Neil Kinnock (Bedwellty)

As an active servant of capitalism, does not the hon. Gentleman share the views of Government supporters that it is a bad thing that the 100 companies of which he speaks, although they represent only 1½ per cent. of the total number of companies in the country, control just over 50 per cent. of all the manufacturing facilities and wealth?

Mr. Heseltine

I believe that the British public are much more interested in the jobs they create, the exports they earn and the general sense of affluence they produce.

The Prime Minister's view is that the National Enterprise Board is to be set up to draw a clear divide between the public sector and the private sector, to bring a new commercial skill to Whitehall and to deploy a cool financial judgment to the investment of the taxpayers' money. That may well be the writing on the tablets of stone but they have sunk without trace on their journey to Victoria Street.

Within the past few months we have seen example after example of how that cool financial judgment has worked out in practice. We have seen the use of the Industry Act, when we were told that there was not time to consult the industrial advisers. We were told that in the case of Harland and Wolff there was no need to consult the industrial advisers. In short succession proposals for Meriden motor cycles, Scottish newspapers and Liverpool heating systems were put to the industrial advisers, whose advice was rejected, and the proposals were pressed on with as rapidly as possible. For in reality the Secretary of Industry is more concerned with the public political impact of his policies than with the health of British industry. To force British industry closer to his personal theories he is prepared to scatter taxpayers' money like confetti.

The present wage explosion which, predictably, we have been told the social contract is now not expected to contain, is one of the greatest weapons in the hands of people who wish to see British industry brought to the doorstep of the State. Without doubt, what is needed is a comprehensive review of the pricing policy, without which we shall find industry unable to stand on its own feet and unable to carry on with the job of investing and developing as it should be doing.

As the Secretary of State for Industry so clearly stated in this week's Labour Weekly, the rôle of public ownership is central to Labour's investment drive. It is not only because the unnecessary acquisition of profitable companies is a prime objective of the National Enterprise Board that we reject it. Even more important, we see it as an instrument for the more pervasive use of State power.

It is unrealistic for the Prime Minister to talk of a clear divide between the public and private sectors. The reality of the purpose of the National Enterprise Board is to be found on page 14 of the Labour Party's paper on the National Enterprise Board, the report of a study group published in 1973: The direct contribution of the NEB companies would also be matched by a 'pull' effect on private companies of a kind which previous planning and financial handouts did not promote—both because many private companies would be compelled to follow the NEB companies' lead, or lose market share and profit…".

Mr. Guy Barnett (Greenwich)

Hear, hear. Good competition.

Mr. Heseltine

Competition with the use of taxpayers' money, which is not good competition at all.

The reality was clearly indicated by the right hon. Member for Birkenhead (Mr. Dell), the Paymaster-General, who, on reading the National Enterprise Board proposals, gave his authoritative judgment: The management problems of this conglomerate can perhaps be imagined…one thing it would not be is an instrument of Ministers in solving Britain's regional and export problems…it is a bad idea. It derives from, a vision of monopolistic society, ruled by technocrats. That is the view of a member of the Labour Government who saw clearly the way in which that proposal is likely to work out.

The House will be as aware as I am that the National Enterprise Board is not without parentage. The experiment has been tried before, conspicuously in Italy, where, in the 1930s, IRI was set up. I do not believe that anyone would argue that history has shown that the Italians' regional problems, employment problems and industrial relations problems have emerged as a pattern of encouragement to the rest of Europe. But a fact that has remained lost in the obscurity of history is that the economic adviser to Mussolini at the time IRI was created was no less a personage than Signor Benni.

But the second negation of the Prime Minister's principle of the clear divide is the concept of the planning agreement.

Mr. John Stonehouse (Walsall, North)

Is it not of more significance that Tory Members of Parliament prefer to buy motor cars produced by the Italian NEB to choosing private enterprise cars made here in Britain? Is not that the fact of the matter, which proves that actions are louder than words?

Mr. Heseltine

I am sure that that is a message that the right hon. Member would like to give to people responsible for disrupting the flow of motor cars out of Britain's factories so that customers cannot get them.

I was saying that the second negation of the Prime Minister's principle of the clear divide is the concept of the planning agreement. We are told that such agreements are to be voluntary. Then why is an Act of Parliament necessary to set them up? When Chris Chataway was Minister for Industrial Development he held continuing discussions with our leading companies about their future plans and the impact of those plans on the regions, on investment and on employment. But the great difference was that those discussions took place in an atmosphere of trust. It is that atmosphere of trust which has been destroyed by the present Government.

The only other conclusion is that there are to be inducements or subsidies to companies to accept planning agreements in order to qualify for the grants or subsidies available to their competitors. It would be the proverbial case of an offer that nobody could afford to refuse.

The planning agreements are, of course, the handmaiden of the National Enterprise Board. Any company expected to reveal its detailed future expectation to the Government will be the totally exposed prey of the board. If the planning agreement projects decline, the company will not be able to counter a bid from the NEB. If the company projects succeed, then the NEB will know long before anyone else. The State will become the most sophisticated insider dealer or them all. It only requires the asset stripper to be rechristened the asset reclaimer for the process to have run full course.

The most likely consequence of the creation of a formal agreement is to create an illusion of control in Whitehall that will be completely overwhelmed by the reality. No one can predict the future with the accuracy that a formal agreement implies. But the nature of the Civil Service is to expect a degree of precision which industrialists know to be unattainable. Forward planning is a tentative exercise, but the information will be solemnised by the machine and will assume the rigidity of holy writ by the trade unions. The promises of the planning agreements could all too easily become running sores of misunderstanding and contention in the negotiations between industrial manager and employee.

Where are we to get the staff to monitor these plans? A new breed of technocrats cannot be created by Act of Parliament. Nobody who has the experience of administering the nationalised industries in government has the slightest doubt that there simply is not the apparatus to partner private sector industry in the administration of a concept as sophisticated and as bureaucratic as that of the planning procedures.

Nationalisation, the National Enterprise Board, and planning agreements, are only a part of the weaponry of those who have now forced them into the Labour Party programme. The purpose is not just to experiment with three or four more methods of Socialist control. The real purpose is to bring about a fundamental switch of power from private citizens and individual companies to the State—the irreversible shift of Socialism.

No clearer example of this can be found than in the controversy raging over the proposals for an investment bank. First, by taxing and squeezing industry, the Government destroy the prospect of profit. British investors refuse to invest and the capital markets are destroyed. A detached observer might feel that the urgent requirement was to restore to industry its ability to earn profits and thus to attract investment through a revived capital market. But Socialists want investment and not profit. They want the State and not the market to allocate the resources. Consequently, the Left of the Labour party stands firm in its determination that the capital markets must not be restored, thus, as they hope, forcing industry into the hands of the National Enterprise Board. The rest of the Government try to find a compromise by offering long-term lending without strings so that industry will have the opportunity to by-pass the National Enterprise Board.

In reality, neither proposal will secure the investment so badly needed. For what company will go either to the National Enterprise Board or to the proposed investment bank unless it sees a prospect of profit? The prospects are not there. Therefore, the answer is clear. In the main, only those companies seeking, not funds for investment but funds for survival, will appear at the door of the Government. The weakest will come running in a race to keep ahead of the bank manager, because, faced with a choice between the receiver and the Secretary of State for Industry, the latter will seem the softer touch.

But it is the British people who will pay, not only with the progressive elimination of freedom in society that these policies imply, but with their savings and with their jobs. The Prime Minister may have nothing to say about the Stock Exchange in the Gracious Speech except irrelevant references to attempts to corner national resources by financial manœuvres. But it is because nearly every family in the land have a direct stake in the Stock Exchange through their pensions, their life policies and other savings, which are secured on the value of British industry, that the collapse of the capital market represents a personal tragedy for so many.

But the most far-reaching tragedy which the Government's fiscal and industrial policies have done so much to aggravate is the present menacing level of unemployment. For those of us who sat through the last period of Labour Government from 1964 to 1970 the most bizarre memories were those of Ministers justifying each new level of rising unemployment with the rationale of the technocrat. The "temporary adjustments" became "shake-outs in industry" which, in turn, gave way to the " new opportunities for purposive redeployment". For the ordinary man and woman in British industry it was unemployment by any other name.

The process is beginning again. Falling confidence has always been the first of the storm cones, and confidence is now at the lowest recorded level. Investment cuts follow. The cut-backs are announced daily. No matter what steps the Government now take, the harm already done cannot be undone quickly enough to prevent unemployment from rising to levels not seen in Britain by my generation.

If there were an area of priority which I should have thought the Government would find attractive it is the need for a penetrating and comprehensive reappraisal of our attitudes towards unemployment. More than anything else it is the fear that the job will go that engenders distrust and fosters suspicion on the shop floor. The older the person, the more bleak the prospect. But the Queen's Speech is silent on a new urgency for retraining, on new schemes to encourage mobility, of any word about improving the quality of dialogue in industry.

The briefest survey of this nation's industrial problems leaves the clearest lesson that we in Britain do not have a surfeit of time. Elections and pre-election periods are not the easiest for politicians to make the call on people that the true nature of our crisis demands. Whichever party had been elected would have been expected to make such a call. The Government's response in no way measures the challenge to which the nation yearns to respond.

The Government's proposals are at best imbued with the sense of relevancy with which the sailors varnished the deck-chairs on the state decks of the "Titanic" [Laughter.] The people on the "Titanic" laughed just as hon. Members opposite laugh. They did not appreciate the disaster that was coming. At worst the Government's proposals in the Queen's Speech will divide where they should unite, destroy where they should create and wound where they should heal.

4.43 p.m.

The Secretary of State for Industry(Mr. Anthony Wedgwood Benn)

This is the first major debate on industrial policy held in this Parliament. When the legislation comes forward, there will be opportunities to examine the proposals that the Government intend to lay before the House. Those proposals include, as was clear from the Gracious Speech, legislation on North Sea oil which was forecast in the White Paper, and my right hon. Friend the Secretary of State for Energy, who will be winding up for the Government, will say more about that.

There will also be laid before Parliament a new Industry Bill to establish the National Enterprise Board, and there will be provision in it for the disclosure necessary to make planning agreements possible. This has all been set out in the White Paper published on 15th August which the House has not had the opportunity of debating until today. There will also be legislation to bring shipbuilding and the aircraft industry into public ownership. In that connection, it is clearly in the national interest, and in the interests of the workers and management in the aircraft and shipbuilding industries and of their customers, that in the period until vesting day the day-to-day operations of these two industries should continue smoothly.

I wish, therefore, to give an assurance that in the period up to vesting day no company or person will be penalised as a result of reasonable action taken in the normal course of business and in good faith. However, it is necessary to protect the new undertakings from dissipation of the assets to be nationalised or other transactions which would have the effect of frustrating the objectives of nationalisation. The legislation will, therefore, contain provision enabling any transactions entered into up to vesting day to be reversed if they are considered to be disadvantageous to the new undertakings, unless the Secretary of State has consented to them.

It has already been announced that these provisions will apply from 31st July 1974 for the shipbuilding, ship repairing and marine engineering industries, and they will apply as from today to the aircraft industry. The Government are ready at any time to discuss any problems which may arise in connection with these provisions with the companies concerned or with the representative organisations of the industry. We shall be prepared to augment these provisions in whatever way we consider necessary to safeguard the assets to be nationalised against dissipation.

The new undertaking will take over the companies to be nationalised as going concerns. Their commercial contracts will remain binding. Shareholders and long-term debenture holders will be compensated. Customers, collaborative partners, suppliers and other commercial creditors can be assured that obligations will be fully honoured under the new arrangements. There will be no lack of continuity in this respect.

Mr. Cranley Onslow (Woking)

I am grateful to the right hon. Gentleman for giving way. He has evidently finished dealing with that point, but can he tell us what arrangements the House of Commons is to have to monitor all this while it goes on?

Mr. Benn

I think that if the hon. Gentleman will allow me to complete my speech he will see not only that there will be legislation on all these matters but that the provisions of the legislation, as has been made clear in the White Paper, will provide for a high degree of parliamentary accountability. I shall be very surprised indeed if the hon. Gentleman—or the House—found it difficult to contribute continually to the debates on these matters, because it is my hope that that will happen.

The hon. Member for Henley (Mr. Heseltine), who opened for the Opposition today, was critical of our proposals. I must do the hon. Gentleman the honour of recognising that he has consistently been critical of these proposals—and I make no complaint about that—but the House will recognise that the Government have consistently advocated these policies. There has been no attempt on my part or on the part of my right hon. and hon. Friends to conceal our policies in any way from the electorate, and, therefore, nobody should be surprised that they are being brought before Parliament with a view to implementing them in full.

Unless every debate—as I feared would be the case when I heard the hon. Gentleman—is to be a perpetual re-run of the election campaign, we should use this debate to establish early what are the real arguments about our proposals—what are they really about, what are we not arguing about and on what should the House expect to find agreement?

Let me begin with this aspect: on what issues should the House expect, in the course of these debates over the forthcoming Session, to find itself in agreement? One must, surely, be the depth and extent of the industrial problem that confronts the United Kingdom. There is no question but that our industrial problems lie at the heart of many of the problems which we now describe as part of the gravest economic crisis since the war. In many cases industrial problems lie at the heart of the problems of inflation, of exports and of productivity. It has to be seen against a long-term, relative industrial decline which has gone on under Governments of all parties, including that of the Tory Party, when they had full opportunity to develop their policies with a working majority. There is another aspect: this country's industrial future needs and prospects.

Figures quoted by the right hon. and learned Gentleman the Secretary of State for Consumer Affairs before the February election forecast for Britain a standard of living that would be below that of Italy and just above that of the Republic of Ireland by the early 1980s. There has been a steady industrial decline for 25 years, and poor investment in private manufacturing industry has played a large part in that decline.

The wider problems of industrial relations have also been touched upon; not only wages negotiations but the whole question of relations within industry is clearly connected with this central industrial problem. If we add to that the intensification of those long-term problems by the oil crisis and the effect of the rise in oil prices last year, the confrontation associated with earlier legislation, and the three-day working week, we get some measure of the magnitude of the task that confronts us as we debate our industrial problems.

We may differ on the remedy but on the magnitude of the problems that face us the House should find some measure of agreement.

Mr. Tom King (Bridgwater)

Does not the right hon. Gentleman realise that all hon. Members accept what he said but that the words he has just uttered increase the magnitude of the problem to British industry? The longer the politicians continue to say how disastrous the state of British industry is—those words are read widely abroad—the harder is the problem. Would it not be fair of the right hon. Gentleman to recognise that this country faces problems—as do all other industrial countries in the world at present—and draw some comfort from the fact that this country exports a larger proportion of its gross national product than any of its major industrial competitors?

Mr. Benn

I appreciate what the hon. Gentleman says, but a Minister presenting an argument to the House involving substantial changes in industrial policy must be allowed, in presenting them, to do so against a background of real problems that go back a generation. I shall not make a point about whether the crisis was concealed from the public. My view is that we should all speak candidly to each other, without hyperbole. I have said what I genuinely believe, and I have, in doing so, indicated not any pessimism but the magnitude of the task that confronts us.

There is no disagreement between the two sides of the House on the principle of Government intervention in industry. Let us be absolutely clear on that point. No Government in peace time or in war time have ever intervened so directly and so intimately in the workings of private manufacturing industry as the Conservative Party when it was in power. It intervened directly through the Industrial Relations Act right into the workshop. It intervened through the Counter-Inflation Act right into every pay settlement. I think that it would be sensible, as we approach these debates over the next 12 months, if we could get clear from the beginning that it is not a matter of argument between us as to whether Government should involve themselves in industry.

The Labour Government have begun their period of office by reducing the intervention in the two key areas to which I refer; namely, by the repeal of the disastrous Industrial Relations Act and by the abolition of the Pay Board. I know many managers in industry who found that the Pay Board interfered more directly with their rôle as managers than any other single act of intervention.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

What about the Price Commission? Is that not the body which has done more damage to British industry than the Pay Board? When are we going to shop that down the river, too?

Mr. Benn

I was not claiming that the Labour Government had withdrawn all intervention. I said that in two key areas—[Interruption.] The hon. Gentleman has honourably Benn engaged in an argument with his own colleagues about this matter and now carries the argument to us. But it is no part of my argument that that withdrawal of intervention would be in the public interest.

What, then, is the argument about? This is what we need to have clear before we begin this session of debates. This argument is about four issues: first, in whose interests should one intervene; second, with what objectives; third, by what methods; and, fourth, with what reasonable expectation of success?

Mr. Eldon Griffiths (Bury St. Edmunds)

rose—

Mr. Benn

Allow me to finish this point. Our industrial policy constitutes a wide-ranging and, in our judgment, long overdue programme of industrial reform, and it is to the issues that divide us that I should now like to turn.

Mr. Eldon Griffiths

I am obliged to the right hon. Gentleman for giving way. To the four questions which he has posed would he add two more and be sure to give the House an answer this afternoon; namely, fifthly, what will it cost, and sixthly, who will pay?

Mr. Benn

The hon. Gentleman will have been in the House at Question Time today, when this question was put, and I think I must be allowed to develop my own argument in my own way. It is open to the hon. Gentleman to intervene as he has done in this debate publicly and in Parliament.

To come to the first question—in whose interests should intervention and industrial policy be pursued?—I am very surprised when I hear hon. Gentlemen opposite speak of industry as if the only spokesmen for it were the directors of major industrial companies. Clearly, British industry is the British people at work, and it is certainly with that in mind that we begin our approach to industrial confidence. We are arguing—it is a very big change and there is a wide difference between us on it—that those who invest their skills, energy and their lives, including managers, in British industry are entitled to at least as great a say in its control as those who invest their money in it. That is the first point we put before the House. The skills are not fully used—

Mr. Onslow

Mines?

Mr. Benn

If the hon. Gentleman wants to intervene he will have an opportunity to do so, but continual heckling does not contribute usefully to our debate. If he wants to speak perhaps he will rise to his feet and intervene.

What we are saying is that our industrial policy must be based upon the recognition of that fact of collective effort and joint decision, and that is the industrial component of the social contract.

Mr. Peter Rost (Derbyshire, South-East)

The right hon. Gentleman has referred to the social contract. Would he not agree that the millions of people who contribute their savings to industry to which he has referred, also have the right to be consulted under the social contract? What has the social contract done for those millions of people who have had their savings wiped out by inflation and the collapse of the capital market?

Mr. Benn

All I can say to the hon. Gentleman is that the first product of the social contract was the pension increase, which the trade union movement put at the head of its campaign, and anyone who observed the issues raised by the Labour movement and the Labour Party in the period of opposition will recognise that all the policies advocated were in the interest of the comunity as a whole. I shall return to that question again.

I come now to the question of the objectives which should now be adopted by us. The four traditional macroeconomic objectives of the balance of payments, full employment, stable prices and economic growth have been debated many times in the past. The Opposition's view has generally been that these problems were soluble by stimulating and guiding the market mechanism to make it work more perfectly. In practice, however, when in government, when they have come to seek to apply the principles —even those described today—they have abandoned their philisophy and adopted one of direct and. I might add, usually—as last time—unsuccessful intervention in order to resolve these problems.

The reason why we reject this approach is that it has not dealt with the growing problem of monopoly to which reference has been made—the 100 companies producing 50 per cent. of our output. It has not resolved the problem of regional unemployment. In the case of the last Conservative Government it has not brought investment up even to levels as high as when we left office in 1970, and it ended with a breakdown of consent. It is this failure that gives us the starting point for the presentation of our new policy.

We must explore new objectives, and I want to take up what has been said by the hon. Member for Henley in opening the debate. There must be a much greater emphasis upon jobs in our industrial policy. It is more than full-employment as a macro-economic goal that we must adopt. It is the recognition that it is through work that a man expresses his skill, acquires his self-respect and status, and gains his security. Therefore, it must be a key factor in any industrial policy to sustain jobs, create jobs, make jobs more secure and, furthermore, to see jobs not just as one of the balancing factors in a complicated national equation but as the heart and core of the needs of people and thus of our industrial policy.

I emphasise this with the threat of a recession ahead where we shall have to accept that, rightly, the British people will not again go through the experiences of the pre-war years. The arguments about the monetary solution, which are discussed within the academic circles of the Conservative Party and in their weekend speeches, which would involve deliberately creating unemployment in order to tackle the problems of inflation, are wholly and absolutely unacceptable. I am putting a point of view to the House. Whatever interest there may be in these debates about monetary solutions, they are absolutely alien to the policy which we are putting forward, and the British people will not accept them.

Mr. John Peyton (Yeovil)

The right hon. Gentleman is using brave words, but I wonder whether he would explain to the House how these disasters are going to be staved off?

Mr. Benn

My speech is an opening up, for the benefit of the House, of the arguments that we are having between us. If the right hon. Gentleman will listen he will find they are not about intervention. As I have said, they are about these other matters.

I want to offer the House my analysis. This is the beginning of a long series of debates. It is not the end of the matter. We shall be pursuing it further. Charles Wilson said "What is good for General Motors is good for the United States", and what we say is "What is good for working people and their families is good for Britain." There is a substantial difference between those approaches. For all of us, jobs come first.

That is not a theoretical matter. It is a practical matter that presents itself to Ministers on a day-to-day basis.

Mrs. Elaine Kellett-Bowman (Lancaster)

rose—

Mr. Benn

I have given way several times. I must be allowed to continue. Has the hon. Lady a question?

Mrs. Kellett-Bowman

Is the Minister aware that the measures in the Chancellor's Budget for squeezing cash liquidity are causing severe de-stocking throughout the land? That is adversely affecting many firms in my constituency, and many are on a three-day working week and many are declaring large-scale redundancies. Would he please ask his right hon. Friend to do something about that most urgently in his November Budget? We shall otherwise be facing far worse unemployment in Lancaster than we have had since the 'twenties.

Mr. Benn

As unemployment rose to more than I million in 1972, in addition to the three-day working week in January, which led to enormous lay-offs, the hon. Lady will recognise that the industrial problems facing Britain go back some time. I made that point earlier.

I want to come to the practical effects of what I have said. As in the case of Court Shipbuilders, for example, where 9,000 jobs were set at risk by financial speculation in the company, it is absolutely right for the Government to intervene to safeguard jobs.

According to Press reports, two brothers own 56 per cent. of the shares of Ferranti. Suddenly, that great enterprise, with some 14,000 jobs in development areas, is in difficulty, and it is absolutely right for the Government to go in and ensure that the necessary operation is carried through.

In the instance of Alfred Herbert, 6,500 jobs are at stake in a company whose problems are very deep-seated and go back to before the February election. The imminent problems of that company were the first to be put on my desk in February. It is right for the Government to go in to safeguard employment.

Other examples are the firm of George Kent, the motorcycle workers at Meriden, and the people at IPD. IPD has had six or seven different owners over the past 12 years. The men have been thrown on to the mercies of the receiver on two or three occasions. The male unemployment rate in Merseyside; is 9.5 per cent. I make no apology to the House for approaching the responsibility that I have in this field by seeing that jobs are sustained, created and strengthened in practical terms, and that is what I intend to do.

Mr. William Molloy (Ealing, North)

Would the Minister be good enough to add to his list the firm of Rockware in my constituency? It was driven out—I know it is funny to Conservative Members when 1,000 men lose their jobs—and the glass container industry savagely damaged because of the predatory activities of people like Slater Walker, who drove Rockware to the point of having to sell its factory to keep another two, while the products that were made at Greenford are now being made in Western Germany.

Mr. Benn

I, like my hon. Friend, regard it as totally unacceptable that workers should be regarded as pawns in a game, the principal objective of which is simply to make money in some other way. It is absolutely wrong, in my judgment, that workers who have devoted their lives to an industry should come—as often happens, and is happening all the time—to their place of work and find a notice announcing a redundancy as a result of a decision that, in many cases, has been taken months earlier and has been taken for reasons that have no bearing whatsoever on whether these people could earn their living by the exercise of their skill.

Mr. Greville Janner

rose—

Mr. Benn

I must not detain the House too long. I know that there are many hon. Members, of different parties, who at one time or another will be coming quite properly to the Department of Industry with examples of this kind themselves, and they will be correctly speaking on behalf of those whom they represent in Parliament.

I know the argument that if one is too concerned with saving jobs there will be some ossification of the industrial pattern. I have heard the argument put very strongly. Against that, I ask the House to consider that if it is generally thought —particularly at a time when world unemployment levels may be rising—that the Government are not concerned with jobs, ossification may be avoided but at the same time the arthritis of restrictive practices throughout industry will be reinforced, and they derive most of their strength from the fear, which unfortunately is correct, that unless people defend themselves in some way they will have no chance of retaining their jobs.

In every case, in so far as it is open to me to do so, I shall seek time to examine the real nature of the problem, which is not at all revealed by what may be the short-term market situation, and see whether it is possible to find an answer to these problems.

The Tory Party totally misunderstands the mood of salaried management if it does not realise that salaried management is as keen that this should be done as are organised workers in industry, because salaried managers who do not own the businesses in which they work have far further to fall if they become the victims of closures or redundancy. They do not find in the hon. Gentleman's rhetoric the comfort that they find in believing that we shall look at the firms in which they work with a view to giving them a long-term future through higher investment and higher productivity; and if public money goes in on that basis, frankly there should be full accountability for it.

Mr. David Crouch (Canterbury)

rose—

Mr. Benn

The hon. Gentleman must excuse me. I have a little more to say, and I do not want to prevent other hon. Members from speaking.

The third difference between the two sides of the House is difference of method. I said in March when I spoke on the Queen's Speech, and I say it again, that, as a Minister responsible for this policy, I reject absolutely the way of confrontation which characterised the previous Conservative Government in their industrial relations legislation. It was a disaster to try to impose upon industry a legal framework, with the lawyers coming in and enforcement by law in an area which requires a measure of consent.

I intend, and I believe, that our planning agreements and the National Enterprise Board in their actual operation will win wide consent in British industry. Our interest is not, and never has been to have civil servants running British industry. The hon. Gentleman should read what is said more carefully. If there were 20,000 civil servants with Ph.Ds. in business studies at the disposal of the Department of Industry, it would not raise British production by 0.0001 per cent. That is not what it is about. That is never what it has been about.

What we are determined to ensure is that those who have devoted their lives to industry shall not be excluded, because they are not shareholders in the firms in which they work, from exercising the right to shape and plan the work they do, and the re-equipment of the firms in which they work, and to secure for themselves, their children and the communities in which they live greater security than they can achieve under the unacceptable face of capitalism, of which we have seen so many examples.

At the heart of our proposals lies not the vast apparatus of bureaucracy but the simple measure of disclosure, because if there were comprehensive disclosure to workers in industry the information available to them would be the basis on which they could make their influence felt and at the same time contribute constructively to the development of the firms in which the work. It is the extension of the industrial franchise that really lies behind our concept of this shift of power, not the transfer of power from management to Ministers but the sharing of power by those who work in industry—at least a sharing—with those who own.

In this first general debate I would say to the House that, for my own part, it is not the mechanics that are important but the objective. It is not the details of the legislation that should excite us at this moment, but the fact that we are seeking to set a new course upon which we recommend the nation to proceed.

I turn now to individual cases. The hon. Gentleman spoke earlier of planning agreements. I told the CBI and the Association of British Chambers of Commerce last week that 90 per cent. of the value of planning agreements will come from what is contributed by workers in the firms concerned, and 10 per cent. will come from the Government. What is that 10 per cent.? It is the simple requirement that any Government of any party would wish to inject into industrial decision-making— investment, exports, location. It will not be an attempt to manage firms in which planning agreements will operate.

As to the National Enterprise Board, I must say to hon. Members of all parties who represent areas of high unemployment that there is no chance whatsoever of dealing with the deep-seated problem of unemployment—in Merseyside, the North-West, in Scotland or Wales—if we rely solely upon the market system, even if it is amplified and assisted by general regional aid.

Mr. D. E. Thomas (Merioneth)

Can the right hon. Gentleman give us an indication whether the powers of the NEB in Wales will work through the proposed Welsh Development Agency?

Mr. Benn

Yes. That is clear from my White Paper and the reference in the Gracious Speech to the fact that we do not even intend the NEB to be centralised in its operations. I assume from the hon. Gentleman's question that he, too, wishes to see the direct generation of employment in areas of high unemployment by public enterprise, which will itself be fully decentralised to meet need.

When, as it will, this message finally gets through the great cloud of distortion that has surrounded our policy on areas of high unemployment—and no one has done more than the hon. Gentleman to obscure what this is about—those areas will see the National Enterprise Board and the planning agreements as a means of bringing jobs to them and of sustaining and creating jobs. With all his market mechanism, the hon. Gentleman could not possibly hope to achieve that, however much he intervened.

Mr. Heseltine

I wonder whether the Secretary of State will understand that, no matter how comprehensive the machinery he sets up, no matters how good the intentions and how general the verbiage, he will do nothing to help the regions if he does not allow a thriving, profitable industrial base to be recreated in the private sector.

Mr. Benn

All I can say is that if I had the hon. Gentleman's past, I would share his pessimism. But I do not feel that such pessimism is justified; I do not share it. The hon. Gentleman tried his methods. There were two periods of policy—the Selsdon and the intervening periods—and neither succeeded in dealing with these underlying problems.

Finally, I put to the House as carefully as I can an assessment of the prospects of success for this policy. We are confronted by a very difficult situation. There is certainly no easy or quick way to reverse a 25-year decline. I believe that a five-year industrial recovery programme, starting now, has some reasonable prospect of success. We would not advocate it unless we believed that. There is certainly no Act of Parliament, not even a new Industry Act or an NEB, that provides a short cut forward, but we offer this programme to the House, and through the House to the country, as being relevant and in the national interest. We believe that there is much support for it now and that the support will grow. I commend it to the House.

5.21 p.m.

Mr. Nicholas Fairbairn (Kinross and West Perthshire)

There falls to me the rare honour of paying a universally heartfelt and greatly deserved tribute to a former Prime Minister and a most distinguished and successful Foreign Secretary, Sir Alec Douglas-Home, one of the greatest statesmen and conciliators of this century, a most respected Member of this House, and a beloved representative of my constituents in Kinross and West Perthshire. Sir Alec's counsels will be greatly missed in the public life of Great Britain, and his inspiration places upon me the special duty of making such contribution to the deliberations of the House and the life of this country as my meagre abilities may provide.

The life work of Sir Alec Douglas-Home illustrates how much greater is the contribution that Scotsmen can make to world affairs through the indissoluble partnership of the United Kingdom than they could make in isolation, and the great benefit to the reputation of Scotland which our right to representation in the Parliament of Great Britain obtains for us.

There is in this great, powerful and inventive nation a crisis, but I believe that it is a crisis not so much of economics as of confidence and morale. I see in prospect in the last quarter of this century a great period for our country in the service of civilisation, if we will but be true to our principles and traditions. The briefest glance at the recent voting figures discloses that the people overwhelmingly voted for a Parliament of statesmanship and not for a Parliament of politics, and there lies, I humbly believe, on each one of us, but especially upon the Scots, who look forward with bright hope to the future, the duty of inspiring the national renaissance.

I believe that the people of this country now realise that the division is not between right and left, or worker and management, or class and class, but between the tolerant and the intolerant, the self-disciplined and the indisciplined, the self-restrained and the self-seeking. I greatly regret that the inescapable conclusion which the Gracious Speech forces upon me is that it is the intolerant, the indisciplined and the selfish who have, for the moment, won the day.

The tenor of the threatened legislation seems to move our way of life from a free country where what is not generally condemned is freely permitted to a State where what is not compulsory is forbidden. The announcement by the Secretary of State for Social Services that private beds are to be forbidden is a foreboding omen of the slide to a dirigiste society whose main fetter is nationalisation, a process which removes power and ownership, not from some hands into all hands, but from any hands into the amorphous clutches of bureaucracy and the State, and thus restricts the liberties and choice of us all.

I suppose that the oldest State industry is the Forces of the Realm. The Gracious Speech proclaims the Government's intention of ensuring the maintenance of a modern and effective defence system while reducing its cost as a proportion of our national resources. That would be a commendable achievement at any time, an impossible one at a time of rampant rising costs. Either we are to have the same for less or we are to have less for the same. If, as I fear, it means the latter, none will be more pleased than those to the east of us who are continually intent on the weakening and destruction of this country as a power and democracy.

But if it means that we are to get the same for less, can we hope for a similar miracle in the other nationalised industries? Can we hope that the coal, electricity and transport industries will give us more for less, or will the taxpayer receive inferior services for an ever-increasing proportion of his income and of our resources?

The first result of nationalisation is centralisation of decision, usually in London. I am dismayed that the localisation of governmental decision should be proposed in the same breath as the centralisation of industrial decision, with the inevitable destruction of such Scottish firms as have, to their credit, resisted the seductive advances of the sirens of English and foreign companies.

The second result of nationalisation is that the State, or, as the public see it, the Government, becomes the employer. As employers, Governments have neither the heart to be fair when the employee has a tradition of discipline and service —as nurses, police and now teachers in Scotland will confirm—nor the guts to be strong when the employee is powerful and Left Wing, such as the militants in the NUM who are demonstrating for the second time in a year—what the Prime Minister calls the "big battalion philosophy". With or without the productivity deal, it looks like being a cold, expensive and bitter winter.

There are at work in the country forces of revolution and disintegration, ruthlessly determined to secure their interests and the interests of their dominies. Against these forces the Government have raised and wave, with perhaps genuine but, nevertheless, naive feebleness, the already shredden banner of appeasement and surrender—a social contract.

For all its much vaunted magical powers, this now tattered remnant of hopeful haberdashery did not deflect or diminish by even a penny the suicidal settlement of the lorry drivers' disputed claim in Scotland, now spilling into England, for an increase of 40 per cent. to 50 per cent. on basic rates—suicidal not just for employers and the community but, much more tragically, for the families of the impendent beneficiaries.

It is almost as if we wanted to pull down the pillars of the temple and revel in the rubble of our national collapse. The first victims, if not the intended first victims, will be those who show discipline and self-restraint, are self-employed or self-sufficient, who set high standards for themselves and higher horizons for their children, in the forefront of whom is the farmer.

I note that Further measures for the protection of consumers will be brought forward. But what of the producer? The best protection of the consumer at this time is the salvation of the producer. We are promised continued discussion with the farming industry. Banks do not lend on security of continuing discussions. In my constituency for an increasing number of farmers even help now may be help too late, and the continuing discussions will be but a requiem on their bankruptcy.

The Government are forcing the farmer this autumn to kill the cow that lays the golden calf, and while initially they will reap only the bitter anguish of the farmer, in two years their prize will be the wrath of the consumer whom they have attempted to seduce at the producers' expense. The greatest act of statesmanship that any Government can undertake at this time is to set in motion plans to ensure that we are self-sufficient in food by the end of the century, by which time, with the doubling of world population, those nations which are not will not eat.

I desperately request the Minister to forbid the import from Ireland of live cattle of unknown origins and increasing number, and to permit the export of live British cattle to Europe, from which so many of the so-called Irish cattle come; and I desperately urge him to come to the rescue of the most restrained, dedicated and essential industry in our land.

I note also at this time of necessary national thrift that Legislation will be introduced to provide additional protection for people booking overseas holidays and travel who suffer loss as a result of the failure of travel organisers. Why should such people, who could for a trivial sum insure their holidays, obtain protection at the expense of those who pay tax on the meagre income from their savings, of their already taxed life-time incomes, who have never had the means to enjoy, or who, on account of their thrift on behalf of their families, have forgone such luxuries and taken their holidays—if any—in our own country? In my constituency, which is as beautiful a part of God's earth as may be found, there are many men and many women who after a lifetime of service have suffered great loss in the value of their savings, their businesses or their shops, particulary since February, many who invested in the nation in the time of peril by buying War Loan, many who bought an annuity, or saved for a modest pension, many who invested in beef production, who have suffered great loss. Are they, in reward for their diligent lives, to be protected, or is protection only to be for the foreign holidays of the industrial worker who expects the community to provide for his retirement and whose unresisted demands enable him to book a holiday abroad?

The Prime Minister, in his ministerial broadcast, promised a partnership between the Government and the whole of our national family. Are those who have done their best for their families and been the most diligent, enterprising and self-sacrificing to be omitted, or are they to be included only for the plunder of what they have saved? Let us be clear that the promise in the Gracious Speech about the redistribution of wealth is a promise for the reduction, or the destruction of capital saved and invested. Upon confiscation, the accumulated savings of the nation will be spent by the Government on nationalisation, if nothing else, and no other person in the community, however humble, will be its new recipient.

While on the subject of capital, may I observe that in his eloquent maiden speech, the hon. Member for Perth and East Perthshire (Mr. Crawford) advised the House that an independent State of Scotland would have one of the lowest interest rates in the the Western world. With a rate of 15 per cent. or more in the neighbouring kingdom of England, that should effectively ensure the flight of all risk capital from the little tartan, oil-fired, Ruritanian tax haven that is to come and make Scotland a land of disillusion, deprivation and despair, but with this distinction—there will be no British Government to blame for it.

I repeat that there are forces of anarchy and disintegration at work in our country. I observe with relief that Her Majesty's Ministers will continue to act decisively against terrorism and lawlessness. I trust, therefore, that the Home Secretary will be able to assure the House that yesterday's speculative reports that he is considering parole for the so-called "flying pickets" who were convicted of lawlessness backed by terror are without foundation, for the people of this country will not stand for that. Last week saw three examples of the cowardice and horror of terrorism—one in England aimed at a Minister of the Crown. One in Northern Ireland aimed at the forces of the Crown. And one across the Channel in Scheveningen. The characteristic of the perpetrators of these outrages is that they are cowards. There are no applicants for martyrdom amongst their seedy and fanatical ranks. They are as jealously concerned for the salvation of their own lives as they are contemptuous of the lives of their random victims. The one decisive step which the Government can take is to treat all acts of terrorism as acts of treason or acts of war, for which the appropriate penalty is death, and to enter into international agreement that all such acts will be treated accordingly, for who can deny that the events in Scheveningen could not have occurred if the malefactors had been executed in the first place?

I hope that I have said nothing in the course of these remarks which offends the traditional generous indulgence and indulgent generosity of this House. What I have said I have said from my heart, and what I have said, I trust, reflects the beat of the heart of the people of our country.

5.35 p.m.

Mr. R. E. Benn (Rochester and Chatham)

I am sure that the hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn) will not expect me to comment on his remarks, since I rise to make my first speech in this House.

I begin by paying tribute to the former Member for Rochester and Chatham, Mrs. Peggy Fenner, who represented the constituency for four years and in that time served with distinction, rising to junior ministerial rank, which is no mean achievement in this Chamber.

As most hon. Members will be aware, the principal employer in my constituency is Chatham Dockyard, or, to give its modern title, the Navy base. During the recent election campaign, there was a great deal of talk about the delay of the Government in publishing their defence review. There was irresponsible speculation, nationally and locally, about the possibility of one or more of the dockyards being closed. I am glad to say that the electors of Rochester and Chatham accepted the assurances of the Under-Secretary of State for Defence for the Royal Navy and of the Prime Minister that the future of Chatham Dockyard was safe. But defence rôles and demands are changing. The modern warship is much smaller than its counterpart of 20 years ago. It is composed far more of electronics and computer equipment. So the traditional skills of the shipwright, the boilermaker and other trades are no longer in such demand. The Government are aware of this and have taken steps to ensure that outside contracting work comes into the dockyards. At Chatham the first contract is due later this month.

There is another change on the industrial scene in my constituency—that of North Sea oil. Hon. Members may be surprised to see that this comes so far south. A company has been established on the banks of the Medway to construct a jack-up rig. Other companies have expressed an interest in moving into the Medway area, undoubtedly attracted by the skill and talent in Chatham Dockyard. I hope that the Government are aware of this, because there is the danger that highly skilled men will be attracted away from the dockyard, thus upsetting its stability.

I think that we have an opportunity in the Medway of realising the full potential of the dockyard, but it needs investment and management expertise. I am sure that we can carry out some of the necessary North Sea construction work in Rochester and Chatham. I read reports about the future expansion of the North Sea oil industry and that it is threatened by the shortage of skilled labour. Again, Chatham Dockyard can make a contribution here. For many generations now it has provided skills and training unequalled anywhere in the country. These skills are needed even more today. In my view, the Government should consider expanding this side of the dockyard's activities.

My main interest, however, is in the building industry. I was interested to read a speech made outside this House by the Secretary of State for the Environment in which he spoke of introducing means to speed up the housebuilding programme. There can be no doubt that we need to speed it up. The latest statistic prove that it now takes a quarter of the time longer to build the average local authority house than it did just four years ago.

The present housing and construction statistics contain another interesting fact. It is that no fewer than 81 different types of industrialised or rationalised systems are in use at present. That is far too many. If we followed continental practice, we could cut the number down to fewer than 10, and I suggest that that should be one of our first priorities. A body set up with Government help in 1963 called the National Building Agency was founded for this very purpose. Unfortunately, after doing a great deal of work in the 1960s and early 1970s, its sphere of influence was changed in 1972 to concentrate on the rehabilitation of housing. In my view, the time has come to review this policy, and perhaps the agency should be given back its old rôle of examining new construction methods as well as the problem of rehabilitation.

I speak as one who is familiar with the building industry, and I appreciate the pledge in the Gracious Speech to look at "the lump" and to introduce new legislation. But that is just the tip of an iceberg. The safety record of the building industry is scandalous. The Chief Inspector of Factories in his report published last week quoted the staggering increase in the number of accidents in the industry. In fact, 40 per cent. of deaths from industrial causes are in the building industry. I hope that the Chief Inspector will take a much stronger and more stringent attitude.

The training and apprenticeship position in the industry is also scandalous. We are failing the nation. But, most of all, we must examine the industry's capabilities. A report earlier this year in the Financial Times showed that from 1970 to 1973 demand on the building industry increased by 33 per cent., yet its capacity increased by barely 10 per cent. If we in this House expect to overcome our housing problem and achieve new roads and hospitals, we must look at the industry's capabilities. As at present composed, it will fail us. I hope that the Government will conduct a short-term and a long-term survey and make radical changes so that we can tackle the problem.

5.41 p.m.

Mr. J. Grimond (Orkney and Shetland)

It is my happy duty to congratulate on behalf of the whole House two maiden speakers—the hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn) and the hon. Member for Rochester and Chatham (Mr. Bean). I greatly welcome their excellent contributions.

The great naval dockyards have always had a special place in Britain's affections and those of this House. We cannot but regret the disappearance of Peggy Fenner, but she clearly has a worthy successor, one well able to stand up for those great naval traditions which Sir Winston Churchill once summed up in a moment of irritation as being composed of " rum, sodomy and the lash". There are, we believe, other goings-on in the Navy, and with modern devices no doubt some of these activities have become out of date. I was particularly glad to hear what the right hon. Member for Rochester and Chatham said about the building industry, and I hope that we shall hear more from him on that important subject.

I also welcome the speech of the hon. and learned Member for Kinross and West Perthshire. He achieved a narrow squeak at the election, no doubt due to adequate hot tea at the count. He gave us an excellent, vigorous and, I think he hoped, impartial or non-controversial speech. Next time, he should address his attention to his own party; that is the way to get out of any difficulty about being too controversial.

May I add a word to the hon. and learned Member's happy tribute to his predecessor? I do not think that we need tonight give any funeral oration on Sir Alec Douglas-Home. He is pretty indestructible. I have known him for a long time. He had a serious illness, from which he recovered, and I expect that he will turn up in another place as the fifteenth, sixteenth or seventeenth Earl of Home. He was a great friend of many hon. Members. He had a long and distinguished career in the public service. He was unfairly viewed as a man of great charm and experience but lacking in shrewdness. He was, in fact, a very shrewd man indeed.

Looking around my colleagues in this place, I sometimes think "Here they are in charge of the nation, but which of them would you actually consult upon any matter of important private business?" There are some, not necessarily those in the highest offices of State. Alec is a person to whom one would have gone both for his undoubted unselfishness and for his shrewdness on many practical matters.

To take up again the general theme of the debate, I would say that to listen to the opening speech from the Opposition one would not have thought that it is only nine months since the Conservatives were in power. We heard a vigorous attack based on the total loss of confidence in the country. That loss of confidence began at least in 1973. Many of our troubles today are due to Mr. Barber—a very nice man, a very capable fiscal Chancellor, but in economics the most irresponsible Chancellor of the Exchequer that we have ever had. They are due, too, to the rapid turn-around by the Conservative Party from total laissez-faire in 1970 to, I suppose, the strictest dirigisme from which this country has ever suffered.

I thought, listening to the hon. Member for Henley (Mr. Heseltine), that he might have been imbued with a little of the modesty of his leader, who has now publicly admitted that, if he had been re-elected Prime Minister, he would not have had the slightest idea what to do but would have consulted a few worthy people around the country. The moral of this is that this is not a situation—the Secretary of State was quite entitled to point this out—which has sprung suddenly on the country since last April, and it is not one to which any Government or any party have provided an absolutely convincing answer, at least over the last 10 or 15 years.

The right hon. Gentleman in turn, I thought, was too sanguine about the process of further State intervention. He started by putting his finger on the need for greatly increased investment in private industry. We should also bear in mind that one of the difficulties that we have faced is the immense appetite for investment in the nationalised industries, which has earned no real return.

To many people in this country the difficulty has been not only that each Government attempt to undo some of the remedial measures of their predecessors, but that, going through all this at the same time, there has been an unwelcome similarity about the repetition of certain faults throughout the economy. The Secretary of State mentioned Alfred Herbert, which is a very good example of the days when bigger was always thought to be better and when a company gave up expertise that it possessed in its own field to branch out into all sorts of different fields in which it could not compete.

These troubles, I believe, are fundamentally political or moral or a question of value judgments, and are not simply economic.

The Minister of State, Department of Industry (Mr. Eric Heffer)

Just as a matter of fact—there is no other point in my rising—the Secretary of State mentioned that company. He made a point of that.

Mr. Grimond

Right. As I was saying, I do not think that our troubles are primarily economic. One thing which has been very much lacking in the public debate is any general aim put before the nation and any great political skill in trying to achieve it. If the social contract —a phrase which, I hate reminding hon. Members, was originally used by my hon. Friend the Member for Roxburgh, Selkirk and Peebles (Mr. Steel)—is to put before the nation, and the whole nation, an aim in the achievement of which it can unite, it will indeed perform a useful purpose. But if it is just a contract between the Government and the trade unions, that is something quite different.

As to political skills, it is surely the first duty of any Government to reconcile the competing interests in the community. Historicaly, this has been the main basis of politics; it is no new situation, but of course it is made much worse by the lack of any overall aim. This encourages various interest groups to claim as much as they can. I would recommend the Government to look at the way in which this has been handled before —in the days of the feudal barons and the days of the great tycoons. It was done then by a mixture of political skills in pursuit of some aim to which most, if not all, of the people could give consent.

I do not believe that further nationalisation will contribute to this aim. It will be very expensive. I missed the answer to a question which was asked on this matter today, but I am told that it will cost about £7,900 million to put the Government's proposals into operation. It still dates from the time when "bigger" meant "better". I do not think that in practice nationalisation has directed resources to the best advantage.

The main argument for nationalisation used to be that it would inject into industry a new motive, something which would, to some extent, take the place of the profit motive, the motive of service and the motive of working in the public interest. I found it a pity, incidentally, that we removed the Post Office out of the control of the Crown and Parliament. The Post Office had a great tradition of service. We tried to turn it into another commercial corporation. However that may be, I do not think that this hope has been realised in general. My one fundamental criticism of the nationalised industries is that they seem to suffer from the same effects and to be moved by the same objectives as big private firms. I do not believe that people at large feel that there is any great difference between ICI and the large nationalised industries.

Furthermore, the nationalised industries have not directed our resources into what I should have thought are the type of production which may not be highly paid but is highly necessary. I should have hoped that they would, for instance, have directed resources into intermediate technology for the use of under-developed areas and the poorer people of this country, rather than into Concorde, which will never be of any use to anyone except the extremely rich or expense-account traveller. Furthermore, the nationalised industries have been given an impossible task by being far too big, and it has been difficult, if not impossible, to find people capable of running them.

Therefore, I want to take up the Secretary of State's offer that we shall be entitled to examine new means of dealing with the problem, which I freely acknowledge—the failure of this country to make the most of its resources in the last 20 to 25 years.

What is the rôle of the State? To me, it is much more that it should create conditions rather than that it should take an active part in running industry. It should create conditions in which industry can be well run and it should undertake certain types of operation which are not attempted by the private sector. Furthermore, it is the State's duty to try to mobilise the national will to a greater extent than has been done at present. The Liberal Party has always praised the advantages of partnership between all those who work in industry. We do so still. We should like to see the law amended to make public companies take on their boards directors from their work people. We should like to see partnership tried in these new experiments of nationalisation.

Earlier in the debate the co-operatives were mentioned. They have been much neglected in this country. In house building and repairing, and so on, there is a great area in which local co-operatives have a great part to play. Again, we have neglected civic enterprises for a very long time. All of these methods will enable us to break down the monolithic size of some of the nationalised industries without departing from public control. I beg the Government to look at them.

There was an interesting experiment in shipbuilding at Fairfields. It was the Secretary of State who produced revised proposals for the Upper Clyde. I view with the utmost dismay the idea that a firm such as Scott Lithgow at Yarrow is now to be put into some big nationalised shipbuilding corporation. Scott Lithgow is training an immense number of apprentices on the Clyde, many of whom are being taken into far less prosperous enterprises which are Government supported. I grant to the Secretary of State the fact that one of the great difficulties in the industry has been the position of Harland and Wolff, which has had to be kept going for social reasons, has had enormous quantities of public money and has, therefore, been able to take on jobs which otherwise would have gone to other yards. The main difficulty, certainly of Scott Lithgow and Hall-Russell, is a lack of labour. The best thing that the Government could do would be to increase training facilities. Both Scott Lithgow and Hall-Russell have turned away orders simply because of a lack of labour.

The Secretary of State also mentioned unemployment. He is right to emphasise that no one dreams of returning to the situation of the 1930s, but he did not put the alternatives quite properly. If we continue pouring out money into firm after firm that is in difficulties, it will feed inflation. Inflation does not necessarily harm the rich classes. It harms all those who are unable to protect themselves against it. I do not think that we can expect that people have a right to continue in the same job. We have the duty to try to the best of our ability to make jobs available, and to provide retraining, housing and other necessities for those who have to move. We also have a very strong duty, as the Secretary of State said, to see that people are not pushed about for purely financial reasons. To maintain full employment is one thing; to keep people in the same job is quite another.

That brings me to the National Enterprise Board. Here again, the Secretary of State said that it would be broken down into smaller units. I hope that we shall hear more about that. I do not believe that in this country we have the geniuses who can do in this corporation all that is necessary for all firms in the country. I hope that we shall hear more about how it will be broken down and how local people will be associated with it. One of the reasons for the comparative failure of our regional policy has been the failure to associate local people in the regions with that policy, and to make them feel that it is not simply something handed down from London but is a natural growth in their own area.

On the subject of oil, I hope that the Government will say exactly why the British National Oil Corporation is necessary. I am open-minded about it. Having lived in Shetland, however, I think that the House should be aware that North Sea oil will be very much more expensive to get than has been thought by some. It will not be the easy bonanza that was talked about a year ago. Many firms engaged in the business are already feeling the effects. As a taxpayer I am not so sure that I should welcome too much public money being put into this risky venture.

I may be wrong, but I think that the Government still have a vacancy on the board of BP and that that vacancy has existed for a year.

Mr. Kinnock

You cannot have it, Jo.

Mr. Grimond

I might put in for it. The Labour Party tell us that it is essential for the Government to have their hand on these great public enterprises. The Government have the right to appoint two directors, yet one vacancy is always used as a nice old pasture for a retired diplomat and the other is left empty. What will happen to Orkney and Shetland legislation under these proposals? Will they be affected?

I should like to mention the Scottish National Party which is now the second party, in numbers of votes, in Scotland. What the SNP says must be taken seriously. It says that Orkney and Shetland should have Faroese status. That is its official policy. Faroe is virtually an independent attachment to Denmark. It has its own Parliament and controls its own resources. It gets a lot of money from Denmark, which has a high commissioner. But it is independent. That is the status suggested for Orkney and Shetland. That is perfectly reasonable. Orkney and Shetland are as big as Faroe and have resources that are also as big. If Scotland is prepared to pay the subsidy, similar to that which is received by Faroe, we should be likely to accept that position. This is a serious proposition of the SNP.

We should then, however, control the oil—let there be no doubt about that. If oil is found 100 miles off Faroe, it is the Faroese and not the Danes who will have it. So when the SNP speaks of Scottish oil, it means about one-third of Scottish oil. The rest is for Orkney and Shetland. I shall not need a seat on the board of BP; I will have my own oil company.

Mr. Gordon Wilson (Dundee, East)

I am glad that the right hon. Gentleman has a seat on which to rest at present. Is he aware of the terms of the legislation under the Geneva Convention and of the arrangements which could be made with Orkney and Shetland if they wished Faroese status? Is he further aware that it is part of the Scottish National Party's policy that the people of Orkney and Shetland should be asked their wishes?

Mr. Grimond

That is what I was saying. We will accept such status.

I am as strong a Scottish Home Ruler as anyone else, and another very important matter to me is devolution. We have been promised devolution by Her Majesty's Government. How is it going to fit in with their new proposals for nationalisation of oil, and so on? The Conservative Government made the great error of changing Scottish local government before devolution. Is such an error to be repeated by the Labour Government?

It is no good giving us devolution if all our main industries are to be run from London. One of the main arguments for devolution of governmental power is that there should also be devolution of industry—that the Scottish people should control their own nationalised industries. What, therefore, is the Government timetable? The introduction of devolution after nationalisation would be an appalling mess, to say the least, and totally unacceptable to the people of Scotland.

As I have said, the fundamental point of the Gracious Speech is whether the social contract is simply a compromise between the Government and the unions, or whether it is to put new aims before the people at large. During the General Election, I noticed with some regret that there seems to be a certain polarisation. The Labour Party has, on the whole, a stranglehold in its traditional areas, the Conservative Party is strong in the South-East of England, and in Scotland the Scottish National Party is a rising force. There is a certain danger of some centrifugal tendencies throughout Britain. Although I am a dedicated Home Ruler, I take the view that we should all much regret it were our politics to become divided in that sort of way at this moment. I believe that objectives should be put before the people of England, Scotland, Wales and Northern Ireland which will infuse new life not only into the economy but also—most important of all—into the politics of the United Kingdom.

6.3 p.m.

Mr. John Stonehouse (Walsall, North)

The right hon. Member for Orkney and Shetland (Mr. Grimond) has considerably improved the standard of the debate, which had become extremely depressing during the opening speeches. We had in the speech of the hon. Member for Henley (Mr. Heseltine) a rehash of political ideas from the Conservative Party—ideas which have completely failed in the past. I regret to say that for the Government we had a failure by my right hon. Friend the Secretary of State for Industry to analyse and explain some of the ideas which he has been ventilating in the past months. It is not sufficient on this important occasion to repeat in the House things we have heard many times before. We need detailed explanations from the Government as to how these great and imaginative ideas of social engineering are to be put into effect. I regret that we have not had them so far today.

I particularly applaud the remarks of the right hon. Member for Orkney and Shetland about the development of cooperative enterprise. I have been associated with the co-operative movement for many years. I believe that, as a nation, we should give encouragement to co-operative enterprise, and I hope that the Co-operative Development Authority will have top priority in the Government's programme, because it is a great method of spreading participation and the rewards of business enterprise.

However, I must strike a note of caution, because in the co-operative movement we have had for many years an experiment in democracy that my right hon. Friend the Secretary of State for Industry would now like to spread throughout industry generally. I would be the last one to claim that co-operative democracy has been an unqualified success in Britain. In fact, for many years it has failed. We have to find out why it has failed. Why, for example, is it that in some of the big co-operative societies only 1 per cent. of the shareholders vote? Why is the maximum number who vote, even in the smallest societies, only about 7 or 8 per cent.? We have had the mechanism for participation for 100 years but it does not work.

The thinkers in the Labour Party who have now embraced the idea of participatory democracy must start to analyse the reason why it does not work in the Socialist area where it has already been available. We are in the throes of getting new systems of participation which may completely fail, because in 10 or 15 years' time we may discover that the workers we are pushing into this participation in democracy do not want to participate. We have to apply ourselves to motivation as well as to creating new constitutions.

The period of this Parliament will be crucial to the future of the country. This is the time when the kidding has to stop. For too long we have fooled ourselves and have tried to fool others that Britain would somehow muddle through. For too long Britain has allowed itself indulgences which a successful and expanding country would hesitate to allow itself. Our problem is deep-seated, and can be best summed-up as "the end of Empire syndrome". It is a failure to adjust to our new situation in the world, which does not owe us a living and is making it extremely difficult for us to earn one.

Our decline first set in during those first 13 wasted Conservative years which have been followed by 10 years of almost constant electioneering, with the wasteful posturing and manipulating that go with it.

Now, however, we have a Government of Ministers with experience—experience of failures as well as of successes—who have the chance to snap the country away from this debilitating past and begin to pull Britain round. It is not only a question of policies. In the midst of shortages, we have a plethora of policies. It is will and strength of administration that we require.

First, the country demands honesty. It is not true that most other countries are more or less in the same state as we are and that we are all suffering from a worldwide disease. The truth about the state of our society is that in 1973 and 1974 political violence in this country has been worse than in any other country in Europe—including Greece and Portugal, which have both gone through some terribly traumatic changes in these years.

Our economic performance in the last 10 years has been the second worst in Europe. A comparison with West Germany, a country of the same sort of population and resources as ourselves, shows the contrast. The West Germans have no balance of payments problem, even with the high oil prices. Their industry has high investment and there is a growth of productivity per man, year by year. Indeed, their productivity per man is, overall, twice and sometimes three times what we achieve.

Factories in my constituency are still using machinery reparated from Germany at the end of the last war, but German factories today have the most modern machinery.

According to some figures that I obtained from the Library, during the last 10 years sterling has devalued against the German mark by 45 per cent. The pound has not lost value simply because of the effect of worldwide inflation; it has almost halved in value against the German mark today in real terms.

The pound would buy 11 deutschemarks in 1964. Today it will buy only six. The decline goes on. The drop in the value of the pound against the mark during the past month alone has been 2½ per cent. The implications of this trend are truly frightening. We emerged from the last war with our economy intact. Germany was devastated but it has won the peace which we are losing. It is argued that our economic problems will be solved by North Sea oil. I agree with what the right hon. Member for Orkney and Shetland had to say about this. The price of oil could drop dramatically in the next 10 years. The cost of extracting a barrel of oil from the North Sea is the highest in the world. North Sea oil does not provide jobs for 10 million people.

Mr. Tim Renton (Mid-Sussex)

I am interested to hear the right hon. Gentleman quoting figures about the West German economy. Doubtless he will know that the real success of the German economy stemmed from the moment that Chancellor Erhardt took the decision to decentralise, to minimise the amount of State intervention in the German economy. As all German business men know, and as the German Government knows, the real wirtschaftwunder of the German economy stems from that point. Will the right hon. Gentleman be urging his Front Bench colleagues to minimise State intervention in this country and follow the German model?

Mr. Stonehouse

The hon. Gentleman will know that the period of greatest advance in Western Germany has been under Socialist Chancellors. In West Germany there is a degree of worker participation in the management of industry which might be an example we should follow. Another significant point is the fact that the trade union movement in Germany participates constructively in industry. I would like to see that being done here, where trade unions tend to be more disruptive than constructive.

Against this depressing factual background the Government have to act decisively. They face a weak and divided Opposition, so they can afford to cut out the electioneering. There should be two broad guidelines for the Government's action. First, they must avoid the error of pursuing excellence and thus losing the good. In other words, they must temper their idealism with the practical realities of 1974–75; secondly they must stop pandering to the demands of vociferous minorities who want to hold the community to ransom and, instead, start acting in the interests of the silent and abused majority.

I turn to the problem of Northern Ireland because our handling of it over the past five years has been symptomatic of our lack of resolve in other areas of our responsibility. The Gracious Speech does not show that Ministers have learned the lessons of weakness in Northern Ireland. I ought to declare a personal interest, as my car was blown up by the IRA and completely destroyed. I could have been sitting in it at the time.

The people who perpetrate these crimes and commit mass murder in the interests of their warped political objectives are dangerous criminals, and I think they are insane. I am glad to see that the Minister of State, Northern Ireland Office is present to hear what I have to say, because it will be his responsibility and that of the Secretary of State, for whom I have a great regard, to grasp the problem of Northern Ireland. They cannot deal with the people there as though they could be considered rational. Many of them are not. They are irrational, and some of them are insane. They have to be dealt with as such. Trying to win their cooperation is futile.

The Government should now declare that the time for patience has run out. If within one month the murder and violence has not stopped, and if the communities are not genuinely working together, the Government should bring proposals before Parliament which should reflect the interests not just of the Province—we should not just be consulting it about what it wants—but of the United Kingdom as a whole.

My preference would be for a repartitioning of Northern Ireland, with a subsidised, voluntary transfer of population. Let those who choose Eire make their bed and sleep in it and those who choose to stay on this side of the border be welcome to remain in the United Kingdom, with appropriate representation in this House. Let us have no more nonsense about devolution, which has clearly been divisive. If we stay within the wider EEC, as I hope we will, the problem of the two Irelands will resolve itself in 10, 15 or 20 years' time.

Mr. Phillip Whitehead (Derby, North)

Is my right hon. Friend aware that a transfer of population on that scale has probably taken place only once in Europe in the past 50 years, with the expulsion of the Sudeten Germans after the Second World War? It needs a crisis of that kind. Is my right hon. Friend really contemplating that in Ireland?

Mr. Stonehouse

I think we have to contemplate an extreme remedy to this ongoing problem, to which we can see no solution. The Conservative Government tried and failed. We have been trying and we are failing. I honestly do not think there is any hope of reaching a clear agreement. If it can be proved that the two sides can work together and reach agreement I would go along with that, but I do not think we can be convinced that such an agreement will be reached in the short term. In any case, this business of where people live and how they participate will be solved in the wider EEC if we stay in it. It will be academic on which side of the border a person lives.

I am sure that hundreds, if not thousands, of families in the Falls Road and elsewhere in Belfast are sick to death of the constant shootings and the danger they face when they go out on the streets by day or by night. They would welcome the opportunity to move to a place where they could live in peace, and where their children would not be shot down if they happened to appear to be holding a toy gun in their hands.

I do not think that we on this side of the Irish Sea really understand how serious the position is in Belfast. It is depressing in the extreme, and it is time that opinion on this side of the Irish Sea stood up and said what it feels should be done about the problems of Ulster, because it is clear that the communities there have not been able to grasp the problem and find a solution.

I am glad to note that devolution for Scotland and Wales is not included in the Gracious Speech. It is a foolish policy if carried to extremes, and could be as devastating in its effects in those countries as it has been in Ulster. I hope that the Secretary of State for Scotland will win his battle to keep the decentralisation programme to the minimum. There is no guarantee that sectarian violence in Scotland would be confined to the football grounds if devolution occurred there.

During the election I strongly supported the concept of the social contract. I shared the platform with the Secretary of State for Employment on the day that the TUC came to its decision. We were all delighted by that decision because, as I said at the time, it gave hope for a new era of industrial relations. There was the idea of participation by the trade unions in a constructive rather than a destructive direction. The alternatives to the social contract are not palatable.

I am bound to say, however, that the signs which we have had from the TUC today are that it is unlikely that the official trade union movement can deliver its side of the bargain. The courageous speech made by Jack Jones in Glasgow had absolutely no effect on the actions of the unofficial strikers, who have now won an award of 40 per cent. By no stretch of the imagination can that be construed as being within the social contract, which lays it down that wage increases will take account only of price increases. Any increase over and above that percentage will come out of someone else's wage packet.

The increases demanded by large sections of the population today cannot be afforded, and the Government must tell them so in forthright terms. A good text to follow would be the excellent speech made towards the end of October by Mr. Arthur Sugden, the Chief Executive of the Co-operative Wholesale Society, who said: The great tragedy is we do not seem to learn from past mistakes. Official statistics just published show that in the second quarter of 1974 we were no better off than we were in the final quarter of 1972 when the wage freeze was on. Since then personal incomes have risen by no less than £3,200 million, but inflation has taken back £2,000 million and the tax man got all the rest. These are the economics of the madhouse… Whatever the expectations of people, and irrespective of promises made, consumption will have to be reduced… I am sure nobody would deny that the real battle is against inflation or that the most essential ingredient of any Government strategy to resolve it will be public support for whatever proposals are put forward. Inflation is, in fact, the challenge of our times, and it is not just a matter of monetary policy, important though that is but rather that our economy is fuelled by a growing expectation by the community of bigger and better things in a demand economy where today's satisfied demand is merely the starting point for tomorrow's negotiations, but without any means of reconciling the various claims with the nation's ability to meet them. The nub of the problem is that the Government have failed to show how we should evaluate the various claims made on our economy. If the various sections of the community who are represented by trade unions do not behave in a responsible fashion the Government will have to step in. If the TUC and the trade union movement generally cannot keep their side of the bargain of the social contract, we shall undoubtedly have to have a wages freeze in 1975. I hope that we can break away from the depressing cycle of stoppages and strikes which handicap industry and sap the country's morale. I regard a strike as the last refuge of a bankrupt negotiator facing an inept employer, both operating within a flimsy structure which provides no real rules of conduct. The TUC and the Secretary of State for Employment must aim for the abolition of all strikes, unofficial and official. We should apply a little civilisation to this area of our affairs and stop inflicting terrible wounds on ourselves to prove our manliness.

I am surprised that there is no reference in the Queen's Speech to an investment bank. I presume, therefore, that the Chancellor of the Exchequer intends to refer to it in his Budget Statement next week. There is an urgent need for such an institution, because the joint stock banks are now incapable, on their reserve position, of converting available short-term funds to long-term investment. They could not take the risk. The oil producers have failed, as yet, to invest any significant part of their huge funds in long-term facilities.

Only a State investment bank would have the backing to guarantee conversion of the thousands of millions of pounds required from seven-day money to seven-year investment money. Only the State can take a view about long-term interest rates for these massive amounts of money. A State investment bank should not detract from the National Enterprise Board, which is also required. The two are complementary, the former providing long-term loans on national terms and the latter taking out equity shares in industry.

I welcome the Government's intention to set up quickly the National Enterprise Board and also to take the aircraft industry under State control. It is essential that we should have a strong and viable aircraft industry and that the period of uncertainty about the industry should be brought to an end. However, it is not only the form of ownership but the management which is so vital to its success.

The Post Office Corporation has been referred to. That has not been an unqualified success, not because the structure is wrong but because there are weaknesses at the top and in the management of the corporation. It is not easy to find chairmen for large-scale public corporations. The man I put forward for the Post Office Corporation is now the successful chairman of a large industrial group, but he was turned down by the Prime Minister for reasons which I did not understand at the time and do not understand today.

I hope that we shall be able to persuade qualified men, irrespective of their political loyalties, to be chairmen of the aircraft industry corporation and the National Enterprise Board. There are too few qualified men around who are able to do these jobs. It is all very well to assume that people can be plucked from the shop floor, from an accountant's office, or out of the Army to do these jobs, but it is not as easy as that. They are difficult jobs, and I hope that the Government will apply themselves not only to creating the right structure but to finding the men capable of running the industries successfully.

For the aircraft industry, I hope that a way will be found to persuade Sir Arnold Hall to serve. He has one of the most able business brains in Britain. He is not a speculator or a capitalist of the sort whom my hon. Friends below the Gangway would attack; he is a wage slave, like all of us. He has been a distinguished civil servant and the head of Farnborough, where he did noble work. He is now doing a marvellous job in industry. Many trade unionist jobs in Hawker Siddeley are there because he and his colleagues are running Hawker Siddeley as a successful enterprise. We cannot afford to lose men of that ability and calibre. Sir Arnold is dedicated to the aircraft industry, and it would be a tragedy if he were lost to it.

There are many misconceptions about democracy. I believe that a democratic decision is valid for the community as a whole and is binding on the community as a whole, but that does not mean that democratic decisions taken by minority groups are thereby sanctified. Many minority groups make decisions to act against the community and representatives of those groups appear on television and say that it was a democratic decision, on the assumption that it will thereby be sanctified and everyone will accept it. I have never heard anything so ridiculous as the suggestion that if a group of people make a decision in their own selfish interests which will hold the rest of the community to ransom it will be accepted because it is a decision democratically arrived at.

The decision taken by the men of Clydeside to pour hundreds of millions of gallons of sewage into the Clyde and pollute the river beyond recovery for two years I do not regard as a moral decision, although it was a democratic one. I think that the decision was wrong, and should be condemned. I hope that the Government, with four or five years in power, will be able to find an answer to the problem of creating a mechanism to prevent damaging strikes of that character, which destroy the environment and sap the country's morale.

We have an exciting period in front of us. The Government are certainly better than the administration we had until February of this year. The Government must recognise, having had many years' experience, that the country expects them to stop making excuses and to produce results. I wish the Government well over the next four or five years, and I believe that, on the whole, the Queen's Speech is a very good start.

Several Hon. Members

rose—

Mr. Speaker

Order. It is clear that I shall not be able to call everyone who wants to speak, but I promise to carry forward until tomorrow the names of those who cannot get in today.

6.30 p.m.

Mr. John Davies(Knutsford)

First, I should like to join the right hon. Member for Orkney and Shetland (Mr. Grimond) in what he said about the maiden speakers today. I particularly want to follow what he said about my hon. and learned Friend the member for Kinross and West Perthshire (Mr. Fair-bairn) in commending his predecessor to us. Sir Alec Douglas-Home was a very respected figure in this House. I had the benefit and privilege of serving with him for a considerable time in the previous Government, and certainly no finer colleague could have existed in or outside Parliament.

During the course of this debate I should like to touch upon the subjects of capital resources to industry on the one hand, and, briefly, the oil industry on the other. I feel it right to declare an interest in that I am a director of a merchant bank and have for many years been a director of a major oil company.

Over my life in industry I have noted that the deterrents to investment generally consist of a deficiency of margins, or a deficiency of markets, or a deficiency of labour, or a deficiency of resources or more generally, a blend of them all. In the course of the past few months I have found that the extent of deterrent which is effected by a deficiency of resources greatly exceeds all other causes. The number of investment projects in industry—I speak of areas wider than this country, but particularly in this country —that are now being foreclosed and abandoned on the score of simple lack of money to undertake them is, indeed, frightening.

It is not confined to smaller companies. Many large companies that, I am sure, perhaps for generations previously had never contemplated failing to go ahead with major viable investments on the score of the inability to find the resources necessary to achieve them, are now so faced, and are deferring or abandoning such projects.

Undoubtedly, too, the problems that arise are involved with the major problems of liquidity, to which so much reference has been made. Clearly, the fact that there has been so much reference tends to restrain one from going into the whole argument about why that should be, but I wonder whether the full measure of that liquidity deficiency is realised even now in the country at large.

Professor Harold Rose commented on this the other day. It was reported that He feared that industry's requirements for stock finance, fixed investment and trade credit were likely to exceed resources generated in the current financial year by roughly £5,000 million, double the excess of £2,500 million for 1973. We are dealing with illiquidity of quite unparalleled severity.

It is necessary to point out that British industry traditionally finds about three-quarters of its total investment programmes from its own internal generations of funds, and looks to the market to meet the other 25 per cent. Today, that 75 per cent. is far from being met. Therefore, for a long time to come, industry generally is bound to look more to the market than it has done hitherto.

Of course, all the explanations of this phenomenon have been put to us. We know all about the nutcrackers of prices and costs; we know about the excessively damaging effect of the March Budget on industrial liquidity; we know about the extraordinary problem caused by inflation acting on stock appreciation and thereby causing high tax liabilities that derive from so-called profits having nothing whatever to do with real profits.

It is difficult to conduct this debate—particularly this part of it, in relation to the capital resources of industry—with the Budget only a week ahead. Clearly, the Budget plays a fantastically important part in the solution of these problems. At this stage we can only contemplate what may be the outcome of the Chancellor's reflections.

However, it is wise and perhaps right to say that it would surprise us all if those reflections gave rise to a relief of this intense liquidity problem for industry at the price of an excessive printing of new money without backing. I think that none of us—even those who feel most acutely about the need to support industry at this stage—would feel at all happy if that support were to be generated by the printing press, with all the damage that that could contain for us.

Equally, we have some concern on the subject of the investment bank—the brainchild of the right hon. Member for Manchester, Central (Mr. Lever). It is an interesting concept, but as yet it is too little outlined, and too little defined —particularly about where the access to those resources would be found—to make it a proposition that we can contemplate with anything like equanimity. But we expect to hear more about this subject during the course of next week's Budget Statement and debate.

In today's conditions—certainly in circumstances in which industry is caught with this wholly inadequate fund of resources to sustain its capital programmes and with an incapacity to generate the resources necessary even for the future to meet what it considers quite seriously to be profitable and viable investment—industry is forced to look outside itself, to the market, for funds, and it has been doing so. What has it found in the way of a market outside? In terms of the domestic market, it has found an equity market that is in so serious a condition that it may be absolutely excluded as a resource to be regarded as available to industry for the maintenance of its investment.

When we talk in perhaps a somewhat sneering tone about the Stock Exchange and all that it entails, let us not forget that the Stock Exchange is the measure of the capacity of industry to appeal to the country for risk capital. If, through that mechanism, industry cannot look to the country for risk capital, then indeed, particularly in the parlous conditions in which it now finds itself, it is faced with gruesome prospects.

It goes beyond that. The truth is that in terms of anything like long-term borrowing in our domestic markets, certainly on fixed interest rates, there is virtually a total absence of available funds. Therefore, the normal industrial enterprise, faced with the problems of investment ahead, short of generated resources of its own, unable to appeal to the equity market, can equally not appeal to the debenture or fixed-interest bond market either—it does not exist. So it finds itself led towards the market of the overdraft, or the market of the variable interest rate, all of which are generated more and more, these days, on the basis of short-term deposits with the banks.

Those are circumstances that hon. Members on both sides of the House must recognise as a sure signal of damage to our economy. An excessive use of short-term investment funds for long-term investment is in itself, I think, one of the high roads to liquidation and bankruptcy.

We therefore find ourselves with industry in this difficult situation, looking for more than the usual complement to the market to help it along with its problems and finding a completely flat or absent market to face it. What does it do? It does as British industry has done for many years and I am sure will continue to do; it turns to foreign markets for finance. It looks there for what it can find.

Today the foreign markets for finance are themselves exceedingly affected by the whole shift in resources occasioned by the change in the oil pricing system and the mammoth movement of funds to new owners, who are perhaps putting back the money to a certain degree but putting it back on conditions that only with great difficulty allow anything like long-term investment. They allow short-term investment. One can put out money at short term, but one cannot put it out on anything that commands a long-term requirement on the lender.

One finds certain markets, such as the United States market, better placed than all of the European markets in this respect, but even so it is affected by this shortage in the availability of funds for long-term investment. They are terribly short throughout the world.

Unfortunately, where there is shortage the confidence of the borrower becomes a critical factor in the availability of those funds. In seeking to find funds in the course of the past months for absolutely blue chip industrial companies in this country, I am met consistently with the fact that the United Kingdom is at the bottom, or near the bottom, of the list of confidence for the availability of overseas finance. It is a mortifying experience for a person such as myself, having been in industry for years, to find myself relegated to the bottom of the list and have that regarded as a factor of no confidence.

The reason for the absence of confidence often does not derive from the company itself. The company may be a fine one, with a good record, with excellent management and with a known record of technical achievement and commercial efficiency, but one is faced with the conclusion that the funds are not available because what is in doubt is not the company but the country.

This adds still further to the anxieties and concern for our future. That people will not lend to XYZ company, not because they do not think that it is a fine concern but because they do not know that the country in which that company exists is responsible in the longer term, is a new experience for me.

It is a new experience which derives from the fact that there is this real fear that the tendencies in this country at the moment are not to allow these good managements and efficient concerns to operate on their own and in their own judgment, but, on the contrary, consistently to be the subject of more and more critical intervention of a damaging and troublesome kind.

This is the cause, to a large degree, of the lack of confidence that one finds. I regret to say it, but it is true, that the right hon. Member for Bristol, South-East (Mr. Benn) is the greatest credit risk for British industry that I know. It is a matter that is bound to cause acute concern to those whose task it is to try to ensure that British industry receives the resources that it needs.

Mr. Robert Kilroy-Silk (Ormskirk)

Is the right hon. Gentleman aware that investment in British manufacturing industry dropped catastrophically during the years of the Conservative administration? Is he not aware, also, that productivity per man dropped during the same period and that this had nothing to do with the Labour Party's proposals for nationalisation? The proposals were not even in the manifesto at that time. Investment in British manufacturing industry, which was at its height in 1970, dropped in 1971, dropped further still in 1972, and went down again in 1973—long before there was any prospect of a Labour Government.

Mr. Davies

I do not think that the hon. Gentleman's statistics are quite right. In 1973, investment was certainly moving forward fairly rapidly in the early part of the year, and it would have moved forward much more rapidly. The point I am complaining about is that even where there is potential for investment there is at the present moment an absence of resource. The absence of resource derives from a lack of confidence, and I am afraid that that lack of confidence is attributable to the causes to which I referred and to no other.

I cannot accept that there is an alibi. There is no alibi. There is a real reason why international resources are not available to this country to the extent to which they are needed.

This provokes a real and particular problem in the oil industry. The truth is that anyone who knows the oil industry at all knows that discovery is one thing —it is expensive, difficult and it was at the limits of technology in the North Sea —but it is only one step forward, and there are many steps to take after it. The development operation for bringing oil to these shores in the 1980s in quantities that will allow us to correct what is bound to be a savage imbalance during the intervening period will be immensely costly.

During a period when, in order to meet our problems, we shall still be big importers of oil for the whole of the rest of this decade and, by the very nature of international markets, we shall have a difficult international market in which to live and gain our living anyway, we shall add to that the tremendous weight of finding externally a vast investment for our own requirements of North Sea oil.

We are talking of many thousands of millions of pounds of foreign money which we need to borrow. If there is an absence of confidence of the kind of which I have had so dismal an experience in recent months those funds will not be forthcoming in which case what we are all [...]elying on to save us from the situation in which we now find ourselves, and from the terribly precarious life which we shall face over the next few years. will itself not be forthcoming.

I looked through the Queen's Speech for a realisation of the extent of this problem, some kind of understanding that we were not, at this moment in time, just dealing with seeing through a manifesto conceived, perhaps, in different times for different purposes. I looked for a recognition that we were facing what may prove to be the most awkward, worrying years that we have ever had in the life of our industrial activity—not just since the war —and I found little of it.

Of course the Queen's Speech is a series of generalities. But the Secretary of State for Industry has promised us a series of debates. I sincerely hope that that series of debates will produce something which shows a deeper understanding of the problems with which we are faced and something which has its heart in the need to regenerate industry, but to regenerate it in the only way that is practicable—by relying on the qualities and the ability of those at every level in British industry including those at management level.

6.46 p.m.

Miss Margaret Jackson (Lincoln)

I have the good fortune to represent a constituency of some distinction, perhaps occasionally even of some political notoriety, the city of Lincoln.

Lincoln is a beautiful cathedral city with a glorious past dating back to Roman times Its previous Member was Mr. Dick Taverne, but, as I am sure he in his time has made this House aware. Lincoln is not just an historic city with a glorious past. It is an industrial city, a city which is rightly proud of its fame and its skill in engineering, a city which is part of the wealth-creating industry of this country, a manufacturing industry.

This part of the debate on the Gracious Speech is about cities like Lincoln—with their past glories in historical pageant and technological achievement—but with great concern for their future. The proposals for industry contained in the Gracious Speech are directed towards their problems, the problems that beset industry not only in my own constituency but throughout the country.

Successive Governments have highlighted our industrial problems—under-investment, ill-directed planning and regional unemployment. All in turn have had earnest discussions with industry and have sought fresh incentive to tempt industry to invest and to expand in the regions and elsewhere, and successive Governments of every political persuasion have failed. It is true that there have been some small successes—one or two factories, a few hundred jobs—but nothing ever on the massive scale of reinvestment and redeployment that we need. Indeed, there are those among hon. Members opposite who, when they were in Government, were heard berating industry for its failure to respond to all the pressure, persuasion and pleas that that Government directed to them.

I believe that these policies have failed under successive Governments because they were founded on the same basis of misconception, namely, that industry would invest not only in depressed regions but anywhere, because it was in the national economic interest for it to do so. Successive Governments have set the targets for growth, talked of increasing and decreasing confidence, and made changes in investment incentive on that mistaken assumption.

I call it a mistaken assumption because it seems to me that it is, under our present system, not the job of those who run British industry to put the national interest first. Perhaps it should be, but it is not, and they do not, especially if it means risking a fall in profitability, even in the short term, and a bad result for their shareholders. It is their job to manage their businesses efficiently and to make as much reasonable profit for their shareholders as they can. That is their prime aim. When Governments exhort or persuade them to invest or expand, they do so if it is in their interests as companies, if it fulfils their prime aim, but not otherwise.

This is not a theory of mine or of my party. Indeed, a Select Committee of this House that had studied these problems published a report last year and found that the companies concerned had accepted and made use of Government incentives, when they had already decided to move into the regions to expand and to invest, because these plans were acceptable in their own interests. In other words, Government incentives had had little or no effect.

The cumulative effect of this failure in the process of persuasion is the failure of our regional policies. We lose, therefore, as a country the opportunities that we should take. We invest too late. We expand too little both for the general welfare of the economy and for the rational fulfilment of Government economic targets.

Our second basic mistake has lain in an outdated view of the ways in which companies decide whether to invest or to expand, and the factors that influence them—outdated because it fails to take into account the changes that have taken place in British industry, as elsewhere in the world, over the last 20 years.

I refer principally to the degree of concentration of ownership and interest. I do not propose to discuss on this occasion whether this concentration is beneficial, but its existence is a fact. Where years ago a sector of industry might contain as many as 20 or 30 companies, each competing for the market, today it contains about four or five. Where the market is divided among so little free competition, to base our industrial and regional policies on the assumption that free competition operates among these industrial giants is nonsensical. They base their actions on the need to hold their share of the market.

This frequently means that little or nothing is done that is out of line. If one raises his prices, they all do. If one advances plans for new investment in new plant, they all do; if one decides on a moderate degree of job expansion, they all do; because they are watching not only the world and the domestic economic climate but one another, making a kind of collective judgment about the prospects for their trade. Government wishes and judgment about investment and expansion take a secondary rôle to these other considerations.

The proposals in the Gracious Speech are designed to come to grips with these realities. They have been much criticised, and the grounds on which they have been criticised are extremely interesting. There are those who have based their criticisms on an understanding of the proposals, fearing that they will not work. I must add, however, that in most cases, even where there has been criticism on these grounds, there has been no rejection of the idea that the experiment should continue Most of the criticism, however, does not come on the grounds of what these proposals are meant to do or how they are meant to work—not even on the grounds that they involve taxpayers money. Taxpayers' money is quite acceptable so long as it is handed out without return in terms of influence or direction. They are criticised on the grounds that they are said to be dogmatic.

I have never understood the philosophical assumption that private ownership is intrinsically better than public ownership. No one can suggest that it is more fair. It tends to be defended on the grounds of efficiency—grounds that are subject to considerable question and considerable operation of selective judgment. The automatic assumption that there is something wrong about public involvement in industry, even without considering whether it can be made more flexible or used in different ways, has never been philosophically justified. It is my hope that we shall hear it so in this debate. I believe that it cannot be philosophically justified. It is an instinctive reaction, a gut reaction, a dogmatic reaction, on the part of our opponents.

Our proposals are based on the use of public ownership and of more informed public planning to solve the real industrial problems that this country faces. We hope, through planning agreements, to ensure that the Government are better informed about industry's plan and do not make wild assumptions about investment and jobs on which they base the wrong policy. We hope, too, to make industry aware through these agreements of the Government's needs and problems, and perhaps to make industry take them more into account at the planning stage. There is nothing dangerous or frightening about that; it is common sense.

Through the National Enterprise Board we hope in time to be able to harness the changing patterns of industrial interaction that I have described, to ensure that if the most influential nine or 10 companies in a sector are watching and following one another, at least one of them is concerned with the interests of Government planning, of economic planning, our interests. As companies are run in the interests of their shareholders, it seems only reasonable that the way to achieve this is through Government shareholding.

This policy, and that of planning agreements, is pursued in many other countries in the European Economic Community as well as other countries outside it; a Community whose policies and success have been extolled to us in the past by other hon. Members. Only in this country are the proposals for industry seen as elements of dangerous revolutionary tendencies, and then, I fear, only by those who are as ignorant of the real proposals in the Gracious Speech as they are of what is done elsewhere.

These policies are, nevertheless, an experiment here, although in some ways an extension of what has gone before, but I believe them to be a necessary experiment, a brave experiment. Certainly they form the only rational proposals before us. The industrial policy of Opposition Members appears to rely on the maxim of Bo-Peep: Leave them alone, and they'll come home, And bring their tails behind them. Our industrial future is of great concern to all of us, but especially to a constituency such as mine which is totally dependent for its survival on our industrial success and our industrial strength. For these reasons I hope that these proposals in the Gracious Speech are given a fair hearing and a fair trial.

6.58 p.m.

Mr. Cranley Onslow (Woking)

In the 10 years and some few days during which I have been fortunate enough to be a Member, I have never have the chance to speak immediately after a maiden speaker. I thank you, Mr. Speaker, for giving me the opportunity to do so after one who is so articulate, so self-possessed and, if I may make a chauvinistic comment, so easy on the eye. I am sure that the House will look forward to hearing from the hon. Member for Lincoln (Miss Jackson) in future. If I may chide her without malice, may I say that the House might make cognisance of the fact that her predecessor for 12 years was, whatever faults he may have had, a man to be envied for having the courage of his convictions? I should not have liked that to go unsaid.

It may be that in some of the hon. Lady's comments she has laid up a fruitful area of disagreement between the two sides of the House when next she seeks to catch your eye, Mr. Speaker, because I was interested to detect no reference in what she said to our rôle as customers and consumers. But, never mind, that is all for the future and we look forward to it. I heartily congratulate the hon. Lady on the immense self-possession with whch she addressed the House—far greater than most of us mere males could muster.

Turning to the matter of this debate, there was one omission on the part of the Secretary of State to which I should like to draw attention. Although at one moment he appeared to be about to mention Court Line, he never did so. An occasion when we are discussing the Government's industrial policy, would seem to me to be a good opportunity to have said a bit more about what is going on in this particularly controversial area. I do not suppose that I am alone in wanting to hear from the Secretary of State some amplification of his promise that the holiday makers who were booked with Court Line last summer should have some reasonable security, and how he wishes now to react to a statement which looks as if it has an element of the careless about it.

I do not think the Secretary of State ought to be surprised at the bitterness with which a large number of people up and down the country view those remarks and that promise of his. A great many people were frustrated, lost their holidays, and considered themselves swindled on the basis of something that was said from the Dispatch Box by one of the principal members of the last Government and of the present Government.

I am not surprised that my hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) has had a great deal of correspondence on the subject, following his announcement that he had been invited by one of his constituents to take the matter up with the Parliamentary Commissioner for Administration. As this is a House of Commons matter as much as a matter for the Parliamentary Commissioner for Administration, may I still ask —and perhaps the hon. Gentlemen on the Front Bench will stop gossiping and take note for a moment—the Minister for an answer to these questions?

What is happening in the case of Court Line? Who will pay the money which has been lost by the individuals concerned? Why is it that we have not yet had from the Secretary of State some statement explaining the way in which he has pledged the public credit and let the public in for considerable expenditure in a manner which, I dare say, in former times might have been considered to touch upon the fitness of the Minister concerned to continue to hold public office?

I make no bones about the fact that my memory of the performance of the Secretary of State is a long one. It goes back over the affair of the Beagle Aircraft Company. During the debate on 10th March 1970, when we were considering a mere matter of £7,500,000 of public money which had gone down the drain, the Secretary of State said: I cannot pretend that I examine personally all the matters in which public money is involved."—[OFFICIAL REPORT, 10th March 1970; Vol. 797, c. 1141.] When we look at the affairs of Rolls-Royce, I do not suppose that the House needs to be reminded that there was another example of how the light-hearted approach of the Secretary of State to matters of public accountability has so often landed the taxpayers with an extremely heavy bill. [An HON. MEMBER: "Frivolous."] One of my hon. Friends says "Frivolous." I find it difficult to quarrel with that description, again remembering a debate in which I was involved when the Secretary of State chided the Government of the day at great length for not having come wholly clean about the financial arrangements involved in the Concorde project; only to reveal, in the course of his own speech, that he himself had come to some agreement three years previously which he had not thought necessary to disclose to the House at that time and which, had it been known, would have enabled the House to alter the terms of the project.

When I asked the Secretary of State earlier this afternoon how, in the new arrangements with which we are concerned—relating to the extensions of nationalisation upon which he has embarked—the House of Commons would be accountable for the expenditure of public money involved, I was told that there would be a reference to that later in his speech. The only reference which I was able to detect later in his speech as even remotely touching upon this subject was when he said that there would be complete disclosure to the workers.

I hope that when right hon. and hon. Gentlemen on the Government benches approach this matter they will realise that the money which they are speculating is not their own; it is raised from the taxpayers of this country upon conditions which are well established by precedent, and if they are not prepared to account to the taxpayers for it they put themselves in considerable political and personal peril.

The amendment to the Gracious Speech is tabled in the names of a number of my right hon. Friends and refers to the proposals before the House as being disastrous. I do not think there is an element in them which is more disastrous than the Government's evident readiness to bypass Parliament—to cut the House out of the decision-making process by any and every means in their power.

It may be that the previous Conservative Government opened the way to some of this. In retrospect, I think that criticism on those grounds has in it an element of validity. The Secretary of State, after doling out large sums of money to the workers' co-operative at Triumph, after propping up International Property Development, after bailing out Alfred Herbert, and being in the expectation of passing legislation which will enable him to take the British Aircraft Corporation, Hawker Siddeley and the shipbuilding industry into public ownership, still speaks of a high degree of accountability being made available through the parliamentary process. I think he should have devoted a line or two in his script to telling us how that might be done.

If we leave aside the irrelevance of these propositions; if we leave aside the damage which the Secretary of State and all his works do to confidence in British industry at home and abroad, it is still right that we should ask: how are the people to control what is done in their name? How is Parliament to exercise some check over the power which is exercised by the Secretary of State and by Government?

That brings me to my second and more general point. The Select Committee on Nationalised Industries is a busted flush; there is no use pretending otherwise. It is a committee whose reports are seldom read. It is a committee which is virtually unstaffed. It is a committee which exercises virtually no power, and yet vast sections of British industry come within its orbit. Enormous sums of public money are raised and spent by the nationalised industries. We rely upon that Select Committee to invigilate on our behalf, but that Committee is a busted flush.

As a matter of high priority, if the Government care about these matters, which I doubt—I put it to my right hon. and hon. Friends on the Opposition Front Bench, in default of any evidence of Government care on the subject—we must do something to jack up the Select Committee on Nationalised Industries to raise it to a level at least as high as the Public Accounts Committee. It must become a committee which can strike terror into the minds of some of the mandarins of the nationalised industries and into the minds of the Ministers and the civil servants who are theoretically controlling these mandarins. This must happen within the next 12 months.

This afternoon we have been confronted with a Minister who evidently believes that mines exist to provide employment for miners, and who believes that there is no difference between people who work for an employer who can go broke and people who work for an employer who cannot go broke. He is a Minister, in short, who is totally out of tune with his responsibilities and with reality.

Given that this is so, the House must adjust to the need to control a nationalising Government. That is even more important than the question asked by the right hon. Member for Walsall, North (Mr. Stonehouse), namely): where are the men to come from, who are to flesh up these new nationalised industries?

If the House has to adjust, industry must adjust as well. The Queen's Speech uses platitudinous and comforting words about the flourishing private sector. It is worth reflecting that it also contains proposals which would reduce the insurance companies to a level of performance set by the least efficient and least reliable among them, and everywhere in the Government's programme there is the same levelling down of enterprise, efficiency and profit-making as we see, as private individuals, in all our spheres of activity. Business is in the front line. It cannot and must not trust the motives of the present Government. It must look to the House and to the Opposition to monitor and to check the actions of the Government.

I suppose it would be unjust to say that the Government are wholly made up of members of the "National Union of Grave Robbers", but there is a large number of members of the "National Union of Grave Robbers" in the Government. Given that that is so, industry must fight for its life. I hope that all those who sit on the Opposition Bench in this Parliament will pledge themselves to keep industry alive, up to and including a willingness to volunteer to be present at any interview that may take place between the representatives of any branch of industry and the Secretary of State and his minions.

7.11 p.m.

Mr. Neil Kinnock (Bedwellty)

There are at least two bits of common ground that I have with the hon. Member for Woking (Mr. Onslow), and it is unusual since he tends to occupy that part of his party's philosophical ground which is the most distant from that of my party I tend to occupy. Certainly, in his compliments to my new hon. Friend the Member for Lincoln (Miss Jackson), I fully endorse everything he says.

In addition, to some extent I agree with the hon. Gentleman's comments about the performance, functions, support, staffing and efficiency of the Select Committee on Nationalised Industries. I do not think that it is busted flush—perhaps I should be better able to comment if I knew what a busted flush is—but I gained the impression that he did not think it an efficacious body in fulfilling the parliamentary function of scrutiny, and I agree with him there, in spite of the fact that I am a member of it. I hope that my continued participation will strengthen it. I am sorry that he cannot join me in this participation.

Before the hon. Member got on to the question of the Select Committee, he disclosed in one comment a great deal of what hon. Members in all parties on the Opposition benches, and, indeed, some people outside this House, feel about the difference between that which is privately owned and used to manufacture and service and that which is publicly owned and employed in manufacture and service.

The hon. Gentleman spoke about the taxpayers' liability and the responsibility that Members of Parliament and Ministers have to taxpayers, while five minutes previously he had been talking about the need for us to be responsive to the needs of customers. Constantly, throughout my political life, and no more frequently than during the recent election campaign, I have encountered people who insisted on asserting that the publicly-owned industries were an incubus, that taxpayers would have to foot the bill, that people were fed up with making up the deficits that the nationalised industries allegedly incurred repeatedly. They could see nothing wrong with private enterprise doing exactly the same—to create additional surpluses and profits to meet the investment obligations and so on, and to create dividends, but doing it not through the financing of taxation which is moderately progressive but simply doing it in the most regressive fashion by pushing up prices in order to collect the necessary additional cash.

The sooner the Opposition acknowledge that public enterprise in this country, as everywhere else, has the choice of meeting its need for revenue either by collecting from the Exchequer or by putting up its prices, and the sooner they face the political choice and the political task, unenviable as it may be, and face it honestly, the sooner will they make a great contribution to political and public education about the needs of public industry and of private industry.

I say categorically that I much prefer, for reasons of economic justice, for consistency in economic planning and for many other reasons, a system that would fulfil the demands that we are about to make as never before on industrial production in this country and ensure that any deficits that arise from underpricing in order to meet domestic demand can be made up out of taxpayers' money, which is fairly and progressively collected, rather than be spread as a burden indiscriminately across the board, with all the effects that that has on distribution of wealth, power and consumer ability in this country. That is probably the essential difference between the two sides of the House on the central question of who shall own and, therefore, by the same token, who shall control our country.

The point was reached a great time ago, in the view of many who share my Socialist political philosophy, that capitalism had a foreseeable end. In recent years we have seen that capitalism has failed to meet any of the demands that a civilised society imposes upon industry, whatever its ownership, in recognising the need for full employment, for goods and services at a price that the country can afford, and for financial and international security. British capitalism has signally failed to show the enterprise about which it boasts so frequently and so loudly, and it has failed to fulfil the tasks that it set itself to make this nation prosperous. Therefore, the time has come, in the view of an increasing number of our fellow citizens and a large proportion of the British Labour movement, for the private enterprise system to give way to one that is to a far greater extent in public hands.

I would rather put the emphasis, in the word "nationlisation" on the first part of the word, as the Americans do, because what we seek to do is to take those resources and wealth that are the nation's original product and the result of the effort of the people of the nation and put them under the control and ownership of, and make them accountable to, the people of the nation.

There are those in our party who, at least occasionally, employ the Marxist analysis of what is happening in our society. It would be wrong to call us Marxist. That gives the impression of our having a kind of religious conviction about the words of a man, and I do not think that anyone should have that about any man. Occasionally, the phrase "Marxist" is used as a form of mild slander against us, and apparently it is used to frighten children in prep schools.

However, Marx did give us one phrase that should enable even the Opposition to get a closer understanding of what the Labour Party and many people associated with it are now seeing as necessary for this country, and a justification of the move towards increasing public owner- ship and control of our industries and services. Marx said): Capital is merely expended labour. We consider that the original source of all wealth is labour by hand and by brain by human beings. If that is the case, as I believe it is, then we deserve the full product. The workers by hand and brain, their dependants, their fathers, mothers and children, deserve the full benefit, the full product of the wealth that they create. That is taking a basic, philosophic view of the situation, but, stripped of all the sophistication and the managerial phrases that we employ in order to try to explain ideas, it is essentially the logic behind our ideas.

The simple assertion, therefore, is that we have tried the private enterprise system for a long time. It does not meet the needs of a modern civilisation which expects to be fully employed, which wants to overcome inflation, and which expects to attain at least a reasonable balance of payments with the rest of the world. Therefore, that system must be moved aside, and it is best replaced by a Socialist system, because that is how we translate the efforts of the common ordinary working people, by hand and by brain, in our economy, back into wealth for the use, disposal and benefit of those people.

Our proposals were slandered throughout the election campaign. Indeed, they have been slandered this afternoon. I should like to think that it is an unconscious slander by some of the Members of the Opposition, but it probably arises from a deliberate attempt to carry on scarifying people and drawing red herrings across the public debate about ownership and control.

The allegations which the Opposition have made about our proposals for nationalisation do not enjoy the support which they did even five or six years ago among the people generally. We have been told that nationalisation, in the words of the amendment, will cause just about everything short of the return of the Black Death. What we find, on the contrary, in those sectors of our economy that have been nationalised is a total contradiction of all the disaster that is foretold for us.

We are told repeatedly that the nationalised industrial sector is a perpetually loss-making sector. I am glad to be able to tell the House that it does not have to rely on my belief in public ownership to counteract that view. The evidence is to be found in no less a place than the latest annual edition of The Times 1000 1974–1975 which says: Any idea that Britain's nationalised industries cannot make profits is exploded. Nationalised industries do make profits, or surpluses as they prefer to call them, on a straight trading basis and, according to the latest figures available, at the time of going to press, only three private companies, British Petroleum, Shell and ICI make more profit than the Electricity Council and its Boards last year. Similarly, the British Gas Corporation would have had a place in the top ten profit makers. I take no particular credit for that, and I derive no particular enjoyment from it. I should prefer those profits to be delivered to the economy in the form of cheaper goods, services and manufacture. If Opposition Members wish to employ the criterion that profit is the justification for status in our society and economy and to use that to defend their economic philosophy they have only to look down the list published by The Times 1000 1974–1975 to see that, with the exception of the National Coal Board, every nationalised industry in this country made a profit in the last year, the smallest of which, I think I am right in saying, on looking quickly down the list, was that made by the National Bus Company—£4.8 million.

Sir Stephen McAdden (Southend, East)

If someone has a monopoly and can charge what prices he likes, he must be up the pole if he cannot make a profit.

Mr. Kinnock

I hope the hon. Gentleman will freely admit at all forthcoming hustings and in all his speeches in the House that it is a general characteristic of nationalised industries to make a profit, whether they have a monopoly or not.

The second thing I sincerely hope the hon. Gentleman will acknowledge is that the feature that is most important in our nationalised industries is not the fact that they are monopolies. If it is, and he wishes to oppose monopolies, it is a pity that he did not do it when he had the chance when his Government were in power during 17 of the years since 1951, because there was no significant de-nationalisation in the whole of that period, and nobody seriously proposed any.

An Hon. Member

And none today.

Mr. Kinnock

Indeed, none today, as my hon. Friend says.

In spite of this implied criticism of a State monopoly there has been no tendency to de-monopolise any of the public industries and services throughout that whole period.

Sir Stephen McAdden

The hon. Gentleman has not answered my question.

Mr. Kinnock

I am sorry. I should love to continue a dialogue with the hon. Gentleman, but I am sure that there will be plenty of future opportunities to do so.

The important thing in this debate is not the existence of monopoly or the characteristic of ownership, but the purposes for which monopoly and ownership are used and how accountable ownership is. It is obvious that the nature and character of ownership tends to mould the uses to which ownership is put. That is the difference between the industries which I have listed here, which are publicly-owned industries, and the industries listed in The Times 1000 1974–1975, which are privately owned and which, as one of my hon. Friends said earlier, exist and, indeed, operate for entirely different reasons.

Another slander which is generally cast upon the nationalised sector of our society is the suggestion that public enterprise is, by definition, over-centralised, inefficient, unconscious of public needs and unable to meet public demands. This general belief owes more to the continual propagandising of those who have a vested interest in promoting the image of private enterprise than to any realities of life, as is instanced by my postbag and, no doubt, the postbags of other hon. Members.

During my time as a Member of Parliament I have had hundreds of letters complaining that there are people who cannot get a telephone installed and operating within six months in their homes. The number of complaints on this score has totalled hundreds and is probably edging towards 1,000 by now. Most people attribute this deficiency in the telephone service to the fact that it is a nationalised service.

Strangely enough, during those four years I have not had one complaint from a constituent who has been unable to get a new car to the specification given to his supplier—such as a certain colour and so on—in under six months. It is strange that the inability to get a telephone at the drop of a hat, no matter how remote the house, how new the estate, how difficult the circumstances, or how over-subscribed the exchange, is generally taken to be a comment on nationalisation, a final judgment on the inability of public enterprise to meet the public need. Yet if someone gets a new motor car in less than six months, that is an abiding tribute to the efficiency of private enterprise.

As my hon. Friend the Member for Lincoln said, this is because our whole belief due to the way in which we are brought up in the Western world, is that private enterprise is essentially virtuous, implicitly and intrinsically so, and that public enterprise is essentially an incubus, if not—as I think some hon. Members imagine it to be—an evil.

In an assessment of our present needs and of our industrial future let us do away with the exchange of dogmas. I refer again to my hon. Friend the Member for Lincoln, who made a very perspicacious speech, and who said that we should do away with the exchange of dogmas. I do not see anything wrong with the affection for doctrines; there is nothing wrong with being doctrinaire. People who criticise politicians for being doctrinaire are proposing the idea that it is virtuous not to have any beliefs, any doctrines or any philosophy. I do not accept that idea.

If, however, we are to accept doctrines and propose them as a serious means of combating the difficulties that face our country we shall have to do better than sloganising about the virtues of one kind of industry or another, and judge them on their proven record. On that record I would be proud and more than prepared to stand alongside the publicly-owned industries in our country.

My final point is more for the digestion of my right hon. Friend than for anybody else. My criticism of the Gracious Speech is that we tend not to go far enough or fiercely enough in certain industries and interests in the area of public enterprise. Planning agreements and national enterprise boards are laudable, necessary and acceptable if we are to co-ordinate, to obtain accountability and to secure the development of our industrial structure, but I do not think that we can secure the development that we want at the pace that we want and as quickly as we want by relying on a voluntary system. As other hon. Members have said, the private enterprise sector is singularly unresponsive to voluntarism even though it preaches it for other parts of the economy.

On the subject of North Sea oil and gas, my right hon. Friend will be familiar with my views. However, he ought to give attention to the essential dishonesty of the stance which the Scottish National Party and, to a lesser extent, the Welsh nationalists have taken in this Parliament. In its proposed amendment to the Gracious Speech, the Scottish National Party speaks of the inalienable rights of the Scottish people to ownership of Scotland's offshore oil and natural gas and to control of the rates of extraction and manner of development. I believe that we should control the rate of extraction and the manner of development. I also believe that the people of Britain as a whole should have the fullest possible benefit of this wonderful treasure off our shores.

However, in my studies of what the Scottish National Party and Plaid Cymru have said about the use of these natural resources, I have never been conscious of their advocating public ownership of them. Instead, they are prepared to surrender the control of these facilities to the barons of the international oil companies. They will turn their countries of Wales and Scotland into modern banana republics dependent on the whims of the great multi-nationals. If they do not assist us in securing the prerequisite of a consistent, publicly accountable and wealth-giving offshore oil and gas industry, that will be the result. It must be publicly owned. The only area of disagreement that I have with the Government is that the demand at this stage falls 49 per cent. short of what I should like in terms of public ownership.

We have from one side the populist view as expressed by the nationalists and from the other side the dogmatic laissez-faire philosophy from business interests which have had the penny and the bun of recent years in getting immense State aid without any concurrent State accountability. The people are misled if they think that a State Britain would not be a Great Britain. Very large numbers of taxpayers are sick and tired of the insecurity which is part of the current system. They are sick and tired of paying out hand over fist to industries which do not respond in job or accountability terms for the money given to them. They are sick and tired of the continual slanders of the industries in which they work. They want the nationalised industries socialised and made more progressive. They want them to advance into wider areas of our economy. They know that at the end of the day the system which has failed will not bring us to a new prosperity. A new system must be tried, and they rely on this Government to do it.

Several Hon. Members

rose—

Mr. Deputy Speaker (Mr. Oscar Murton)

Order. Before calling another hon. Member I remind the House that there are a considerable number of right hon. and hon. Members who still wish to contribute to the debate and that there is not very much time left for them to speak. Brevity in speeches will be very helpful.

7.35 p.m.

Sir John Eden (Bournemouth, West)

Having listened to the hon. Member for Bedwellty (Mr. Kinnock), I regret very much to tell him that it is not quite as simple as he pretends. Unfortunately, life is a little more complicated than he realises.

I owe it to right hon. and hon. Members to make it known that, as a director of and shareholder in a number of companies, I have an interest in the profitability of British industry.

I felt a great deal of sympathy and understanding for that part of the speech of the Secretary of State in which he spoke about unemployment. But I think that he was misguided, as are so many of his right hon. and hon. Friends, in believing that the matters proposed and the attitudes adopted by this Government will do anything but damage to the objectives which they themselves have declared. Unless we can maintain a profitable industrial base, the prospect for secure employment is bleak.

I regret that we are having, yet again, to debate nationalisation. The only reason why we are having to do so is the proposals of this Government. The economic case for further nationalisation, centralisation and intervention has not been made out; nor has it even been attempted. The disruption of the aircraft industry, with its exceptional and outstanding performance, cannot be justified under any pretext.

The example of existing nationalised industries gives little encouragement to the belief that a company's total immersion in the State system will of itself enhance performance, improve efficiency and raise standards of service to the public. On the contrary, it makes the attainment of these objectives more difficult, more complex, more drawn out and much more costly.

Having had, throughout the lifetime of the last Conservative administration, something to do with practising intervention, I know how damagingly distracting for management it can be. Yet, as a Minister with responsibility for nationalised industry, I found that it was not possible to step aside from the many problems—political as well as economic—posed by these great concentrations of power in the public sector. Perhaps the most difficult of all was how to deal with prices and with pricing levels in the public sector.

The nationalised industries, being in the main monopolies in their own spheres of activity, have a marked influence on the domestic economy. By holding down the prices for their products or services, demand is stimulated, capital hunger is increased and management disciplines are weakened. That is bad for the industry concerned and bad for the country's economy. But the creation of these public sector monoliths makes more difficult the natural interplay of market forces to which any self-respecting management must remain sensitive, and seems almost inexorably to embroil Government—Ministers and civil servants—in directing the decisions of management.

Although during our time in Government much thought was given to possible ways out of the dilemma, we failed to reach any conclusion. It would have been more fruitful could we today have been concentrating on the steps needed to deal with this problem. Instead, we now have to contend with the Government's proposals, which will make it much worse.

Undoubtedly there are weaknesses in British industry. But further nationalisation and the proliferation of interventionist agencies, even if we can find the right people to man them, which is very difficult, will contribute nothing to their correction. The overriding need today is for the re-creation of a climate of business confidence, and, although the onus for achieving that rests primarily with the Chancellor of the Exchequer in his Budget next week, all Ministers who are engaged in any way in manipulating the economy share in the responsibility.

If the Government are genuine in their commitment to vigorous and profitable public and private sectors, immediate action is imperative. They must act to ease company liquidity, to discount the effects of inflation on the valuation of stocks and inventory, to make it possible for managers, who are the decision-takers in industry, to foresee an adequate profit on capital to be invested, to cease treating the private investor as some kind of parasite and—here I agree very much with the right hon. Member for Walsall, North (Mr. Stonehouse)—to encourage a more constructive attitude on the part of unions and employees, especially towards schemes for improving productivity, whether of capital or of labour. To a short list of that kind, one must also add—forlorn hope though it may be—that the Government should forgo the worse excesses of their forays into further nationalisation and public ownership.

There are many influences which affect managements in the decisions which have to be taken about marketing, investment and the development programmes of their companies. There are already risks and difficulties enough. To push ahead with arrangements for the formal and extensive involvement of Government Departments in business affairs will make the whole exercise much more burdensome and unsure. Detailed planning by the Government will almost guarantee that the wrong goods are produced at the wrong prices for the wrong markets. One might be able to coerce domestic demand to accept such products, but we have to sell abroad, where the writ of Government does not run.

The purpose of this Government's industrial policies is, of course, more political than economic. Their oft-stated objective is the redistribution of wealth and fundamental changes in the structure of society, and their industrial policies are avowedly means to those ends. But that will bring no benefit to anyone if the creation of new wealth is discouraged.

The weakness of the Government's case is to be seen throughout British industry today, where steel and coal productivity have fallen, industrial activity has slowed, industrial disputes have grown and inflation is rampant. What, then do they propose to redistribute, and to whose advantage do they think it will be? The true aim of this Government is to centralise economic power in the hands of those who already hold political power. If there be any in the House who are disposed to cheer at that, they should realise that at the end of that path lies also the end of liberty itself.

7.43 p.m.

Mr. Mike Noble (Rossendale)

The constituency that I now have the honour to represent is tucked away in the foothills of the Pennines and is part of the economy of North-East Lancashire. Like the rest of that area, it is still very much based on traditional industries, particularly footwear and textiles. My predecessor, Mr. Bray, worked hard for his constituency but was unable to diversify the industrial base, and the loss of insured population continued.

I make no apology for concentrating on the footwear aspect of my constituency. Nationally, footwear employs 85,000 people, and about 50,000 more in ancillary jobs, and the turnover is £350 million per annum. It compares with many of the more spectacular industries. In Rossendale, two towns particularly depend on the industry. In Rawtenstall 24 per cent. of the insured population work in the industry, while in Bacup the figure is 30 per cent. It is not unreasonable to say that virtually half the economy of my constituency rests upon the industry.

I was, therefore, particularly interested in that part of the Gracious Speech which said that the fulfilment of the social contract was seen as a means of maintaining employment, particularly in the older industrial areas. About 35 per cent. of employees in the industry in Rossendale are working short time. It is significant that next week the industry will be celebrating—if that is the right word in present circumstances—its centenary.

The industry faces two kinds of problem. There is a long-term problem relating to its structure, which was based on small family firms. Although one employer has extended and rationalised across the industry, there is still far too great a concentration of employment in small family firms. The attitudes of the industry in the past could have been described as conservative—I hasten to add, with a small "c"—but the climate of opinion is changing. Representatives of both the manufacturers and the unions have recently suggested to me that there was a need for at least a little Neddy. I would suggest going further and extending the operations of the National Enterprise Board, which the Secretary of State described today as "the only way", to this industry. But even if we go only as far as a little Neddy there are certain problems.

The little Neddy would have to be all-embracing. I am assured by many friends in the industry that, whereas on the manufacturing side they would wish to reach agreement with the Government, any arrangement, to be effective, would need to include distribution and retailing, and there could be problems there. What they were most emphatic about was that with the increasing competition from overseas the industry's only way forward is a collective solution.

These are long-term proposals, but there are severe short-term problems as well, arising from international trade. Again with interest, I see from the Gracious Speech that the Government will promote international efforts to establish a more liberal pattern of trade. That is a praiseworthy aim which we should all seek, but the trade we wish to liberalise must be fair, unlike that which is threatening the jobs of so many of my constituents.

I have already talked to various members of the Government about the import situation, and I know that representations have been made to them from other quarters. From the Comecon countries of Eastern Europe alone—Poland, Romania and Czechoslovakia—in the full year of 1973 we imported 5.36 million pairs of shoes. Between January and July of this year 5.42 million were imported. So the figure for those seven months exceeded the whole of the previous year. The prices of these imports led one strongly to suspect dumping.

There is an immediate need for import restriction. The Conservative Government of 1970–74 reached a voluntary agreement, particularly with Poland, which is now being breached. If voluntary agreement cannot be operated, we must urgently seek to impose anti-dumping legislation.

As if the import position were not enough, the industry is now threatened by restrictions on exports. Only on 18th October the Australian Government imposed a quota system on footwear, aimed mainly at cheap imports from Hong Kong and Taiwan but also affecting Britain, and particularly companies in my constituency. According to the Lancashire Footwear Manufacturers' Association, its immediate effect will be to prevent the export to Australia of £250,000 worth of footwear.

The initial request that I would urge the House to accept is very modest—that those companies which have already entered into contracts or have shipped goods or hold irrevocable letters of credit in exporting to Australia should be allowed to complete their contracts in accordance with the terms and conditions agreed between the parties, and that goods on the high seas or currently being manufactured in Rossendale should not be prevented from being exported. But it is a matter of urgency that the Government must pursue these negotiations now. In Rossendale we cannot afford the kind of hardship which is being created.

Earlier this afternoon, at Question Time, my hon. Friend the Under-Secretary of State for Industry, the Member for Oldham, West (Mr. Meacher), said that the work of his Department was job preservation. If that is so, in the long term we must restructure industry, but in the short term it is absolutely essential that we are protected from unfair trade through imports and that the export situation, particularly with regard to Australia, is cleared up.

Immediately before the February General Election the Granada Television company held a series of programmes in my constituency called "Crisis 74". Those programmes dealt specifically with the crisis caused by the energy problems and the problems of the three-day working week. I hope that there will be no recurrence, with a "Crisis 75" held in Rossendale to deal with a three-day working week which might be continuing then.

7.52 p.m.

Mr. Gordon Wilson (Dundee, East)

It is almost presumptuous of me to speak immediately after a maiden speaker, having been a Member of the House for only seven months, but I should like to take the opportunity, from my innocence in these matters, of congratulating the hon. Member for Rossendale (Mr. Noble) on a notable and thoughtful speech. The constituency of Rossendale will be thankful that it has a representative who will be outspoken on its behalf in dealing with the problems of the footwear industry. I hope that the House will hear more frequently from the hon. Gentleman on other matters as well as on industry.

In Scotland, which is principally my interest, the General Election made it clear that we are interested in self-government, and with autonomy in relation to economic management. If the Government assume that legislative devolution will necessarily satisfy the aims and aspirations of the Scottish people, they are making a mistake. There are claims coming from members of the Labour Party—as well as, I would hope, from Conservative Members from Scotland, if any such care to turn up this evening in the Chamber—that trade and industry could be among those functions which should be delegated to the Scottish Assembly. But I want to make it perfectly clear to the Government that it is essential that centralisation of jobs and opportunity and of economic initiative should cease to be vested in London, and that centralisation has, in a sense, probably marred the concept of nationalisation.

While in a self-governing Scotland all nationalised industries would remain in public control, undoubtedly we should try to improve the methods of management so that these industries become more efficient and responsive to the general consuming public. All Members of Parliament must be aware of complaints about the nationalised industries and their failure to carry out services, and some-times there is exasperation about the difficulty of getting through to the bureaucracy behind the nationalised industries that there is need for immediate action—although there is often equal irritation about the failure of some multinational companies to perform their obligations to service domestic equipment.

If the Government are really interested in devolution and a Scottish assembly, they must ensure that there is maximum power over industrial development. It is no use calling, on the one hand, for a Scottish assembly but, on the other hand, promoting legislation which would strip Scottish control from the shipbuilding industry, oil and natural gas. In anything that the present Government approach, they must remember that, in addition to the mandate which they secured at the General Election, they should pay attention to the competing pressures in Scotland from public opinion on the need for control within Scotland over the economy.

It has been suggested that some of the Government's proposals are intended to prevent unemployment from growing. But anyone who looks at the record of the nationalised industries in Scotland will be aware that they are not a buttress against unemployment. Some information has been supplied to me by the Department of Trade or by the Department of Industry—I cannot remember which; perhaps the Department of Trade and Industry would cover it. That information shows that from June 1955 to June 1973 covering the gas industry, railways, coal mining and electricity—and, in the case of iron and steel, June 1967, which was the date of nationalisation—the performance was rather discouraging.

For instance, out of the 18 years in the table given to me, there was in the gas industry over 15 of those years a loss of employment. Again, with the railways there was a loss of employment over 16 years. In coal mining there was a loss for 14 years. In electricity there was a much better performance and I am glad to say that out of the whole period there were 11 years during which there was growth in employment. In steel, in a shorter period of six years, there were only two periods when the situation gave rise to an increase in employment.

Looking at the nationalised industries in Scotland, it is perfectly clear that for the regeneration of industry in Scotland there will be a requirement to have a Scottish industrial and economic policy. It is no use continuing with the old practice of the last 20 years of "stop and go", when these factors were applied against industrial and economic expansion in Scotland.

I should like to refer the Secretary of State to the report of the Scottish Council's Development and Industry Research Group, published earlier this year, which advocates a case for economic and industrial autonomy. The group was outlining this case within the concept of the United Kingdom, but I rather doubt in some instances the practicality of that without the self-government which the Scottish National Party wishes to achieve.

It is very important, therefore, that we deal with this question in this Parliament to ensure that there is the initiative located in Scotland, perhaps to take different economic decisions in the course of Budgets or in some other way to change the trends within Scottish industry. In some ways the question of centralisation has been positively harmful to Scotland, as seen through the nationalised industries. But it should also be borne in mind that centralisation can occur in other ways, too. One can also get developments of industrial monopolies, and restrictions on trade in the private section. But certainly within the nationalised industries, perhaps because of the tendencies towards bureaucracy which one gets in administrative units, the situation has been worse.

The Scottish steel industry, which before nationalisation was fairly nicely balanced and had a wide range of markets, after nationalisation, because of this trend towards centralisation, was reorganised on a basis of different divisions, which had the effect of stripping away a lot of the decision-making powers within Scotland. Although a general steels division was set up in Scotland by the British Steel Corporation, with what one might term a nominal control, almost immediately 100 sales jobs were sent to London. Successively after that, the advanced planning group, which was responsible for the planning of Ravens-Craig strip steel mill—the brains of the Scottish steel industry—was dismantled and the experts were dispersed. Now we are threatened with the possibility of another 7,500 jobs being lost to the steel industry in Scotland.

The statement made in response to Questions today about the lack of guarantee being given about the retention of two of the open hearth furnaces at the Lanarkshire works faced with closure must fill many steel workers with dread, although the works was running at a profit in June. One of the saddest things has been the narrowing of the products range within the Scottish steel industry, from 17 to five. The sections of the products retained are unfortunately in the less profitable range, so that the opportunities for future development have been limited.

Hunterston should have been one of the great opportunities of Scotland, even within the British let alone the Scottish, context. The British Steel Corporation's way of proceeding with the sterilisation of land to the prevention of expansion must be very harmful and is expressive of what I have been saying.

Again, in energy supply we come to the British Gas Corporation. Far be it from me to advance the cause of the former Scottish Gas Board—a body with which I had many strenuous arguments in connection with my own domestic supplies—but the British Gas Corporation, which took the place of the Scottish Gas Board, has, in the recent development of the Frigg field, been pursuing an extraordinary, if not anti-Scottish, line. I have here a report from gas engineers in Scotland pointing out that contracts for the pipeline were valued at about £800 million. Yet Scottish responsibility for that development has—according to the engineers—been reduced to minimal proportions, very largely related to the use of the legal department and wayleave personnel, as London did not have Scottish lawyers. A request has been made to headquarters for a share of the Scottish work since Scottish gas engineers believe they have the ability and skills to carry these contracts forward. They have advanced a detailed case to me about it. It seems they are not to be entrusted with the major and important job of bringing Scotland's offshore gas on flow.

In relation to the proposed British National Oil Corporation, I am sympathetic in the broad and philosophical sense to what the Government are trying to do, because they have taken over the policy of the Scottish National Party and of Norway in seeking State participation in the industry. But the Government are making the major error of calling it the "British National Oil Corporation", which clearly indicates that the profits and benefits of the development of North Sea oil will be divided on a British level, making the share for Scotland very slim. One must congratulate the Government on their honesty in doing it, but some of the leaflets issued by the Labour Party in Scotland during the election campaign seemed to suggest that the Scottish people would get advantage out of these proposals.

I hope that the House will have an opportunity to discuss the new energy-sharing agreement in detail, because in some ways, with the majority powers built in, it seems to have a much more restrictive effect on sovereignty than is perhaps the case with the EEC.

Comment has been made about sites for production platforms and the dangers of having too many of them in Scotland. I refer the Government to an article in today's Glasgow Herald and advise them to tread fairly carefully in that respect.

I hope that there will be a reorganisation of the nationalised industries in Scotland on a Scottish rather than a British basis and that the responsibility for the nationalised industries in Scotland will go to the Scottish assembly. I hope, in relation to shipbuilding, that the Government, whatever detailed proposals they eventually produce, will endeavour to retain local managements wherever possible rather than submerge them in bureaucratic corporations. Representing a constituency with a small shipyard, I would have fears for its future if its product range were lost sight of in a larger organisation.

The idea of a Scottish development agency meets with the approval of all political parties in Scotland, but a lot will depend on the size of the amounts of oil money which will go to it. Unfortunately, the Government will not commit the revenues from Scotland's oil resources directly to the- agency, but mask them under the guise of the Treasury in the hope that the Chancellor of the Exchequer may be generous and oversway the opinions of the barons of his Department.

When the Government approach the regeneration of industry they should not dismiss Scotland purely in terms of two paragraphs in a White Paper but should consider the positive rôle that Government funds can have in the creation of new jobs in Scotland as well as in the safeguarding of jobs which may be placed in temporary jeopardy.

Finally, I come to a matter which will largely determine how my hon. Friends and I vote tonight. In the White Paper, Democracy and Devolution Proposals for Scotland and Wales", there is the heading "Trade, Industry and Employment". The paragraph says: There is still a great deal of doubt about whether and if so how far executive powers in these fields could be devolved to Scottish and Welsh assemblies without prejudice to the essential economic unity of the United Kingdom. There is a strong desire for more decision making in Scotland and Wales, but this would not necessarily require the creation of an elected assembly. I serve notice that if the Government do not brush up and strengthen the proposals in their White Paper they will quickly lose whatever remaining support of the Scottish people they may presently have.

8.8 p.m.

Mr. Philip Whitehead (Derby, North)

It would be inappropriate for me, as a mere English Member, to follow the hon. Member for Dundee, East (Mr. Wilson) too closely in his remarks, but I regret the chauvinism of part of what he suggested. I have never thought, as an English Member, that it was any part of my outlook to advocate that the expenditure of the national product of England, if it could be differentiated, should be spent only for the benefit of the people of England. We have to see this debate in the context of the United Kingdom, and I think that perhaps in time the hon. Gentleman will realise that the autonomy he advocates cannot be operated in the case of Scotland by autorchy but that Scotland is and must be a part of the United Kingdom.

I want to devote my remarks to the main subject of the debate, the question of public ownership, particularly in the context of the aviation and aerospace industry. I was saddened by some of the remarks of the hon. Member for Henley (Mr. Heseltine). After many of the pronouncements during the General Election, one had expected that we might today have a coherent critique at least of the proposals in the Gracious Speech with regard to public ownership. Instead, we got from the hon. Gentleman an array of remarks which culminated in an attempt to equate the principle of full employment with the health of the Stock Exchange. To those of us who remember that the Financial Times share index record was broken in the very week that unemployment passed the million mark, that is an absurd assertion by the hon. Gentleman.

I want to talk about the proposal in the Gracious Speech for the public ownership of the aerospace industry and to say how much I welcome it, representing a constituency which has within it a significant element of aerospace in the shape of the already publicly-owned Rolls-Royce company. I found the recent attack on our proposals by the Society of British Aerospace Companies almost incomprehensible and showing some signs of incipient hysteria—an attempt, if I recollect correctly, to claim all the benefits of innovation and export potential for private enterprise without a mention of the enormous amount of public money which has been put into this industry over the years, partly on a contractual basis, because the Government have been one of the main purchasers of the aircraft concerned, and partly in floating loans and general backing finance for the industry over many years.

There was not a mention of the fact that, relatively speaking, over recent years the British aerospace industry has declined if we compare it with the French industry. I find it incomprehensible that those in the Tory Party who take this view can always ignore facts of this kind, as though the only success story in France was Marcel Dassault and as though the large segment of the French aerospace industry which has been in public ownership for many years was not in itself a success story.

I hope we shall take the view today that as we are to put into this vital industry essentially more and more public money it should be followed by public accountability. In my view there is no other way to do this other than by public ownership. That can take many forms. I propose to argue tonight that the wholly-owned public company on the lines of what we already have in the aero-engine business may well be the solution.

Mr. Geoffrey Pattie (Chertsey and Walton)

Does the hon. Gentleman not agree that the aerospace industry as at present constituted has earned this country £3,400 billion over the past 11 years?

Mr. Whitehead

I agree with that. I think it will earn a great deal more in the future. In the high risk business we are now in with aerospace work it is essential that public investment should be safeguarded and that there should be public accountability. I recognise the hon. Member's constituency interest in this and I know some of the concerns nearest to his heart. I think he would agree that much of the public money which has gone into the aerospace industry over the past decade has not been fruitfully used but has been wasted. In this House we have never had proper accountability until long after the event.

It is no good some Select Committee deliberating upon these things years after the money has been spent. We need to know what is happening and to have accountability at the time of the expenditure, when the risks have been taken. Of course there will be risks, and I hope that there will be profits accruing from them. But this should be within the context of public ownership.

I give two small examples from the publicly-owned Rolls-Royce company, which is my particular concern, as an illustration of this point. The company is engaged upon a wide range of production and innovation. It is engaged not merely in the massive project which led to the financial crisis of 1970–71, but in a whole range of collaborative ventures often overlooked when we consider the rôle of this public company within the general aerospace picture.

I take just one small example which is relevant by way of comparison with other matters which have been raised by some of my right hon. and hon. Friends recently, namely the small, short-haul airliner being built in collaboration with the Dutch company, Fokker. In view of the fears that have been expressed in the House over the future of the Hawker Siddeley 146, it is worth recollecting that the number of British components in the Fokker aircraft is almost as considerable as those which would have been in the proposed HS146, although I hope that the 146 will still be built.

It is worth considering that we have here a public company putting about 41 per cent. of its expenditure into this aircraft, the F28, while the privately-owned company, from which we have heard a great deal through the pronouncements of Sir Arnold Hall during the election, has now withdrawn from its commitment. It had a great deal of public assistance in the early stages of its commitment to build the HS146.

There should be a publicly-owned company for the aerospace industry. It should be based upon BAC and should certainly include all of the aerospace parts of Hawker Siddeley. Sir Arnold Hall would probably not quarrel too much with the contention that during the period of his control over Hawker Siddeley it has diversified pretty successfully out of aerospace. It has not actually been expanding its aerospace interests. It has been moving into other things. It is part of that removal from the, to my mind, vital aerospace side of our exporting industries which is in part at the back of all that has happened with the HS146.

I believe that the wholly owned public company such as Rolls-Royce is now an answer in the context of public ownership. In the remarkably lucid maiden speech by my hon. Friend the Member for Lincoln (Miss Jackson) we heard the contention that the publicly-owned company, unlike the privately-owned company, does not have the need at every turn to placate its shareholders, to consider the short-term profits over the long-term investment. When the hon. Member for Henley began prating from the Opposition Front Bench about a failure to invest one would have thought that that failure had begun on 1st March this year.

That failure is deep-seated and profound It is the major malaise of the whole of private industry in the country. That is nowhere more true than in aerospace. In Rolls-Royce we have a com- pany which is now deriving its investment from the left and right pockets of the taxpayer. The major investment programme which is now being undertaken by it, the RB211 engine in its stretched form, the-524, is partly funded by the profits of Rolls-Royce, which are based upon the taxpayers' investment, since it was the taxpayers' money which floated Rolls-Royce 1971. It was also floated, in equal ratio, by direct Government grant, by Government loan, to get this project moving.

Much to my regret just before the election, and not entirely coincidentally, the Financial Times ran a major story to the effect that the Labour Government were withdrawing from their commitment to the pre-production financing of the-524 engine. My right hon. Friend the Secretary of State for Industry was put under considerable pressure then. It is fair to say that the Boeing Company, reading this article, and believing it—and I have reason to think that a major part of the story was perhaps leaked from within the aerospace industry—had to ask the Government whether the project was going ahead and receiving the backing of the British Government. The fact is that it was. It is perhaps a sign of the times that the Government funding of the-524 engine depended upon a firm order from Saudi Arabia, Saudia Airways. The minute we received that firm order, the Government contribution by way of the launching loan was paid over. My constituents and I welcome that, as do all the people who came to talk to the Secretary of State. They know that that is happening within the context of a responsible public industry.

When Opposition Members say, "What about all these profits, and what about the collapse of this great industry if it were taken into public ownership?"—I say that at the cutting edge of innovation, export and risk-taking is a publicly-owned industry which is doing precisely that.

I make a special plea to my right hon. Friend the Secretary of State for Industry. I believe that a large part of the future of the British aerospace industry lies in the development of the whole family of engines built upon the RB211. We have seen an extension of this in the -524 which has been developed with 48,000 lb thrust for Lockheed and will be developed up to 50,000 lb thrust for Boeing and Lockheed if that development is approachable. I have every reason to believe that it will be. It will be the work horse of the world's airlines in the 1980s and 1990s. My right hon. Friend should vary the conditions which have been placed by the British Government upon additional funding for the collaborative project with Boeing, because the fitting of that engine to the Boeing 747 aircraft would give the engine a much wider range and a much greater acceptability to the world's airlines than is possible if it is included only in the Lockheed TriStar, successful though that has been.

I know my right hon. Friend's enthusiasm for the RB211 project and I know that he has been with it and supported it from the start. As the Boeing Company already has a conditional order from British Airways for a certain number of 747 aircraft, we should be able to say to the Boeing Company, as we said to Lockheed, that one order is enough.

As I understand the financing of the project, about £80 million is required for this development, about £55 million of which will be required for Lockheed in any event and a further £10 million to get the engine up to the 50,000 lb thrust that Lockheed as well as Boeing requires. We are, therefore, talking of less than one-third of the total amount which will be specifically earmarked for the funding of a conversion for the Boeing 747. As the Government will be putting up half that money directly through the taxpayer and from the Chancellor of the Exchequer I believe that it will be money well spent.

If there is to be a future for this great enterprise not merely in the next decade but for the rest of the century it has to be achieved within the context of responsible public ownership. During the election I was constantly seeing large Renault motor cars driving people to the polls in the Conservative interest which had plastered all over the back window "No to Nationalisation". There is a similar ambivalence about the Conservative Party's attitude not only in this debate but also towards Rolls-Royce which the Conservative Government had perforce to nationalise in 1971. I believe that the industry can go forward into an immensely profitable area of exports and into a sustained field of further innovation, as a publicly-owned enterprise which will belie as the years go on all the absurd, cheap sneers about public ownership which we have heard in this debate.

8.22 p.m.

Mr. Churchill (Stretford)

It is a pleasure to speak after the hon. Member for Derby, North (Mr. Whitehead) who has referred so eloquently to his constituency interests in Rolls-Royce. The hopes he has expresed for the future development of the RB211 engine will be echoed by many of my hon. Friends. It is a great project, and it is right that we should be pushing back the frontiers of high technology. If we once opt out of that business we can no longer expect to have a high and increasing living standard for our people.

The hon. Member for Derby, North will not expect me to take up his remarks in favour of nationalisation generally, although he made a more eloquent case for it than did his right hon. Friend the Secretary of State. The hon. Gentleman mentioned ambivalence—it was he who re-recruited me into the Conservative Party when we were at Oxford a few years back.

During the election campaign and in opening the debate on the Address the Prime Minister said that the economic crisis that Britain faces is the gravest since the war. I think that few of us in the House would dispute that. We have a crisis of inflation. Rip-roaring wage inflation has taken over from oil and commodity price inflation as the principal cause of high prices to the consumer. We are faced with a crisis of industrial confidence, brought about in the first place by the declaration of war by the Secretary of State for Industry and the Labour Government on that sector of British industry which accounts for three out of every four jobs and 95 per cent. of Britain's exports.

Is it any wonder that more and more firms are facing bankruptcy, and that unemployment is growing? In the summer the figure rose by more than 10,000 a month in the North-West region alone. We face a crisis of agricultural confidence, with tens of thousands of animals which should not be coming on the market for one year, or even two years, going for slaughter.

We also have a crisis of growing foreign debt. We are financing, by short-term borrowing, principally of Arab money, a living standard which we are not earning in the market places of the world. That is hot money which can be withdrawn at 24 hours' notice. We are rapidly getting into a situation in which a single telephone call from the Finance Minister of any one of four Middle Eastern States could cause the collapse of the British banking system overnight. This is a situation which I hope that the Government will seek to get away from at the earliest moment.

The Government, in the Gracious Speech, have laid before Parliament those measures which they believe should have legislative priority in this Session. In the debate last week the Prime Minister said: This week we shall be debating the economic crisis and the Government's measures for fighting it"— [OFFICIAL REPORT, 29th October, 1974; Vol. 880, c. 74.] What measures? We have been given no measures by the Prime Minister or by his Ministers for fighting inflation. The only recipe they have is to cling to the social contract.

Where is the social contract? It is not in the Library of the House of Commons. I went to check there three months ago; I went to check there again today. Even though the Prime Minister said last week that it had been published, it has not been published by the Government. The Government have not given their version of it. It is no wonder that people on the shop floor of industry and those who have to negotiate on behalf of industry have no idea where they stand.

Where is the social contract today in Scotland? There is paralysis over large sectors of Scottish industry. Where is it so far as it concerns the commuters who are seeking to get home tonight on Southern Region and up in Liverpool, and who face a total stoppage of all rail services?

I welcome the appeal by the right hon. Member for Walsall, North (Mr. Stone-house) to those people who take that action to think of the interests of the community as a whole. Is it impossible to think of the damage being done to the Clyde by the millions of gallons of sewage being poured into it? Is it impossible for these people to think in terms of the gross inconvenience being caused to hundreds of thousands of commuters seeking to get back home after a hard day at work? Where is the social contract? Twenty-seven out of 39 settlements in the last three months have broken what is understood to be one of the clauses of the contract, namely, that there should not be a second increase in the space of less than a year. Yet the Government take no action.

I freely acknowledge that the Prime Minister did say that Britain faces the gravest economic crisis since 1931. But the fact is that no one believes him, and one wonders whether, at any rate during the election campaign, anyone was intended to believe him, for at the same time, the Prime Minister and his Ministers made clear that the situation was not so grave as to require any formal restraint of excessive wage demands, and emphatically ruled out any resort to the most potent economic weapon in the armoury of any Government—namely, the wage freeze, which has been used by Governments of all colours in recent years.

It is this sort of double dealing to the electorate of this country that has provoked, and is provoking today, the wage explosion and the industrial unrest which is doing so much damage to our economic situation. The fact is that the Government have no policy for dealing with inflation. The Prime Minister says that Governments should keep their promises. I certainly agree with that. But the corollary is that when Governments make promises they should do so with some belief that they can honour them. One must wonder how many hundreds of thousands of working people in this country will be thrown in the coming months on to the slag heap of unemployment in the name of the promises which have been given to effect no restraint over excessive wage demands. Mr. Jack Jones was right to say—and the Prime Minister in his earlier incarnation before the 1970 election said as much himself—that we cannot have runaway wage inflation and expect to have a high level of employment.

What is to be found in the Gracious Speech to stimulate industrial confidence? The answer is, "Not a single thing." Indeed, the reverse is the case. The war on industry is to continue. We are to see the nationalisation of aerospace, shipbuilding, building land and other sectors, including North Sea oil. The hon. Member for Bedwellty (Mr. Kinnock) said that the private enterprise system had failed the British people. I put one question to the hon. Gentleman and to the Government as a whole. How is it that the people of this tiny island with few natural resources—at least until recently when North Sea oil was discovered, and even that has not come on stream yet—apart from our own wits, have been able to have and command a living standard approximately three times as high as that of the people of the great Socialist Republic of the Soviet Union, a continent twice the size of the United States and with natural resources approximately twice those of the United States? Why is it that the Russian people, who live under a system of Socialism, State bureaucracy and centralised control, have a living standard which is one-third of that of the ordinary British people?

Mr. Kinnock

I regret having to intervene again, but the hon. Gentleman has invited me to do so. The crassness of the Soviet system is not mine to excuse, nor does it appear as a model in the Labour Party manifesto. The fact remains that, while we need not follow the example set by the Soviet Union, what we are seeking to do in this country is to avoid the mistakes of the private enterprise system and give a higher standard of living to our people. Any hypothetical or allegorical statements about the Soviet Union are totally irrelevent to this debate.

Mr. Deputy Speaker (Sir Myer Galpern)

I think it would be appropriate for me at this stage to indicate to right hon. and hon. Members that the principal speeches will begin at 9 o'clock. There is still a long list of back benchers who are anxious to speak and I appeal to Members, as my immediate predecessor in the Chair did about an hour ago, for brevity to enable others to take part in the debate.

Mr. Churchill

I accept what the hon. Gentleman says, that he wishes to have no part of what happens in the Soviet Union in terms of economic and industrial control. Nevertheless, one must recognise that what Government Members are seeking to do is to concentrate economic and industrial power in this land in the hands of the politicians. This is something with which I and my hon. Friends cannot go along. In short, in the eight months in which the present Government have been in office we have seen a growing crisis. Indeed, the Government have in no small measure contributed to the growth of that crisis, and yet they have taken no decisive action to deal with the critical economic problems that face us; nor, indeed, have they indicated that they have any proposals to put before Parliament.

The Prime Minister, in his television broadcast speech following the election, took up the Leader of the Opposition's theme on national unity. Some may have thought that this heralded a new start, but the rhetoric was far removed from the reality. The Government are making it clear in the Gracious Speech that they are pressing ahead with the divisive policies for which they have no mandate whatever from the people. The Government are pressing ahead with nationalisation. Yet neither in the election campaign nor today when the Secretary of State for Industry was answering questions from the Dispatch Box—if it can be called answering questions—have they once told the House or the electorate what is the cost of the nationalisation proposals. The least that they can do for the people is to tell them where the money is to come from and how much is to be extorted from them in the coming months and years to pay for the insane measure of State ownership that is going to be forced on wide sectors of British industry.

The Government also are intent on pressing ahead with their defence cuts, at a time when British defence capability has never been weaker in this century—and that goes back to the pre-war period —at a time when the Soviet Union is producing 5,000 tanks a year—five times as many as the United States—and the equivalent in two months of the total 900 that the British Army can deploy. Yet there are two references in the Gracious Speech to détente. What détente? What justification is there for the Government's cutting the defence capabilities of this country still further?

With regard to hospitals, the right hon. Lady the Secretary of State for Social Services is carrying on where what Mr. Bernard Levin felicitously called "the lady with the saw-toothed bed-pan" left off—chivvying private patients and consultants in what seems a determined effort to make the National Health Service into a third-class service.

With regard to industry, the divisive and unfair policies of a wages free-for-all are wreaking their damage. Why do not the Secretary of State for Industry and the Secretary of State for Employment go down to the pithead and explain the productivity deal to the miners? They can see the moderates being pushed aside. The Secretary of State for Employment is perhaps too busy rehashing the law on picketing, which will enhance the powers of the industrial wreckers at the expense of ordinary trade unionists and employees who seek to attend their places of work. It will certainly curtail the freedom of the individual.

The right hon. Member for Bristol, South-East (Mr. Benn) is too busy building new empires and creating new State monopolies which will in their turn, no doubt, provide new vehicles of power for militants in the trade union movement to paralyse new sectors of British industry and hold the country to ransom again. He would do better to get those industries which are already nationalised running smoothly.

Why do the Government stand aside while a small wholly unrepresentative Fascist minority on the executive of the National Union of Mineworkers seek to gain control of that union, wishing to have another confrontation with the Government, this time a Labour Government—

Mr. Bob Cryer (Keighley)

Go to the pithead.

Mr. Churchill

The hon. Gentleman says, "Go to the pithead". It is a pity that some Ministers are not going to the pithead at the moment and explaining the productivity deal.

Could it be that some of these same Fascist forces—and I use the word advisedly, because they are anti-democratic, totalitarian and extreme socialist, all of which are the hallmarks of Fascism —have their reflection within the ranks, sad to say, of the Labour Party?

It is time that the British electorate realised the stark reality, that sovereign power has been leaving this Parliament—which for many centuries has been the guardian of the liberties of the British people—and, following the humiliating surrender in 1969 of the present Prime Minister over pay and prices, over "In Place of Strife" and the defeat of the Conservative Government by the miners in February this year, we have seen power passing from this Chamber to forces and bodies which have no democratic control whatever.

One must wonder whether it would be a more appropriate suggestion that the National Executive of the Labour Party should be televised rather than this Chamber. There, it seems, is where power has been going to, even though this body is elected by the Labour Party conference where 80 per cent. of the votes are wielded by the block vote of the trade union movement. Nobody is less representative of the aspirations of the ordinary Labour voter, let alone the ordinary voter in this country.

The Government's proposal that we should go ahead on the basis of nationalisation and more State control is enormously divisive and, unless the Prime Minister and his colleagues make it clear that they are prepared to exercise decisive leadership in the coming months, decisions will be increasingly taken, not here in Parliament, but in the Labour Party's National Executive. Already a decision apparently has been taken about tearing up the Simonstown Agreement. It has not been taken on the Floor of the House; it has not even been taken by the Cabinet. It has been taken by the National Executive. The Cabinet endorsed the sending of the fleet recently to Simonstown. Unless the Government are prepared to show some leadership, the democratic liberties of the people of this country will be at risk.

The reality is that Britain today is being governed by a minority which commands less than 40 per cent. of the vote. It is not only a minority but a minority within a minority, and this is what, above all, is unacceptable to the British people.

The Prime Minister must recognise that the British people will not tolerate being led towards a Socialist dictatorship by a minority clique in his Government. He has the choice of going down in the history books as one of the greatest peacetime Prime Ministers who saved parliamentary democracy from its gravest internal threat, or as the weakest Prime Minister since, and including, Lord North, and the man who became the Quisling who sold out the liberties of the British people to a small, power-seeking Fascist clique.

8.45 p.m.

Mr. Brian Sedgemore (Luton, West)

It is always a pleasure to follow the hon. Member for Stretford (Mr. Churchill) in debate. This Chamber is steeped in serious history and his boyish approach soon makes one forget that.

In the debate today there seems to be universal acceptance from the Government side that the language of Socialism is the politics of investment. Paragraph 3 of the White Paper "The Regeneration of British Industry" states: In 1971, investment for each worker in British manufacturing industry was less than half that in France, Japan or the United States, and well below that in Germany or Italy. In spite of the measures to encourage investment taken since then, it has still lagged behind; indeed, it was significantly less in 1972 and in 1973 than it was in 1970. Behind those two sentences lies the failure of private enterprise over the past two and a half decades: the failure of British management to invest and the failure of the financial institutions to provide the working and investment capital that industry so desperately needs.

Year after year, the CBI shuts its eyes to reality. Every year, whatever the economic situation and however disastrous the performance of its members, it submits to the Chancellor of the Exchequer a gramophone record called its Budget representations. Every year that document calls for help for company liquidity, cuts in company taxation, handouts to industry and cuts in public expenditure.

The year 1970 was no exception. In that year, its prayers were answered with the return of a Conservative Government, and in four years the open-ended money supply eased the liquidity problem, company taxation was cut, the better off had £2,000 million slashed off their taxes, public expenditure was regularly mauled, handouts to private industry totalled £3,000 million, several millions a day, and, unbelievably, the nationalised industries were made to subsidise private industry by £1 million to £2 million a day through low public sector pricing.

By every tenet of classical economic theory we should have been witnessing the greatest investment boom that this country has ever known. Indeed, the then Secretary of State for Trade and Industry told us that that was precisely what was happening. The then Prime Minister believed him and spoke of the problems of success. Whatever happened to the truth in those years? To some people, one could spray the truth on their eyeballs and they would not see it.

Investment in manufacturing industry in 1972 was 15 per cent. less than it was in 1970. In 1973 it was 10 per cent. less than it was in 1970. In 1973 Britain was spending only 3.5 per cent. of its gross domestic product on investment in manufacturing industry, or 16 per cent. less than in 1970. By every international comparison the performance of British management was wretched. The investment ratio in Britain in 1972 was 3.4 per cent. In Sweden it was 4 per cent. In Japan it was 6.8 per cent.

In 1970 British management invested a miserable £251 per employee in manufacturing, whereas the corresponding figures of our chief competitors were: Italy, £330; Germany, £392; Japan, £512; France, £623, and the United States of America, £697.

We are, therefore, entitled to ask where the plentiful supply of money went in those years. Direct investment by British firms overseas trebled. Thousands of millions of pounds found their way into secondary banks and out of secondary banks. Millions of pounds found their way into property companies. Millions ended up in swamp-infested tax-free tropical islands.

It would be unfair to place all the blame on British management. The financial institutions and the City illiterates, as the right hon. Member for Down, South (Mr. Powell) so endearingly calls them, played their bit, too, From 1971 to 1973 bank advances doubled, but while advances to property empires soared by 320 per cent. and advances to other financial institutions rose by 225 per cent. advances to British industry went up by a mere 75 per cent.

Yet the performance of the banks was positively heroic compared with the sloth of the Stock Exchange. In 1969 the Stock Exchange provided but one-tenth of the capital used by all industrial and commercial firms. By 1973 that figure had fallen to one-hundredth. It is unbelievable, but in 1973 the Stock Exchange provided 1.1 per cent. of the total capital used by all the industrial and commercial firms in this country. People in my constituency have been going to the citizens advice bureau and asking what in the name of God and mammon those parasites on the Stock Exchange do to earn their money.

Yet, with all that evidence before it, the CBI comes back this year with its old plaintive cry: improve company liquidity by removing price control—which would certainly lead to a rise in prices of more than the 1¾ per cent. claimed by the CBI —and cut company taxation, this time specifically cut corporation tax from 52 per cent. to 35 per cent. It asks for £2,400 million this year and £3,500 million next year. The truth is that that would lead to practically no increase in investment in this country, and would preempt each and every social advance that the Chancellor of the Exchequer has in mind, including the proposed increase in family allowances. If that is not enough, this morning it went to the Chancellor and asked him to slash his already modest proposals for a gifts tax. I believe that the social contract will not stand the strains of these selfish demands. The public, no less than the trade unions, will be up in arms.

However, this time there is one difference: the CBI has started to employ arguments of doom, saying that the whole of British industry is now operating at a loss. As I understand it, accountancy may be an art, and Professor Sykes and Mr. Merrett may be excellent artists, but that is damned ridiculous. A piece of serious research by Mervyn King in the Financial Times recently showed that 1973 was a good year for profits compared with 1972, which was in itself an annus mirabilis. He showed that in 1973 even if we deducted stock appreciation, depreciation and tax, profits for that year were 14.5 per cent. higher than in 1972.

For a correct analysis of the state of British industry at present we should read two letters in The Times of 18th and 24th October, signed by seven MPs. Those letters have the support of the bulk of the trade union movement, the majority of Members on this side of the House, and the bulk of the Labour movement. They are now part of the social contract and part of the Socialist contract.

If I were to summarise briefly the true position of British industry at present, it would be thus: granted that certain small and medium-sized firms have cash flow problems in industry, it is these and not the largest firms—that is, the 200 in category 1 of the Tories' Counter-Inflation Act—which have cash flow problems. A relaxation of those problems for the 200 firms would threaten the social contract and presage industrial confrontation. Economists of the Left and Right —and on the Right I could cite Vernon of Harvard or Penrose of London—all seem to agree that the big firms can declare what profits they want to by altering their transfer prices, and they can fix their prices at levels which just enable the small firms to survive. If we are to help the medium-sized firms, perhaps we could do it on a regional basis, with new access for local authorities, regional economic planning councils and workers in the firms concerned; and with public and workers' shareholdings where substantial sums of money are involved.

However, the critical and crucial need for this country is to bring those 200 large firms into the planning procedures which the Government have in mind, and to enable the National Enterprise Board to buy into the profitable sectors of each part of industry. We must bring our industrial democracy into line with our political democracy. We must give the National Enterprise Board teeth if it is not to become a lame duck, and we must allow it to buy shares compulsorily.

I would not rule out fiscal measures as a means of encouraging investment. I am talking about such measures as a differential payroll tax for those firms which are not subject to planning agreements or to purchases by the National Enterprise Board, but I would rule out the investment bank of the Chancellor of the Duchy of Lancaster—the bastard son of the Industrial Relations Court, spawned in error, conceived in the dark, and now, hopefully, aborted.

Finally, I would remind the House that the next crucial advance for our movement—the battle for the next Session of Parliament—must be the future of the financial institutions in this country. They must be made publicly accountable and relevant. Good Europeans in this House—and they are spread all over the opposite side of the Chamber —know that it was 29 years ago that the banks of France were nationalised. I can think of no measure that would be economically more relevant and politically more popular than the public ownership of the banks and insurance companies in this country. A sum of £60,000 million is too much money to be handled badly.

I sincerely hope that the Chancellor of the Exchequer and the Secretary of State for Industry will give the lead. If they can persuade the country that there really is an irreversible shift of wealth and power afoot, that industrial democracy really is on the march, and that in a property-owning democracy it is vital that industry and finance be publicly owned, I believe that there is genuine hope for this country.

8.56 p.m.

Mr. Geoffrey Pattie (Chertsey and Walton)

I hope that the hon. Member for Luton, West (Mr. Sedgemore), who has just spoken so ably and breathtakingly, will not mind if I do not take up his remarks in the few minutes that I have before nine o'clock, although I was intrigued by the imagery which he conjured up of a lame duck without teeth.

I want to confine my few remarks to the subject of the proposed nationalisation of the aerospace industry. I am glad that the hon. Member for Derby. North (Mr. Whitehead) has taken part in this debate. Between us, we have at least ensured that this proposal has not gone without comment.

I believe that the onus must be on the Government to submit a convincing case for nationalising the aerospace industry. There has been precious little sign of such a case so far. The onus is not on the aerospace industry to say why it should not be nationalised, or to ask its many friends to support it.

Despite the many uncertainties created by successive Governments and the difficulties for the aerospace industry caused by rising cost of fuel and the impecunious nature of airlines throughout the world, the British aeropsace industry bids fair this year to achieve exports of £600 million. This represents over £2 million in foreign exchange earned for every working day by 200,000 skilled men and women, who are about 1 per cent. of the total work force. There is also the huge technological spin-off that has been achieved. All in all, this is a first-class achievement by this industry.

As I said in my intervention during the speech of the hon. Member for Derby, North, in the past 11 years this industry has earned £3,410 million abroad. Yet, in the document the Labour Party and the TUC have produced, "The Nationalisation of the Aircraft Industry", we read only such snippets as: BAC have received more than £200 million in the last ten years and Rolls-Royce more than £300 million. It then says: The major firms have been the beneficiaries. The inference is that these major firms have taken this money and decamped with it, whereas, in fact, it has been used to create the £3,410 million earned abroad. Therefore, the whole industry has been the beneficiary of this investment in those two companies. The whole industry includes not only the two I have just mentioned but also the 300 avionics companies which are involved in this industry. The whole country has benefited from the achievement of earning this amount of foreign exchange.

We all know the arguments. Hon. Members opposite say, "Think of all the money we have put into aerospace, into research and development, and of all the money we have spent to buy the aircraft from these companies." We know that in military terms all the ordering has to come from the Government. The purchasing power is the Government's. We all know that there is no possibility of any sizeable civil aviation project, literally and metophorically, getting off the ground without Government money behind it. All new projects need Government funds. But it is a complete non sequitur to suggest that therefore we need to take over these companies.

In the course of his interesting and amusing speech the hon. Member for Bedwellty (Mr. Kinnock) spoke of a Mr. Marx. Let me refer to another Mr. Marks. I have in mind the Mr. Marks who went into business with a man named Spencer. They formed a firm which has been extremely successful. It is a model of profitability, service and high standards. Marks and Spencer is supplied by many small companies. To such a company, a contract with Marks and Spencer can represent 75 or even 80 per cent. of its work load. Marks and Spencer takes a very close interest in the welfare of those small companies, even down to the way staff are trained and deployed, their holiday arrangements and so on. But it does not seek to take the next step, which is to own those companies.

The British aerospace industry faces two problems. They are simply that the cost of projects is going up and up at a time when the capability of airlines throughout the world to buy these projects is diminishing. No one in the debate so far has suggested how nationalising any company in the aerospace industry will tackle either of these two problems. Therefore, I suggest that any proposals for the nationalisation of aerospace are totally irrelevant to the real problems facing that industry.

9.2 p.m.

Mr. Patrick Jenkin (Wanstead and Woodford)

In what has been a good debate today we have heard a number of excellent maiden speeches, and it is my privilege to congratulate those who made them. My hon. and learned Friend the Member for Kinross and West Perthshire (Mr. Fairbairn) paid what I thought was an extremely graceful tribute to his very distinguished predecessor which this House much appreciated. His was a wide-ranging speech. Whether it was controversial, I do not know. If my hon. and learned Friend thought that it was not, I look forward to hearing a controversial speech from him on some future occasion. Then we heard from the hon. Member for Rochester and Chatham (Mr. Bean), the hon. Member for Lincoln (Miss Jackson) and the hon. Member for Rossendale (Mr. Noble). All spoke with a knowledge and understanding of the industrial problems of their constituencies, and I know that this House looks forward to hearing them again.

The Secretary of State for Industry does not appear to be with us. [HON. MEMBERS: "Where is he?"]. He opened the debate, and I wish to make one or two comments about what he said. I have no doubt that someone will tell him what I am about to say. His speech was chiefly remarkable not for what he said but for what he did not say. He was attacked from his own benches by the right hon. Member for Walsall, North (Mr. Stonehouse) in what I thought was a very robust speech. He attacked the Secretary of State for his failure to analyse and explain his ideas, and he demanded a detailed explanation of what he described as this "exercise in social engineering". He did not get it from the Secretary of State.

The Secretary of State was asked by my hon. Friend the Member for Henley (Mr. Heseltine) where he intended to recruit all the experts required to man the National Enterprise Board. There was no answer. The right hon. Gentleman was asked by my hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) what the plans would cost. There was no answer. He was asked who would pay the cost. There was no answer. He was asked by my hon. Friend the Member for Derbyshire, South-East (Mr. Rost) what effect the plans would have on savers and investors. There was no answer. He was asked by my right hon. Friend the Member for Yeovil (Mr. Peyton) how the Government proposed to avoid the evil of rising unemployment which is now threatening us. No answer.

On all the real issues which arise in this debate, the Secretary of State displayed, somewhat uncharacteristically, great similarity to a Trappist monk. But what emerged was a frightening fixation on the preservation of existing jobs at all costs, come what may. This showed a total disregard for the need for some flexibility in industry if we are to make progress. If the right hon. Gentleman's recipe had been in operation 100 years ago, much of British industry would still be struggling along making hansom cabs, crinolines and cast-iron kitchen ranges. Some may prefer hansom cabs and crinolines, but I do not think that that was the message that the right hon. Gentleman wished to convey.

Mr. E. Fernyhough (Jarrow)

British industry would still have had child labour, too, 100 years ago.

Mr. Jenkin

Fortunately, it was a Conservative politician who did away with that.

This will be the first occasion since the announcement of the Government's plans for offshore oil that we have been able to debate that matter. We were promised a debate before the Summer Recess, but it never materialised. I therefore propose to devote most of my speech to that part of our amendment. But I wish to make it absolutely clear that our vote tonight will be on our amendment as a whole. We are utterly opposed to the increasing concentration of power in the hands of the State—and that is what it will be, for all the brave talk about participation. We are opposed to the spreading tentacles of bureaucratic State control and interference. They will divide the nation, undermine confidence, damage investment and put jobs at risk. That is why we are voting tonight.

But before I deal with the specific problem of offshore oil I should like to say a word about recent events in an industry which was nationalised nearly 30 years ago—the coal industry.

Last Wednesday the executive of the National Union of Mineworkers finally decided to recommend rejection of the National Coal Board's proposal for a realistic productivity scheme. Of course this will be voted on by the miners, it still may be accepted, but it is already more than possible that that union is once again on a collision course with the Government.

This productivity scheme is no peripheral matter. The Secretary of State for Energy will know that he pinned his faith on higher productivity in his somewhat emotional foreword to the interim report. It is picked up in the final report published today. He said last June: All of us want a thriving coal industry offering proper rewards to those who work in it, and this is now a perfectly realisable prospect. But, for mineworkers as for the nation as a whole, real rewards can advance to the extent that they reflect higher efficiency and higher output per man. That is absolutely right. Therefore, the threat that it may not happen is very serious.

This threat comes at a desperately dangerous moment for this country. Coal stocks, distributed and undistributed, [...]stand—I have the figure for 19th Octo- ber—at 21½ million tons, compared with over 35 million tons at the same time in 1973. Coal output since April is 5 millin tons down on the same period in 1973 and there is clearly no hope at all of reaching the 120 million-ton target. The Central Electricity Generating Board now has to burn, and import, more oil, at grave cost to our balance of payments, because of the shortage of coal.

That is not all. What if the union rejects the productivity scheme? We have been told—a jubilant Arthur Scargill has already warned us—that it will be a claim not just for £30 a week more but for £42.50—the £30 plus the £12.50 that they might have got on the productivity scheme. Note his words: That is going to be the price of peace in the pits. To show what a reasonable chap he is, he added We do not want a confrontation. What have the moderates got to say about that? Mr. Gormley has no doubt about where the blame lies. He at least recognises a Communist conspiracy when he sees one. Mr. Len Clark, of the Nottingham miners, summed it up in a nutshell, and his words bear repetition: I do not hesitate to say that the Communists' aim is to bring down the Establishment and seize control. I could not have put it more succinctly.

When my right hon. Friend was Prime Minister, however, he was told—the unions were saying as much—that he was hell-bent on confrontation with the unions. When he warned that the Communists were using industrial power to bring down not just the previous Conservative Government but any democratically elected Government, he was scoffed at by the wiseacres on the opposite benches, with shouts of "Reds under the bed".

Will the Secretary of State for Energy now tell the House what he proposes to do? Does he stand by his election boast, made 10 days before the election, of The days of confrontation with the miners are over"? Will he confess to the House that Communist influence in unions can lead to a confrontation which is of no seeking by the Government? Will he spell out to the House the consequences of the failure of the coal industry to reach its targets? Of one thing I am certain—that the Secretary of State's time in the next few weeks would be far better spent in campaigning for sanity in the coalfields than it will be in nationalising the oil industry.

I now turn to the oil industry. I start with a proposition which few will dispute. Amid all the perils that face our economy, Britain's offshore oil stands as a lifeline of quite crucial importance. Rising world oil prices mean that we are currently running an oil deficit of between £3 billion and £3½ billion a year. There have been various estimates of how this will build up over the next few years. Our own calculations, based on reasonable assumptions, suggest that by 1980 the total indebtedness on oil account could reach £15 billion.

Of course, this is part of the world monetary crisis, and no country can expect to solve that alone. But surely, at the very least, it should be the central aim of any British Government, first, to seek to reduce this country's consumption of oil and, secondly, to do everything in their power to speed up progress to the day when we can achieve self-sufficiency in oil.

This is not the occasion, perhaps, on which to castigate the Secretary of State for his manifest lack of energy in the field of conservation. It has taken him eight months just to appoint a committee. Almost every other nation has already embarked on a major energy conservation programme, but the Secretary of State has done virtually nothing. He merely claims to have cleared the ground for the committee's deliberations. How much better if he had spent some time in the last few months in seeking to conserve oil rather than in trying to nationalise it!

My main attack is on the other count. Nationalisation, or even the partial nationalisation outlined in the Government's White Paper, is bound to delay the achievement of self-sufficiency, at massive cost to the nation. It is bound to make the Chancellor's task in financing our vast debts even more difficult than it is already. To that I would add another charge, made by the right hon. Member for Orkney and Shetland (Mr. Grimond). He said that nationalisation was utterly pointless and unnecessary. I shall demonstrate that. I want to make sure that when the Secretary of State for Energy replies to the debate he answers the specific question which I will put to him and does not evade it in a sort of flummery of guff which we have had from him on previous occasions in seeking to justify his policies. The specific attack that I level at the Government is against their unnecessary and foolish decision to nationalise a 51 per cent. share in commercial oilfields.

I am not objecting to the principle that offshore oil profits should be fairly and effectively taxed, nor am I objecting to the Government taking the necessary powers to regulate offshore activities and, in particular, powers to regulate the rate of depletion. While we shall want to study the details of the Government's proposals on taxation and regulation, we on the Opposition side of the House have made it abundantly clear—we did so long before last February's General Election—that we recognised and accepted the need both for tax changes and for stronger controls. But it is nationalisation which is unnecessary, and it is nationalisation that we attack, because it is totally irrelevant to both those objectives.

Let us take first the question of a proper share of the revenues for the Exchequer. The Government are well able to devise and enforce, and no doubt will do so, a tax régime which will secure for the Exchequer an appropriate share of the oil revenues and leave a fair share to the operating companies as a return on their investment. The licences which have been issued have always reserved the Government's right to levy taxation and, if necessary, to change the tax system. The companies are expecting a tax régime, and this is perfectly appropriate. But even this Government cannot take the same pound twice. If the Chancellor takes the money in the form of dividends, he cannot take it again as tax. That at least must be obvious.

In either case—dividend or tax—the key question is what rate of return the operators should expect on the capital they have invested. It is clear that there is no need for the taxpayer to invest huge sums to secure a financial return which the Government are perfectly well able to get by taxation. This is to confuse sovereignty with ownership. The Government are a sovereign power and have a sovereign right to tax. They do not need to own a company in order to tax it.

I have seen only one even barely plausible reason why nationalisation is necessary in support of the power of taxation. It was given by the Minister of State, Department of Energy, Lord Balogh, in an article in the September issue of The Banker which was a riposte to an article by my hon. Friend the Member for Guildford (Mr. Howell). Lord Balogh said: … participation … automatically provides a check on the investment outlays and production costs of the oil companies. He went on to argue that these precautions were necessary to prevent avoidance of tax. I have to point out that even while he was writing his article his own Department was destroying his argument.

I have here a copy of a letter, dated 3rd September, which has been sent to all the offshore companies by the head of the petroleum products division of the Department of Energy. Its purpose, quite properly, was to consult the industry on the various new powers which the Government propose to take over the licensees. It attached a list of the powers. I am concerned at the moment with the one contained in paragraph 10, headed "Provision of Information ". This said: The Secretary of State would have power to require a licensee to give him any information … This power would cover financial as well as technical or geological information …". I see that the Secretary of State for Industry has returned. No doubt he has been engaged in important matters of State and his hon. Friends will tell him what I have said about his speech.

The letter went on: It would also give the Secretary of State a reserve power to appoint an auditor or assessor to inspect a licensee's books and records where necessary. That is quite right. I doubt whether we shall dispute that. But where does that leave Lord Balogh's argument about the need for participation to see that the books are not fiddled'? At least we must congratulate Lord Balogh on his imagination, because not even the Secretary of State for Industry in his wilder moments of fantasy has suggested that in order to put an auditor into a company one has first to nationalise it. So there is no need to nationalise in order to raise revenue. Taxation is the satisfactory and appropriate weapon.

Then there is the question of control over operations. It is clear that these powers must stem from legislation. They will not stem from ownership. It is clear not only from the Department's letter but from what the Prime Minister told us about the Bills we can expect this Session. We argued during the General Election that these powers require a separate impartial regulatory body. We shall be interested to see whether the Government contemplate such a body. There are ample precedents in Canada, the United States and elsewhere. The key power is the power to control the rate of depletion of the resources—that we must have. This is an intensely complex technical process and not one to be carried out by Government-appointed directors or by Government shareholders. Ownership or participation is totally irrelevant to the exercise of these powers.

Here again there is only one argument which it has always seemed might carry some weight and would justify a form of participation—that relating to control, also referred to by Lord Balogh. It is that participation, entitling the Government to direct ownership of the oil, will give better control in times of emergency. But that argument is no longer available to the Government because only last week the Secretary of State announced in a Written Answer that the United Kingdom is to join the agreement for an international programme. He said: The immediate practical part of the agreement is the oil-sharing scheme. This"— subject to majority voting— will be activated when supplies of oil to any participating country or to all the participating countries are reduced by a given proportion."—[OFFICIAL REPORT, 30th October 1974; Vol. 880, c. 4.] I might say that there is some indignation and surprise, not confined to this side of the House, about the fact that the Government should have assented to this far-reaching agreement even before the House has had a chance to read it, let alone debate it. It is a massive agreement, over 100 pages long, and there is at the moment only one copy in the Library, which no Member is allowed to remove. I have here a copy which the Secretary of State has kindly sent me.

This agreement contains substantial supra-national powers, and it is already apparent that other prospective Western oil producers are having grave reservations about whether they should join. Neither Canada nor Norway is a signatory. The Secretary of State is treating the House with contempt on this issue. It may be a good agreement. I do not know. I shall want to study it. We must have an early opportunity to debate it.

But in the context of tonight's debate it must be clear that the argument by Ministers that nationalisation is needed to control oil in an emergency is wholly invalidated. The implementation of sharing may need legislation but not nationalisation. Both the United States and Germany, which intend to be signatories to the agreement, have felt no need to nationalise their oil-producing companies. Here again, nationalisation is wholly irrelevant to control.

The specific question to which we must have an answer tonight from the Secretary of State is: what is the extra advantage—the incremental benefit—which will flow to this country as a result of obtaining 51 per cent. nationalisation? What benefit is it that cannot be obtained by appropriate tax machinery and appropriate regulatory legislation? The House is entitled to a clear and specific reply. We have never had it. We have not had it from the Secretary of State or the Prime Minister, and it is time that we had the answer. The right hon. Member for Orkney and Shetland asked the simple question: why is it necessary?

If the benefits are vague and insubstantial, the cost is appalling. There is first the cost of buying a 51 per cent. stake. In July we made a rough calculation that it would be perhaps £2 billion.

It is now apparent that that was far too low—for two reasons. First, the costs of offshore operations are rising dramatically. In June 1972 BP estimated that the cost of developing the Forties field was £360 million. Its latest estimate is £630 million. Shell estimated last yew that the cost of a concrete gravity platform installed in 1977 would be about £55 million. Today that same structure installed in the same spot will cost £100 million. I could quote example after example. The 51 per cent. share will cost the Exchequer vastly more than the £2 billion which I estimated. It may cost three times as much as that, and this will be Exchequer money paid out for absolutely no purpose at all. Let no Labour Member delude himself that these are merely paper transactions. A vast quantity of money will be spent on hardware, on investment, and will be in the public expenditure accounts competing with all the other demands on the Chancellor of the Exchequer in the same way for example as investment in the steel and the coal industries.

Mr. Arthur Lewis (Newham, North-West)

Who bought a 51 per cent. share in BP?

Mr. Jenkin

The cost of buying half of BP was £2 million, not £6 billion.

Then there is the cost of delay. Every day's delay in bringing the oil ashore costs this country on its balance of payments £10 million. Quite modest delays could run us into £3,000 million or £4,000 million extra on the balance of payments. It is inconceivable that this vast State investment, far bigger than anything attempted before, will not lead to massive delays.

The British National Oil Company does not exist. It will need hundreds of oil technicians and engineers, and the best estimate is that it will take five years to build up the teams. In the meantime, how can the companies plan? What assumptions should they make about the kind of reimbursement they will get? What consents will they need to invest? How is the Department of Energy or the Treasury to monitor the expenditure? What will the Comptroller and Auditor General require for the control of the expenditure of these vast sums of money? What is the cost to the Exchequer of financing the compensation? On the precedents, this will presumably be by a further issue of Government paper. What will be the effect of that upon the management of the Government's debt? What will be the effect on the management of the gilt-edged market? How will the Government be able to finance the already massive borrowing requirement if at the same time they are issuing billions of pounds worth of new debt on to the market? Nothing whatever has been said by any Minister to suggest that this problem has ever been thought about, let alone solved, before the policy was embarked upon.

Then there is the intangible cost, the damage to the United Kingdom's reputation as a country which welcomes investment from overseas. It is significant that the Secretary of State for Energy had to resort to distorting what was said to him by a prominent American oil man during what was intended to be a private conversation. The Scotsman reported the Secretary of State at one of the Labour Party conferences during the election as saying: that the world's largest oil company, Exxon, would readily accept the Government's plans for majority State participation in North Sea oil if Labour were returned with a majority after the election. Exxon had to issue a denial. Mr. Jamieson, the chairman in New York, said: I have had discussions with Mr. Varley, but apparently there has been a misunderstanding between us. In these discussions I indicated that Exxon would not favour direct State participation in North Sea oil. I hope that the Secretary of State apologised to Mr. Jamieson for thus disgracefully misrepresenting him.

The Minister is fond of citing the Norwegian example. Norway is utterly different. The Norwegians are trying to slow down development in their sector in which precisely four rigs are operating. In the United Kingdom sector there are 28 rigs. But even Norway never sought to alter retrospectively participation in existing concessions, and that is what is causing concern. I can find only one international precedent for a country which has altered an existing participation arrangement before production has started, and that was Ecuador, in February 1972, after the Government had been overthrown in a revolutionary coup by a military dictatorship. Is that the standard by which the Government want to be judged?

In the amendment we condemn the Government's nationalisation proposals as disastrous. It is depressing that when Socialist Parties in virtually every other country in the free world have long since recognised that nationalisation is irrelevant to the solution of today's problems, here in Britain the same dreary old Socialist dogma goes plod, plod, plodding along. Like the Bourbons, the Labour Party has learned nothing and forgotten nothing. It has dressed up the same tired old doctrinaire discredited ideas in the trendy modern gear so beloved of the Secretary of State for Industry. But, to misquote Gertrude Stein, nationalisation is nationalisation is nationalisation. Because we are against it, we propose to divide the House tonight.

9.30 p.m.

The Secretary of State for Energy (Mr. Eric Varley)

I am pleased to be able to begin by congratulating hon. Members who have made maiden speeches. I did not have the opportunity and the good fortune to hear all of them, but I have been told of the high quality of those I missed as well as those I heard.

The House certainly appreciated the tribute paid by the hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn) to his predecessor, Sir Alec Douglas-Home. Sir Alec was widely respected in the House and was a unique individual figure. His successor has already marked himself out as equally individual in his dress as well as his views. I was rather amused a moment or two ago when the hon. and learned Gentleman suggested that all the trendy dressers were on the Government side of the House.

My hon. Friend the Member for Rochester and Chatham (Mr. Bean) demonstrated his intimate knowledge of the building industry, and I know that we shall all benefit from that knowledge. My hon. Friend the Member for Lincoln (Miss Jackson), as might have been expected from her expertise, made an extremely good and well-argued case for public enterprise. Many of us know her well from the hard work she did for the Labour Party at Transport House. We are delighted to welcome her to the House.

My hon. Friend the Member for Rossendale (Mr. Noble) made a powerful speech and showed that he will fight vigorously for his constituency and the constituency interests about which he is so concerned.

Let me say something straight away about the international energy programme. No discourtesy was intended on my part. I wanted to get the matter before the House as quickly as possible, but it proved difficult last week. I thought it best to arrange for the House to be informed in the way that it was informed. I think it is a very good agreement. I am not responsible for arranging debates in the House, but I should be pleased if it were debated. As the right hon. Gentleman knows, it came out of the Energy Coordinating Group. I know that his party, in Government, and the right hon. Gentleman the Leader of the Opposition were very keen on the work of the Energy Co-ordinating Group. If it is decided that a debate is needed, I hope that it can be arranged.

I am certainly glad that the Opposition have at last stopped running away from a debate on the Government's plans for public participation in North Sea oil. How well we remember the stern clarion call of the Leader of the Opposition on 11th July, the day on which I made my statement about offshore oil and gas policy, when the right hon. Gentleman said: Will the Leader of the House note that this is such an important matter that we shall probably want to debate it before the House rises?" —[OFFICIAL REPRT, 11th July 1974; Vol. 876, c. 1550–1.] The House sat for another three weeks. During that period the Opposition used up two of their Supply Days—

Mr. Patrick Jenkin

I want to explain the position. The Leader of the House as the right hon. Gentleman well knows, had in the Business Statement preceding the right hon. Gentleman's statement already promised a debate on this question in Government time.

Mr. Varley

I am coming to that. At no time did the Opposition take any further action to debate Labour's oil policy. If the right hon. Gentleman would just hold his fire a moment, I will tell him the other part of the saga. They were even offered a Friday debate by my right hon. Friend the Chief Whip. When he made it plain that we could have the debate on a motion that required a Three-line Whip, the Opposition ran away again. They could have had a debate, had they so wished. Now, four months and one General Election later, they have plucked up courage to insert three words in a 46-words amendment which give us our chance to debate North Sea oil. I am afraid they have made a very grave mis- take. In fact, the right hon. Gentleman spent a good deal of his time debating the coal industry. I should be happy to debate the coal industry at any time, but even in this amendment there is no mention of the coal industry.

The Opposition have really made a mistake in wanting to debate this. Since I made the statement on the Government's offshore policy on 11th July, we have had a bizarre misrepresentation of the Government's policy. But the right hon. Member for Wanstead and Woodford (Mr. Jenkin) has also, ironically enough, described what his party would do and how the Tories would frighten off North Sea oil operators. Nothing could be more damaging to confidence, to investment and to employment than the sterile bureaucratic interference which would have been the sole outcome of the right hon. Gentleman's scheme.

The Tory Party was determined to ensure the worst of all worlds under its policy. Under its policy there is no stake for the British people in the oil wealth, no effective control by the British Government over depletion rates, no right for a British national oil corporation to engage in exploration, exploitation, marketing and refining—just a eunuch body, again described by the right hon. Gentleman tonight, called the United Kingdom Conservation Authority, with no clear powers to take action to protect the interests of the British people, but with the ability to meddle and interfere to no constructive purpose with the oil licensees and in a way which would have totally stultified their activities.

I should like the right hon. Gentleman to listen to what I have to say. I have in my hand what purports to be the Conservative policy on offshore oil. For greater accuracy, I have obtained a copy. An article written by the right hon. Gentleman in Petroleum Review says: we would therefore propose to give the United Kingdom Oil Conservation Authority the power to control the timing of investment by oil companies in production facilities. It would work something like this. A company declares a field to be commercial. The United Kingdom Oil Conservation Authority call the company in for discussions and sees how the projected production from the field fits in with the overall target levels of production laid down by the Government. What does the Opposition amendment say? It accuses the Government of "bureaucratic interference". But it goes even better than that. The right hon. Gentleman says in the article: If the production is needed as soon as possible to reach the target figure, then the company can be given the go-ahead. If, however, the given level of production is likely to be achieved from facilities already on stream or approved, then the United Kingdom Oil Conservation Authority would ask the company to postpone its major investment for a year or two perhaps even longer …". Is that bureaucratic interference?

The right hon. Gentleman goes on to say that this would be irksome to the oil companies. You bet your life it would be irksome!

Mr. Patrick Jenkin

I ask the right hon. Gentleman to answer this question. Given that there must be control over the rate of depletion, and given therefore that there must be controls of this nature, would he ask the oil companies which they would prefer—our solution or his?

Mr. Varley

That is the easiest question I have been asked for a long time. Of course, the oil companies would like that, because it does not offer one scintilla of a depletion control.

Mr. Patrick Jenkin

Then why was the right hon. Gentleman saying that my solution would frighten them off with bureaucracy?

Mr. Varley

As a result of some of this, the oil companies would much prefer that policy to our policy.

The right hon. Gentleman has derided the Government's intention to provide suitable staff for the British national oil corporation. He says that such people are not available. Yet he insists that his oil conservation authority would employ highly qualified expert assessors. He would recruit highly qualified oil experts to do no job at all while, according to him, these men would not be available to do a real job for a real authority with real powers. No wonder the Tory Party's oil policy was rejected by the people of England, Scotland and Wales, each and all of whom returned more Labour Members committed to our oil policy than Tory Members impaled on the fantasies of the right hon. Gentleman. No wonder that in Scotland the Tory Party received a rebuff of historic dimensions and it is now reduced in that country to a rump.

I can well understand the Tories' defeatism. After all, they have plenty to be defeatist about. But what I cannot understand is their lack of confidence in their own country. They call their manifesto "Putting Britain First", but by their attitude to the oil industry it puts Britain nowhere.

Here are some countries which have participation in their own oil industries: Saudi Arabia 60 per cent.; Kuwait 60 per cent.; Qatar 60 per cent; Iraq 71 per cent.; Nigeria 55 per cent.; Denmark and Greenland 50 per cent. In their attitude to oil, the Tories are implicitly saying, Do not class Britain with such countries as Nigeria or Greenland". That is what they are saying.

Mr. Patrick Jenkin

rose—

Mr. Varley

I cannot understand the inferiority of the Tory Party. It is perfectly all right for the tiniest oil sheikhdom to have participation in its oil industry, but when it comes to a British Tory Government the Tories say, "No, we cannot have it."

The Labour Government intend to put Britain first, and we shall give the British people a stake in their own oil industry. We shall find the money required to fund State participation.

The Opposition benches are scarcely lacking in hon. Members who were something in the City. There are on those benches experts in identifying the face of capitalism whether acceptable or unacceptable. They preach the merits of investment for private gain, or even selfish gain, yet they fail to discern the merits of investment for public gain.

It is an undeniable fact that participation is as good an investment for the Government as an investment in the North Sea is for the oil companies. The cost of the initial investment will be considerable, but the rate of return will be very good indeed. [Interruption.] No investment could be better than the development in a natural resource which already belongs to the nation, for which demand is guaranteed. I only wish the investors in Court Line had had such a secure and guaranteed return on their money. Had that been the case, the House would have been spared the squalid and cynical antics last summer of the hon. Members for Henley (Mr. Heseltine) and for Bury St. Edmunds (Mr. Griffiths).

Mr. Heseltine

The right hon. Member will understand that the antics of Court Line and North Sea oil will be paid for in the end by the taxpayer.

Mr. Varley

I have referred to the unacceptable face or acceptable face of capitalism. The hon. Gentleman's antics last summer were the unacceptable and unsuccessful face of political opportunism.

North Sea oil is a good investment for the British people. These are the immediate prospects. In my report to Parliament I said that proven reserves of oil in the 10 fields then declared commercial amounted to 895 million tons, with a further 165 million tons of probable reserves making a total of 1,060 million tons from those fields. Since May two more fields, Heather and Claymore, have been declared commercial and these, together with the results of further appraisals on the other 10 fields, now bring the total of proved and probable reserves from commercial fields to around 1,160 million tons. The value of this quantity of oil at today's prices is immense. One thousand million tons of oil is worth around £40,000 million. That is the oil we know about.

In addition, other promising possibilities have come into view such as the probable extension into United Kingdom waters of the large Statfjord find off Norway. Other finds such as British Petroleum's Andrew field announced recently need more appraisal before an estimate of their potential can be made. A great deal more exploration will take place and huge quantities of oil will be discovered.

A few weeks ago the Bank of Scotland estimated—and it is consistent with the estimates of total possible reserves in my report to Parliament—that the value of all the oil in the North Sea could exceed £100,000 million.

Day after day my officials bring to me news of foreign organisations and foreign Governments which wish to get some small share of Britain's oil. The Leader of the Opposition knows this, because he had discussions with Mr. Tanaka, the Japanese Prime Minister, and he will confirm that day after day there are approaches to the British Government about getting some small stake. If by some curious misfortune the right hon. Gentleman had stumbled into the office I hold, he would apparently have looked extremely benevolently and encouragingly upon such approaches, and the only approach that he would have coldly discouraged would have been the approach from the representatives of the British people. That is the motto when it comes to oil: "Put Britain at the back of the queue."

Mr. Edward Heath (Sidcup)

The Secretary of State has emphasised the importance of this matter to the British people. I think, therefore, that he ought to deal seriously with it. The proposal that the Japanese Prime Minister put to me when I was Prime Minister was that the Japanese were prepared to put investment into North Sea oil and into the development areas of Scotland in order to provide jobs for Scotland on the basis that the oil would come to this country and be of benefit to this country and we for our part would help the Japanese with the development of oil nearer to their own country. That bears absolutely no resemblance to what the Secretary of State is describing at the moment.

I have put this question to the Secretary of State and he has failed to answer it. He wishes to put money into oil already completely under our control. Would he now kindly tell the House where the money is to come from? Is it to come from the taxpayer, in which case will he tell us so? Is it to be borrowed by the Government, in which case they will pay interest on it, high interest rates at that? If that is the case, why is it necessary to pay interest on this money instead of taking the complete amount in taxation from the oil companies for the benefit of the taxpayer?

Mr. Varley

I am very pleased that the right hon. Gentleman has confirmed that approaches by foreign countries were made to his Government, and were perhaps being encouraged by his Government. Does he not realise that that is a contradiction of the Conservative Party's case? The right hon. Gentleman and his party are saying that perhaps it is all right to encourage foreign companies and foreign countries, but the British Government themselves cannot get involved in this project. We shall have a chance to debate this issue on another occasion—[Interruption.] No, I cannot give way now. I have done so already on many occasions.

What I cannot understand is this. After 30 years of expanding public enterprise in this country, I am astonished that the Tory Party is so narrow and so hidebound that it refuses to recognise Britain's publicly-owned industries. I thought that the right hon. Gentleman and hon. Members opposite were interested in knowing about public enterprise. [HON. MEMBERS: "Answer."] I should like to—[HON.MEMBERS: "Answer."]

Mr. Speaker

Order. Hon. Members must not go on shouting "Answer". We have had a fairly orderly debate. There have been good speeches from both sides of the House. I hope that we can finish the debate in an orderly manner.

Mr. Varley

I thought that in this debate the Opposition wanted to know the Government's case for public ownership. I want to give the House some facts about successes of public ownership. I cannot understand why hon. Gentlemen opposite will not listen. [Interruption.] I am very sorry that right hon. Gentlemen opposite have decided to shout me down so that I cannot give the facts about public enterprise. Do the Opposition want to hear about public enterprise? [Interruption.] The right hon. Gentleman is the Leader of the Opposition for only a short time. There are other Leaders of the Opposition, I think.

We are told that the Tory Party is engaged in an agonizing reappraisal of its attitudes and forces. Let hon. Gentlement opposite at least pluck up enough courage to acknowledge the debt that ought to be paid to those who are engaged in publicly-owned industries. When the asset strippers, the speculators and the whizz kids contribute one fraction of what the miners, the steel men and the nuclear technologists do, the Tory Party will deserve a hearing for the tired chidings which they utter from time to time.

Regarding North Sea oil, only majority public participation will attract to public enterprise the skilled oil technologists that Britain must train and keep. Other oil-producing countries have learned to their cost the dangers of allowing the exploitation of their indigenous oil resources to be wholly in the hands of foreign experts. We should learn from their mistakes and experiences, and not wilfully disregard them. But at the same time, we shall continue to welcome all those in the oil industry who contribute their experience and skills to this great enterprise. Only majority participation can ensure for the British people a realistic revenue from these indigenous resources.

The House will be pleased to know that within a matter of weeks, and certainly in the New Year, we shall have the opportunity of studying the text of the petroleum Bill, the preparation of which is now approaching its final stages. This Bill will set up the British national oil corporation with the powers outlined in the White Paper.

Meanwhile, my right hon. Friend the Chancellor of the Duchy of Lancaster, the Paymaster-General and my noble Friend, the Minister of State, will be embarking on negotiations to obtain public participation in existing licences. I know that the Opposition at least will take some pleasure when they observe my right hon. Friend the Chancellor of the Duchy of Lancaster deploying his brilliant and greatly appreciated talents in extending the boundaries of the public sector.

This afternoon my right hon. Friend the Secretary of State for Industry advanced a compelling case for taking the aircraft, shipbuilding and ship repair industries into public ownership. Most of the firms operating in these industries, whose survival is essential to the economic and industrial future of the country, have received substantial amounts of taxpayers' money over the years. They asked for that money and they were glad to get it. Yet in the meretricious words of this bogus amendment the Opposition have the nerve to claim that State intervention is damaging.

On Friday, when the workers of Hawker Siddeley lobbied hon. Members, they were not fearful of public intervention jeopardising their jobs. They were asking for public intervention to save their jobs.

Far from these measures being damaging, as the Opposition so unconvincingly claim, all of them are absolutely essential. But public enterprise is not simply a matter of rescuing private industry that has fallen on difficult days, or is badly managed, or cannot make money, or cannot ensure employment for its work force. Public enterprise is not simply the week's good cause. Public enterprise must also ensure that the State is institutionally equipped to make the decisions that matter for the British economy, rather than leave it to random forces to make them. It is absolutely essential that we reject the doctrine that what is good for Slater Walker is good for the country.

It does not matter to us whether the decisions about the future of the Tory Party are made in Milk Street rather than in the House. We are not prepared to allow the decisions about the jobs of

British workers to be made in Milk Street rather than in the House.

I cannot understand why the right hon. Member for Penrith and The Border (Mr. Whitelaw) is shouting. Is he trying to frighten somebody? The amendment that we shall vote against tonight has shown the total irrelevance of the Tories. They drift unrealistically out of the mainstream of British political life. They are now a fringe party, which is why we shall reject the amendment in the Lobby tonight.

Question put, That the amendment be made:—

The House divided: Ayes 296, Noes 310.

Division No. 1.]	AYES	[10.0 p.m.
Adley, Robert	Crowder, F. P.	Harvie Anderson, Rt Hn Miss
Aitken, J. W. P.	Davies, Rt Hon J. (Knutsford)	Hastings, Stephen
Alison, Michael	Dean, Paul (N Somerset)	Havers, Sir Michael
Amery, Rt Hn Julian	Dodsworth, G. H.	Hawkins, Paul
Arnold, Tom	Douglas-Hamilton, Lord James	Hayhoe, Barney
Atkins, Rt Hn H. (Spelthorne)	Drayson, Burnaby	Heath, Rt Hon Edward
Awdry, Daniel	du Cann, Rt Hon Edward	Henderson, Douglas
Bain, Mrs Margaret	Dunlop, J.	Heseltine, Michael
Baker, Kenneth	Durant, Tony	Hicks, Robert
Banks, R. G.	Dykes, Hugh	Higgins, Terence L.
Beith, A. J.	Eden, Rt Hon Sir John	Holland, Philip
Bell, Ronald	Edwards, Nicholas (Pembroke)	Hooson, Emlyn
Bennett, Sir Frederic (Torbay)	Elliott, Sir William	Hordern, Peter
Bennett, Dr Reginald (Fareham)	Emery, Peter	Howe, Rt Hon Sir Geoffrey
Benyon, W. R.	Eyre, Reginald	Howell, David (Guildford)
Berry, Hon. Anthony	Fairbairn, Nicholas	Howell, Ralph (North Norfolk)
Biffen, John	Fairgrieve, Russell	Howells, Geraint (Cardigan)
Biggs-Davison, John	Farr, John	Hunt, John
Blaker, Peter	Fell, Anthony	Hurd, D.
Body, Richard	Finsberg, Geoffrey	Hutchison, Michael Clark
Boscawen, Hon Robert	Fisher, Sir Nigel	Irvine, Bryant Godman (Rye)
Bowden, Andrew (Brighton)	Fletcher, Alex (Edinburgh N)	Irving, Charles (Cheltenham)
Boyson, Dr Rhodes (Brent)	Fletcher-Cooke, Charles	James, David
Bradford, Rev Robert	Fookes, Miss Janet	Jenkin, Rt Hon Patrick (Redbr)
Braine, Sir Bernard	Fowler, Norman (Sutton C)	Jessel, Toby
Brittan, L.	Fox, Marcus	Johnson Smith, G. (E Grinstead)
Brocklebank-Fowler, C.	Fraser, Rt Hon H. (Stafford & St)	Jones, Arthur (Daventry)
Brotherton, Michael	Freud, Clement	Jopling, Michael
Brown, Sir Edward (Bath)	Fry, Peter	Joseph, Rt Hon Sir Keith
Bryan, Sir Paul	Galbraith, Hon T. G. D.	Kaberry, Sir Donald
Buchanan-Smith, Alick	Gardiner, George (Reigate)	Kellett Bowman, Mrs. Elaine
Buck, Antony	Gardner, Edward (S Fylde)	Kershaw, Anthony
Budgen, N. W.	Gilmour, Rt Hon Ian (Chesham)	Kilfedder, James
Bulmer, J. E.	Gilmour, Sir John (East Fife)	Kimball, Marcus
Burden, F. A.	Glyn, Dr Alan	King, Evelyn (South Dorset)
Carlisle, Mark	Goodhart, Philip	King, Tom (Bridgwater)
Carr, Rt Hon Robert	Goodhew, Victor	Kirk, Peter
Carson, John	Goodlad, A.	Kitson, Sir Timothy
Chalker, Mrs Lynda	Gorst, John	Knight, Mrs Jill
Churchill, W. S.	Gow, I. (Eastbourne)	Knox, David
Clark, Alan (Plymouth S)	Gower, Sir Raymond (Barry)	Lamont, Norman
Clark, William (Croydon S)	Grant, Anthony (Harrow C.)	Lane, David
Clarke, Kenneth (Rushcliffe)	Gray, Hamish	Langford-Holt, Sir John
Clegg, Walter	Grieve, Percy	Latham, Michael (Melton)
Cockcroft, J. H.	Griffiths, Eldon	Lawrence, I.
Cooke, Robert, (Bristol W.)	Grimond, Rt Hon J.	Lawson, Nigel
Cope, J. A.	Grist, Ian	Le Marchant, Spencer
Cordle, John	Grylls, Michael	Lester, Jim (Beeston)
Cormack, Patrick	Hall, Sir John	Lewis, Kenneth (Rutland)
Corrie, John	Hall-Davis, A. G. F.	Lloyd, Ian (Havant)
Costain, A. P.	Hamilton, Michael (Salisbury)	Loveridge, John
Craig, Rt Hon W. (Belfast)	Hampson, Dr. Keith	Luce, Richard
Crawford. Douglas	Hannam, John	McAdden, Sir Stephen
Crouch, David	Harrison, Sir Harwood (Eye)	MacCormick, Iain
McCrindle Robert	Percival, Ian	Stainton Keith
McCusker, Harold	Peyton, Rt Hon John	Stanbrook, Ivor
Macfarlane, Neil	Pink, R. Bonner	Stanley, John
MacGregor, John	Powell, Rt Hon J. Enoch	Steel, David (Roxburgh)
Macmillan, Rt Hn M (Farnham)	Price, David (Eastleigh)	Steen, Anthony (Liverpool)
McNair-Wilson, M (Newbury)	Prior, Rt Hon James	Stewart, Donald (Western Isles)
McNair-Wilson P (New Forest)	Pym, Rt Hon Francis	Stewart, Ian (Hitchin)
Madel David	Raison, Timothy	Stokes, John
Marshall, Michael (Arundel)	Rathbone, T	Tapsell, Peter
Marten, Neil	Rawlinson, Rt Hon Sir Peter	Taylor, R. (Croydon N.W.)
Mates, Michael	Rees-Davies, W. R.	Taylor, Teddy (Glasgow, C)
Mather Caro	Reid, George	Tebbit, Norman
Maude, Angus	Renton, Rt Hn Sir D (Hunts)	Temple-Morris, P.
Mawby, Ray	Renton, Tim (Mid-Sussex)	Thatcher, Rt Hon M.
Mayhew, Patrick	Rhys Williams, Sir Brandon	Thomas, Rt Hon P. (Barnet)
Meyer, Sir Anthony	Ridley, Hon Nicholas	Thompson, G.
Miller, Hal (Bromsgrove)	Ridsdale, Julian	Thorpe, Rt Hon Jeremy (Devon)
Mills, Peter	Rifkind, Malcolm	Townsend, Cyril D.
Miscampbell, Norman	Rippon, Rt Hon Geoffrey	Trotter, Neville
Mitchell, David (Basingstoke)	Roberts, Michael (Cardiff NW)	Tugendhat, Christopher
Moate, Roger	Roberts, Wyn (Conway)	van Straubenzee, W R
Molyneaux James	Rodgers, Sir John (Sevenoaks)	Vaughan, Dr Gerard
Montgomery, Fergus	Ross, Stephen (Isle of Wight)	Viggers, P. J.
Moore, John (Croydon C.)	Ross, William (Londonderry)	Wainwright, R. (Colne Valley)
More, Jasper (Ludlow)	Rossi Hugh (Hornsey)	Wakeham, John
Morgan, Geraint	Rost, Peter (S.E. Derbyshire)	Walder David (Clitheroe)
Morgan-Giles, Rear-Admiral	Royle, Sir Anthony	Walker Rt Hon P. (Worcester)
Morris, Michael (Northants)	Sainsbury, Tim	Walker-Smith, Rt Hon Sir Derek
Morrison, Charles (Devizes)	St. John-Stevas, Norman	Wall, Patrick
Morrison, Peter (Chester)	Scott, Nicholas	Walters, Dennis
Mudd, David	Scott-Hopkins, James	Warren, Kenneth
Neave, Airev	Shaw, Giles (Pudsey)	Watt, Hamish
Nelson, Anthony	Shelton, William (Lambeth, St)	Weatherill, Bernard
Neubert, M.	Shepherd, Colin	Wells, John
Newton A	Shersby, Michael	Welsh, Andrew
Normanton Tom	Silvester, F.	Whitelaw, Rt Hon William
Nott, John	Sims, Roger	Wiggin, Jerry (Weston-s-Mare)
Onslow, Cranley	Sinclair, Sir George	Wilson, Gordon (Dundee E)
Oppenheim, Mrs Saliy	Skeet, T. H. H.	Winterton, Nicholas
Osborn, John	Smith, Cyril (Rochdale)	Wood, Rt Hon Richard
Page, Rt Hon R. Graham (Crosby)	Smith, Dudley (Warwick)	Young, Sir George (Ealing)
Page, John (Harrow West)	Speed, Keith	Younger, Hon George
Pardoe, John	Spence, John
Parkinson, Cecil	Spicer, James (W Dorset)	TELLERS FOR THE AYES
Pattie, Geoffrey	Spicer, Michael (S Worcester)	Mr. Adam Butler and Mr. John Stradling Thomas.
Penhaligon, David	Sproat, Iain
NOES
Abse, Leo	Canavan, Dennis	Dempsey, James
Allaun, Frank	Cant, R. B.	Doig, Peter
Anderson, Donald	Carmichael, Neil	Dormand, Jack
Archer, Peter	Carter, Ray	Douglas-Mann, Bruce
Armstrong, Ernest	Carter-Jones, Lewis	Duffy, A. E. P.
Ashley, Jack	Cartwright, John	Dunn, James A.
Ashton, Joe	Castle, Rt Hon Barbara	Dunnett, Jack
Atkinson, Norman	Clemitson, I. M.	Dunwoody, Mrs G. P.
Bagier, Gordon A. T.	Cocks, Michael (Bristol S)	Eadie, Alex
Barnett, Guy (Greenwich)	Cohen, Stanley	Edelman, Maurice
Barnett, Joel (Heywood)	Coleman, Donald	Edge, Geoff
Bates, Alf	Colquhoun, Mrs Maureen	Edwards, Robert (Wolv SE)
Bean, R. E.	Concannon, J. D.	Ellis, John (Brigg & Scun.)
Benn, Rt Hn Anthony Wedgwood	Conlan, Bernard	Ellis, Tom (Wrexham)
Bennett, A. (Stockport North)	Cook, Robin F. (Edin. C.)	English, Michael
Bidwell, Sydney	Corbett, Robin	Evans, Fred (Caerphilly)
Bishop, Edward	Cox, Thomas (Wands Toot)	Evans, loan L. (Aberdare)
Blenkinsop, Arthur	Craigen, J. M. (Glasgow. M)	Evans, John (Newton)
Boardman, H.	Crawshaw, Richard	Ewing, Harry (Stirling)
Booth, Albert	Cronin, John	Faulds, Andrew
Boothroyd, Miss Betty	Crosland, Rt Hon Anthony	Fernyhough, Rt Hon E.
Bottomley, Rt Hon Arthur	Cryer, G. R.	Fitch, Alan (Wigan)
Boyden, James (Bish Auck)	Cunningham, G. (Islington S)	Fitt, Gerard (Belfast)
Bradley, Tom	Cunningham, Dr J. (Whiteh)	Flannery, Martin
Bray, Dr Jeremy	Dalyell, Tam	Fletcher, Raymond (Ilkeston)
Broughton, Sir Alfred	Davidson, Arthur	Fletcher, Ted (Darlington)
Brown, Hugh D. (Glasgow, Pr)	Davies, Bryan (Enfield N)	Foot, Rt Hon Michael
Brown, Robert C. (Newcastle)	Davies, Denzil (Llanelli)	Ford, Ben T.
Brown, Ronald (Hackney S)	Davies, Ifor (Gower)	Forrester, John
Buchan, Norman	Davis, S. Clinton (Hackney C)	Fowler, Gerald (The Wrekin)
Buchanan, Richard	Deakins, Eric	Fraser, John (Lambeth N)
Butler, Mrs Joyce (Haringey)	Dean, Joseph (Leeds West)	Freeson, Reginald
Callaghan, Rt Hon J. (Cardiff S)	de Freitas, Rt Hon Sir Geoffrey	Garrett, John (Norwich S)
Callaghan, Jim (Middleton & P)	Delargy, Hugh	Garrett, W. (Wellsend)
Campbell, Ian	Dell, Rt Hon Edmund	George, Bruce

Gilbert, Dr John	McGuire, Michael (Ince)	Selby, Harry
Ginsburg, David	Mackenzie, Gregor	Shaw, Arnold (Redbridge, Ilf)
Golding, John	Maclennan, Robert	Sheldon, R. (Ashton-u-Lyne)
Gould, Bryan	McMillan, Tom (Glasgow C.)	Shore, Rt Hon Peter
Gourlay, Harry	McNamara, Kevin	Short, Rt Hon E. (Newcastle C)
Graham, Ted	Madden, Max	Short, Mrs R. (Wolv NE)
Grant, George (Morpeth)	Magee, Bryan	Silkin, Rt Hn S. C. (Southwk)
Grant, John (Islington C.)	Mahon, Simon	Silkin, Rt Hn John (Lewish)
Grocott, Bruce	Mallalieu, J. P. W.	Sillars, James
Hamilton, James (Bothwell)	Marks, Ken	Silverman, Julius
Hamilton, W. W. (Central Fife)	Marquand, David	Skinner, Dennis
Hamling, William	Marshall, Dr Edmund (Goole)	Small, William
Hardy, Peter	Marshall, Jim (Leicester, S)	Smith, John (N Lanarkshire)
Harrison, Walter (Wakefield)	Mason, Rt Hon Roy	Snape, Peter
Hart, Rt Hon Judith	Maynard, Miss Joan	Spearing, Nigel
Hattersley, Roy	Meacher, Michael	Spriggs, Leslie
Hatton, Frank	Mellish, Rt Hon Robert	Stallard, A. W.
Hayman, Mrs Helena	Mendelson, John	Stewart, Rt Hn M. (H'smith F)
Healey, Rt Hon Denis	Mikardo, Ian	Stoddart, David
Heffer, Eric S.	Millan, Bruce	Stonehouse, Rt Hn John
Hooley, Frank	Miller, Dr M. (E. Kilbride)	Stott, Roger
Horam, John	Miller, Mrs Millie (Redbridge)	Strang, Gavin
Howell, Denis (B'ham Sm H)	Mitchell, R. C. (Soton, Itchen)	Strauss, Rt Hon G. R.
Huckfield, Leslie	Molloy, William	Summerskill, Hon Dr Shirley
Hughes, Rt Hon C. (Anglesey)	Moonman, Eric	Swain, Thomas
Hughes, Mark (Durham)	Morris, Alfred (Wythenshawe)	Taylor, Mrs Ann (Bolton W)
Hughes, Robert (Aberdeen N)	Morris, Charles R. (Openshaw)	Thomas, Jeffrey (Abertillery)
Hughes, Roy (Newport)	Morris, Rt Hon J. (Aberavon)	Thomas, Michael (Newcastle)
Hunter, Adam	Moyle, Roland	Thomas, Ron (Bristol NW)
Irvine, Rt. Hon Sir A. (L'pool)	Mulley, Rt Hon Frederick	Thorne, S. G. (Preston)
Irving, Rt Hon S. (Dartford)	Murray, Ronald King	Tierney, Sydney
Jackson, Colin (Brighouse)	Newens, S.	Tinn, James
Jackson, Miss Margaret (Lincoln)	Noble, Mike	Tomlinson, J.
Janner, Greville	Oakes, Gordon	Tomney, Frank
Jay, Rt Hon Douglas	Ogden, Eric	Torney, Tom
Jeger, Mrs Lena	O'Halloran, Michael	Tuck, Raphael
Jenkins, Hugh (Wandsworth)	O'Malley, Brian	Urwin, T. W.
Jenkins, Rt Hon Roy (B'ham St)	Orbach, Maurice	Varley, Rt Hon Eric G.
John, Brynmor	Orme, Rt Hn Stanley	Wainwright, Edwin (Dearne V)
Johnson, James (Kingston W)	Ovenden, J,	Walden, Brian (B'ham, L'dyw'd)
Johnson, W. H. (Derby S)	Owen, Dr David	Walker, Harold (Doncaster)
Jones, Barry (East Flint)	Padley, Walter	Walker, Terry (Kingswood)
Jones, Dan (Burnley)	Palmer, Arthur	Ward, Michael
Jones, T. Alec (Rhondda, W.)	Park, G.	Watkins, David
Judd, Frank	Parker, John	Watkinson, John
Kaufman, Gerald	Parry, Robert	Weetch, Ken
Kelley, Richard	Pavitt, Laurie	Weitzman, David
Kerr, Russell	Perry, Ernest	Wellbeloved, James
Kilroy-Silk, Robert	Phipps, Dr C.	White, Frank (Bury)
Kinnock, Neil	Prentice, Rt Hon Reg	White, James (Glasgow P)
Lambie, David	Prescott, John	Whitehead, Phillip
Lamborn, Harry	Price, C. (Lewisham W.)	Whitlock, William
Lamond, James	Price, William (Rugby)	Willey, Rt Hon Frederick
Latham, Arthur (Paddington)	Radice, Giles	Williams, Alan (Swansea)
Leadbitter, Ted	Rees, Rt Hon Merlyn (Leeds S)	Williams, A. L. (Havering)
Lee, John	Richardson, Miss Jo	Williams, Rt Hn Mrs S. (Hertford)
Lestor, Miss J. (Eton & Slough)	Roberts, Albert (Normanton)	Williams, W. T. (Warrington)
Lever, Rt Hn Harold	Roberts, Gwilym (Cannock)	Wilson, Alexander (Hamilton)
Lewis, Arthur (Newham N.)	Robertson, John (Paisley)	Wilson, Rt Hon H. (Huyton)
Lewis, Ron (Carlisle)	Roderick, Caerwyn	Wilson, William (Coventry SE)
Lipton, Marcus	Rodgers, George (Chorley)	Wise, Mrs. Audrey
Litterick, Tom	Rodgers, William (Teesside)	Woodall, A.
Lomas, Kenneth	Rooker, J. W.	Woof, Robert
Luard, Evan	Roper, John	Wrigglesworth, Ian
Lyon, Alexander (York)	Rose, Paul B.	Young, David (Bolton E)
Lyons, Edward (Bradford W.)	Ross, Rt Hon W. (Kilm'nock)
Mabon, Dr J. Dickson	Rowlands, Ted	TELLERS FOR THE NOES:
McCartney, Hugh	Ryman, John	Mr. Joseph Harper and Mr. Tom Pendry.
McElhone, Frank	Sandelson, Neville
MacFarquhar, R.	Sedgemore, B.

Question accordingly negatived.

Main Question again proposed.

It being after Ten o'clock, the debate stood adjourned.

Debate to be resumed tomorrow.