GENERAL PURPOSES AND FUNCTIONS

HC Deb 22 October 1975 vol 898 cc492-615

Lords Amendment: No. 9, in page 2, line 27, after first "the" insert "development or".

Mr. Kaufman

I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Speaker

With this amendment we are to discuss Lords Amendment No. 10, in page 2, line 32, after "of" insert "productive".

Mr. Kaufman

It was suggested in another place that the Board's first purpose— the assistance of the economy of the United Kingdom"— had insufficiently positive connotations. It was suggested that the word "development" might be incorporated. That does not narrow the Board's purposes in any way.

I cannot see that Lords Amendment No. 10 serves any particularly useful purpose, although great weight was attached to it in another place and the Government have no strong reasons to oppose it. The point that it seeks to make is already implicit in the totality of the Bill's original provisions. We have no particular attachment to the original wording, which was taken from the Conservatives' Industry Act 1972.

Mr. Dafydd Wigley (Caernarvon)

I should read into Lords Amendment No. 10 the connotation that it aligns itself with productive industries or index-of-production industries, and that might have some effect on other industries which might otherwise fall within the provision. I have an interest in tourist industries and that sort of thing, and the provisions could cut across them.

Mr. Kaufman

The hon. Member's fears are not founded. We have managed to accommodate his views about mining and quarrying later in the Bill.

Question put and agreed to.

Subsequent Lords amendment agreed to.

Lords Amendment: No. 11, in page 2, line 35, leave out "establishing"

The Secretary of State for Industry (Mr. Eric G. Varley)

I beg to move, That this House doth disagree with the Lords in the said amendment.

Mr. Speaker

With this amendment we are to discuss the Lords Amendments Nos. 12 and 14.

Mr. Varley

These amendments are based on a doctrinaire opposition to public enterprise which strikes at the very heart of the Bill. They would remove the Board's powers to set up new industrial enterprises and form new companies, and these are essential powers if the NEB is to make a fully effective contribution to the regeneration of British industry.

If these powers are deleted, the NEB will be crippled in its efforts to improve industrial efficiency and to tackle unemployment, particularly in the assisted areas of England. The powers to establish new undertakings are in the Bill particularly to enable the NEB to build new factories and bring new jobs to areas of the country with the highest level's of unemployment.

Existing legislation, such as the Industry Act 1972, has had its successes, but despite 30 years of regional measures there remain areas with seemingly intractable problems where it has proved extremely difficult to attract desperately needed private investment.

The NEB will be able to complement the incentives and controls of regional policies pursued by successive Governments by assessing in a rational way and without the prejudice which is so often shown by private industry whether its new investment can be sited in areas of greatest need. Hon Members who have in their constituencies areas of severe unemployment and deprivation will appreciate the significance of the powers which the other place is attempting to remove.

4.0 p.m.

Fears that the powers to establish new enterprises will be used to undermine the private sector through unfair competition are wholly misplaced. The National Enterprise Board will be subject to proper commercial discipline. The Bill specifically permits the setting up of separate financial objectives for different categories of activity so as to ensure that activities such as the establishing of new enterprises can be separated and set appropriate objectives. The guidelines for the Board will require it to avoid showing undue preference in its trading relationships.

Perhaps I might also say something specifically about Lords Amendment No. 12. The NEB's function of extending public ownership into profitable areas of manufacturing industry was stated quite clearly in our White Paper "The Regeneration of British Industry", and set out again in the Labour Party's manifesto at the last General Election. Our policy was quite unambiguous and we were elected to carry it out. Their Lordships' proposal to strike out of the Bill elements crucial to the Government's strategy for British industry and for the employment prospects of the British people is entirely unacceptable.

Like the power to establish new undertakings, which their Lordships sought to remove, a stake in profitable manufacturing industry is needed if the board is to fulfil its purposes, particularly the purpose of creating new employment. Only from a base in profitable manufacturing industry can the NEB itself take new initiatives to develop new industrial capacity in the areas of greatest need.

The NEB will need to acquire an interest in several significant companies with strong potential for profitable and successful expansion. It is only right that the NEB should acquire 100 per cent. of the equity capital in appropriate cases so as to avoid conflicts between the Board's objectives and the interests of private shareholders. This was all fully debated in the House and was set out in the White Paper.

Never before has public enterprise had the opportunity to compete on equal terms with the private sector. The NEB's companies will have no special privileges, but, equally, they will have no special shackles, such as the Opposition have tried to devise. The NEB will have the opportunity to demonstrate that a concern for the public interest is not incompatible with profitability and efficiency.

Mr. Michael Heseltine (Henley)

Perhaps the House will not have failed to miss the charm of the advice given by the right hon. Member for Orkney and Shetland (Mr. Grimond) from the Liberal benches in suggesting a greater degree of co-ordination in Opposition tactics, in that I rise, in the absence of any Member of his party whatsoever, to take part in that process.

This is a debate, as the Secretary of State for Industry recognises, that we have had in the House on many previous occasions in various forms.

I agree with the analysis of the Secretary of State that it is the purpose of the amendments that we are discussing to restrict the NEB in a way that would prevent it from taking over—presumably by making bids on the open market at inflated prices—profitable and, therefore, successful public companies. Such action, in the view of my hon. Friends and myself, would be likely to have a wholly deterrent effect, out of all scale with the benefit to the economy that it is likely to achieve, because it would perpetuate the dialogue which was conducted by the right hon. Member's predecessor about the relationship of the State to private industry, and which actually led to the removal of the right hon. Member's predecessor and his own appointment to undertake this task.

Unless the Government are prepared to make up their mind whether they genuinely want what they frequently describe as a prosperous and thriving private sector, with clear divides, we shall simply end up with the worst of all possible worlds.

The Secretary of State's hon. Friends understand that with exactly the same clarity as I express it. They understand that to try to make a mixed economy work with an inefficient public sector and a shackled private sector is a meaningless posture to adopt, but that is the task which this Government have set themselves. While they may well pay lip-service to the concept of a clear divide, in reality, when any decision comes to be taken, the clear divide has persistently moved a little further in the direction of the left wing of the Labour Party.

The Secretary of State for Industry tells us—and his colleagues in another place have told us—that there are to be clear guidelines. My hon. Friends and I find it difficult to understand why the clear guidelines have not been allowed to see the light of day during the discussions which have taken place at great length about the various provisions of this Bill.

The Secretary of State for Industry understands as clearly as I do that the guidelines for today are by no means guaranteed as the guidelines for tomorrow. What a Government can dispose by way of a generalised issue of intent from 1 Victoria Street can equally well be replaced with a quite different set of guidelines under the responsibility of a different and successive Minister. Therefore, it really is no assurance at all to anyone to be told that there will be some ad hoc document which it will be convenient for the Government to produce at a particular political moment, unless people can be convinced that it will represent the long-term strategy behind the Government's industrial policy.

It is because, in reality, we have moved from the situation of a few months ago, when there was an industrial policy—however repugnant it might have been to me and my hon. Friends—to the situation today, where there is simply no industrial policy at all, that we have not actually seen the level of confidence in British industry move upwards. Indeed, if anything, it has continued to move downwards, despite the change of direction that we were promised when the right hon. Gentleman took up his present appointment.

Mr. Varley

Who promised that?

Mr. Heseltine

I am asked by the Secretary of State for Industry to say who promised a change of direction. The whole tenor of the Chancellor of the Exchequer's speeches is that there is now to be a new industrial policy. The whole initiative for the NEDC conference scheduled for next month is that a new document is to be produced which will indicate a new way forward.

I shall not seek to describe the words used by Members on the Government side to indicate their policy, but let us have no doubt that everybody is aware today that a massive re-think is taking place in Government, and has been discussed outside Government with the various institutions concerned, in order to find another way forward for industry. That is what is happening. That is what the Secretary of State for Industry has been doing since he took up his task. We all look forward to the publication of the document, because we can certainly do with an improvement of the climate within which industry is to operate.

The Secretary of State for Industry knows as well as I do that he is now looking again at the basic assumptions upon which the initial Green Paper, the initial White Paper, and much of the thinking of Labour Members was based, and which underlay the great revisionist view which brought this party to power. I am concerned at the absence from the Secretary of State's speech of any factual justification for the assertions that he makes. I understand the political reasons why the National Enterprise Board should be given aggressive powers of take-over. I well understand the basic concept of the transfer of power from the private to the public sector. That is the underlying view of many of his hon. Friends, and that is very clearly expressed. But I should have thought that the main preoccupation of the Labour Party today would be with how to improve the performance of British industry, for without that we shall not see a revival of confidence, or any improvement in the real standards of the British people, which have been sinking, relative to our main competitors, for two decades or more. In the end, we should be concerned with performance.

If that is generally agreed across the House, perhaps I may move on to the second question which must pre-occupy the Secretary of State. Why should State ownership be likely to improve performance faster and more effectively than private ownership? If the Secretary of State had tried to answer those questions, we could have conducted a real dialogue. No one can claim for any system the results its supporters always hope for, but over any recent period it is more likely that the State ownership of industry has led to bad results than the reverse.

Therefore, when the Secretary of State argues this case, he argues a political and not an economic case. It is an important part of government, for instance, to remain at one remove from the management's decisions of industry—and not just because, every so often, some Minister, for all sorts of reasons, will make the wrong decision. My complaint against the right hon. Gentleman's predecessor is not that the idea of supporting co-operatives was a bad one. The co-operative movement has been underused in this country and it may be a way of harnessing people's enthusiasm to their benefit and that of the country. My complaint is that his predecessor used ministerial discretion to make bad managerial judgments.

If the Secretary of State for Energy was responsible for creating the Scottish Daily News and Robert Maxwell for managing it, we are entitled to be sceptical about the outcome. If the previous Secretary of State for Industry, against all the available advice, decided to back a three-factory solution for our motor cycle industry, it can be no surprise that two of those factories are now in the hands of the receiver, within months of his decision. [Interruption.] It is no use Labour Members trying to confuse the issue by reacting from sedentary positions. They must understand that the jobs of thousands of British workers have been severely prejudiced by the intervention of politicians under their Government in the motor cycle industry.

Mr. John Lee (Birmingham, Handsworth)

Stripped of the verbiage, is not the right hon. Gentleman saying that if there is to be Government control it must be a stage further removed so as to be less effiective? Either the Government intervene and intervene effectively or they do not intervene at all. Is not his position wholly false, therefore?

Mr. Heseltine

I believe that the workers of Wolverhampton and Small Heath would think not that I was indulging in verbiage but that what I have said comes closer to their real problems than what many Labour Members say. I am saying that it is important for Governments not to be so committed to management that they are locked into certain positions. They can do that only by having management controlled by regulations, but at one remove. The moment that that frontier is crossed the political instinct usually overtakes the economic, in an effort to preserve a political posture, not an economic one. That is likely to delay change and the solution of the dilemma of British industry and to slow down the process of adaptation that we have to undergo.

But it is not the mismanagement of one set of co-operative decisions which is of prime concern. In other areas where Governments have become involved in the ownership of industry—Labour Members will have to produce counter factual evidence—this has led, often for what seems to be good political reasons, to the slowing down of the momentum of those industries and the injection of political decisions into their problems in a way which has ill served the nation, The classic and most recent example is that of the steel industry. We all understood why the investment programme was held up—because the Government believed that they had a political opportunity at the time of the first General Election in 1974 to appeal to many of the workers in that industry. As a result, workers throughout the rest of industry are still suffering from the under-modernisation of the steel industry, which the next time that the pressure is on will not be able to supply the steel we need at the quality we demand for a price competitive with the rest of the world. That will prejudice workers throughout British industry for the short-term benefit of some of the workers in the British steel industry.

4.15 p.m.

A more recent issue with which the right hon. Gentleman himself has had to deal is that of British Leyland. Perhaps the most surprising indication of the dilemma came last Monday when the Secretary of State was asked what he expected to be the rate of return from British Leyland and he had to explain that that would be a matter for the directors, that it was not his decision. Presumably, he will make available large sums of taxpayers' money but leave decisions to the directors.

What the Secretary of State does not understand is that directors left without any pressure from shareholders or the market or outside forces cannot be expected to seek to maximise the returns which flow from their investment. It has in the last resort to be a function of owners to decide what return they expect to achieve. I do not blame the right hon. Gentleman for his inability to apply this but merely ask him to ponder it. He simply has not the commercial expertise to make a judgment about the sort of returns that British Leyland should earn, but has to rely entirely upon the board of directors. That is not the way to achieve the best returns for the motor industry or the higher living standards of those engaged in it.

Wherever one looks in the private sector, despite the fine promises of performance by Ministers, when the accounts have been presented this House has had to pick up the tabs. Year after year publicly-owned industries have shown unfavourable returns when compared with the private sector. It is worth asking the right hon. Gentleman whether he can tell us of one industry in the public sector which in any consistent period has earned a decent rate of return on capital employed.

Mr. John Tomlinson (Meriden)

How was that objective assisted by the consistent interference by the hon. Gentleman's party when in government with the pricing mechanisms of the nationalised industries?

Mr. Heseltine

That is a serious question and it would be easy to run away from facing the consequences of what happened then. The last Conservative Government tried to reach agreement with the unions on a counter-inflation policy, part of which deal was that there would be restraint on public sector prices. The consequence was that that restraint remained but the Labour Party encouraged the unions to believe that there was not need for restraint on their side. As a result, we had 27½ per cent. inflation while public sector deficits remained—

Mr. Tomlinson

You did it.

Mr. Heseltine

The hon. Gentleman keeps trying to make narrow party points while I am trying to point to one of the fundamental dilemmas facing this country. How are we to persuade the British people that if they want a public sector it has to be paid for, either through increased taxes or by commercial pricing?

If the hon. Member is satisfied that the British people understand or that we have been fair in explaining to them, he would be surprised to be involved in a dialogue in which, every time a Government tried to increase public sector prices, they were opposed by the Opposition—of both parties. It is a fundamental weakness that that is one of the major imperatives which make it hard for Governments to follow realistic commercial pricing—and that applies to Governments of both parties.

The explanations that the right hon. Gentleman has given us for the need and the political and economic justification for the NEB are wholly inadequate. But more germane to the contradiction of advice given by his Government is whether he agrees with Lord Beswick, who, when asked why successful companies should be taken over, far from the rhetoric of the Secretary of State today, said: The answer to that question is that successful firms will not be taken over: successful firms, if they do not need regeneration, will not receive the kind of regeneration provided for in this Bill."—[Official Report, House of Lords, 21st July 1975: Vol. 363, c. 133] Who is right—is it the Minister of State or the Secretary of State? I believe that it will turn out to be the Secretary of State who is right, but the position should be clarified because clearly, from the record of Hansard in another place, the Minister of State has laid it on the line that successful companies have nothing to worry about. If they are able to sustain themselves, they are free from any threat from the National Enterprise Board. If that is so, there is no case for the House to disagree with the Lords amendment. We are seeking to lay down legally that the Minister of State's assurance is built into the statute.

I cannot understand how the Secretary of State for Industry believes that using the powers of the National Enterprise Board to buy up Scottish and Welsh companies, which are profitable in their own right and based for their power operation in Scotland or Wales, would improve the position if they found their ownership transferred from the countries in which they operate to London. We have not had a word of explanation about that from the Secretary of State. I am sure that it is something which the Under-Secretary will want to explain when he comes to reply.

We were told of the proper commercial disciplines and the fact that there will be nothing except fair and proper competition with the private sector. Those are contradictions in terms. It is totally impossible to give to the National Enterprise Board unlimited access to public funds at a rate of return which the Secretary of State is unable to explain in advance as a laid-down standard for the rate of return on capital, and then to talk about realistic and fair competition with the private sector.

The ultimate discipline in the private sector is the existence of funds. If the funds run out, the companies are constrained in what they can do. In the public sector there is no such constraint. If, as will be the case, the rates of return on public money are decided upon not in advance but in arrear, when the results are available and can be rationalised after the event, there can never be fair and realistic competition between the public and private sectors.

I should like to mention briefly the suggestion which underlines the whole of the case which the Secretary of State has put forward, namely, that the private sector has failed because it has invested on an insufficiently large scale. I ask the Secretary of State whether he intends to publish the evidence now available to him from the NEDC organisation about the rate or return on British manufacturing industry over the past decade or so. That evidence indicates that the rates of return are inadequate to attract new investment when compared, on the international scene, with our major competitors.

There is no way, no Government mechanism and no science known to Ministers that will be able to attract investment to industry unless the prospects of adequate profit exist. This is not only the view of the Governor of the Bank of England, because, although he spelt it out clearly at the Mansion House last week, it is also the view of the Government's advisers. Unless the Government are prepared to recognise that and explain how they intend to regenerate the private sector's ability to earn money, there is no palliative available to the nation's industry through any device of the Government, let alone the National Enterprise Board.

The reality is that even if the whole of the resources of the NEB were spent in one year, they would not be sufficient to make up for the fall in investment that has followed partially as a consequence of the world economic crisis and partially as a consequence of the political activities and speeches of certain members of the Government.

Mr. Bob Cryer (Keighley)

Is the hon. Gentleman saying that there has been a strike of capital because of the advent of a Labour Government? Is he saying that there is a conspiracy of the holders of capital against us?

Mr. Heseltine

I know that what the hon. Gentleman said sounds right in the constituencies, but this is the critical underlying dilemma of the country. That sort of approach is part of the banalities that have gone on in the House for 20 years. Unless we can begin to understand that the only way in which this nation can seek a higher standard of living it to get a higher rate of return upon the nation's assets, whether through the public or the private sector, we shall continue to drift compared with our other advanced economic competitors.

It is no use trying to introduce expressions like "The strike of capital" and "The march of the bosses overseas", because that is simply to spit in the wind of economic forces.

Mr. Brian Sedgemore (Luton, West)

That is what the hon. Gentleman was saying.

Mr. Heseltine

There is a major political divide between Labour Members who sit on the bench below the Gangway and myself. I believe that for the economic recovery of the country a much greater understanding of our underlying issues by all politicians in all parties will be necessary. If we continue to try to seek the maximum division as opposed to the maximum agreement, we shall perpetuate the wounds which have done so much to bring the country to the relative state of poverty which it has achieved.

At least we knew the views of the previous Secretary of State for Industry. His views quite clearly stood with those of his hon. Friends below the Gangway. He was against the private sector, against private enterprise and against a capitalist system—indeed, anything that contributed to its downfall was fair game for him. At present we have a Secretary of State for Industry who, I hope, will reverse that trend. However, he has given no indication yet that he has understood the essential need to give industry the opportunity to earn sufficient and adequate profit. It is as though, under the previous régime in the Department of Industry, like Antony he came to bury Caesar, not to praise him. Now we have the mortician trying to dress up the corpse.

Mrs. Judith Hart (Lanark)

I should like to seek to maximise the areas of agreement between the hon. Member for Henley (Mr. Heseltine) and myself. This may be a rather unusual course, as he has taken a very ideological Conservative approach to the whole question. However, I believe that there are two or three matters he mentioned on which certainly I should find no difficulty in agreeing. I know it may be a little disconcerting to the hon. Gentleman to hear me say this, but nevertheless I shall do so.

What underlies a great deal of what he said was that we are talking about the prospects and potential for British industrial success. That means success in full employment, in exports and in recreating a thriving industrial sector, especially in manufacturing in this country. He and I would have no basic disagreement about that as an objective.

The hon. Gentleman went on to say that it was therefore a matter of the performance of British industry. Again, I do not disagree that this is about the performance of British industry. However, after that point we begin to part company—and we do so not so much in terms of what the Bill is proposing as in terms of the analysis which has given rise to the Bill and to Labour Members' views that we must have, on the one hand, the National Enterprise Board and, on the other hand, a system of planning agreements. The analysis is the key, because the whole Labour industrial strategy arises from our analysis.

It is probably fair to assume that the hon. Gentleman's analysis and that of his hon. Friends indicates that we are living in a world in which the medium-sized firm is still crucial to the investment performance of the British economy, and that the small firm is still of considerable importance—in other words, the view of the entrepreneurial significance of British industry as it truly was some 20 to 25 years ago. If one examines the situation as it was 20–25 years ago, one finds that a great deal of what the hon. Gentleman has said would have much more validity then. However, it seems to me that the hon. Gentleman and their Lordships have totally overlooked—I refer to the omission of paragraph (c)—the principle that the NEB may extend public ownership into profitable areas of manufacturing industry". 4.30 p.m.

And that the analysis is now totally different. The hon. Gentleman may refer to whichever documents or analyses he likes, but he will find that today we live in an economy in which most of the significant economic decisions about the level of investment, exports, pricing policies and regional job creation are made by a comparatively small number of large conglomerates which control innumerable numbers of subsidiaries, most of which are unrecognisable to the general public as subsidiaries of conglomerates. I am sure that he is familiar with the analysis presented by the Labour Party two or three years ago, which showed that 50 per cent. of our manufacturing industry was controlled by 100 key firms. The latest figures show that 40 per cent. of our exports are controlled by 30 leading firms in this country.

Mr. Heseltine

The point which the right hon. Lady misses is that, although her statistics may be true, the decisions on pricing policies are controlled not by these relatively few companies but by their competitors, which are much more numerous.

Mrs. Hart

The hon. Gentleman poses an interesting question. I was about to say that as an economy—this point has come to public attention—we are five times more multinational than most of our major competitors—for example, Germany and Japan. A high proportion of our leading conglomerates have a multi-national dimension. The significance of that is that decisions about investment and pricing and, therefore, employment in the regions, and so on—and with a multi-national dimension the element of transfer pricing looms larger than whatever the Chancellor of the Exchequer is doing in this country—are determined more by what is happening in the international money markets—the Eurodollar market, Wall Street and the Bourse—than by the Treasury.

The conclusion that we have reached, and which underlies this strategy, is that it is no longer possible to attempt, as both Conservative and Labour Governments have done during the last 15 years, to exercise a degree of planning control over the major national economic decisions through the old and well-respected methods of Keynesian demand management. A large conglomerate with a multinational dimension is more responsive to factors outside Britain than to what the Chancellor decides to do about hire-purchase deposits, hire-purchase rates, and so on.

I do not think that the Opposition will find any evidence to contradict the analysis that an enormous concentration of British industry is in very few hands. If the analysis is correct, we need a new method or strategy to influence the development of the British economy. Unless the hon. Member for Henley is saying that it should be no part of the function of British Governments to seek to influence the economic well-being of the nation and is totally rejecting every kind of intervention, including Treasury demand management policies—I cannot conceive that he is saying that—he must be saying that it is the duty of the Government to seek to influence the major economic planning decisions of industry as a whole. If the analysis of the current breakdown of ownership in British industry, as I have presented it is correct, it follows that the old methods are not enough and that new methods must be found. We then face the question: what should those new methods be?

I believe that hon. Gentlemen opposite and their Lordships have not understood the basis of the Bill, the basis of the White Paper on the regeneration of British industry, and the basis of Labour Party policies. They have seen them in narrow ideological terms as dealing with the basic transfer of power from the private to the public sector. That is part of it, but the major part is that this is the only strategy, given the present structure of ownership in British industry, to exercise a degree of effective control over the major elements of economic decision-making.

We must not move into the management of factories and companies, nor interfere with the technological and management expertise on the factory floor, but we must move into the boardrooms in Throgmorton Street and Threadneedle Street, which are more responsive to interests outside this country than to the interests of the British people.

This amendment must be rejected. We must have effective control, which means ownership. It need not be 100 per cent. ownership; it can be whatever element of ownership gives us the capacity to control the economic decision-making of the conglomerate in manufacturing industry, because that is where our future success lies. We must move into the leading sectors of industry. Therefore, the National Enterprise Board must have the power to move into profitable manufacturing industry.

Mr. Tom King

Does the right hon. Lady recognise that a price has to be paid for State control or public ownership and that that price is putting the Government in direct confrontation with industry in certain situations? Does she not recognise that if the benefits and the achievement of national objectives in economic planning could be obtained not by control but by influence and persuasion, that would be preferable?

Mrs. Hart

The strategy adopted here is the consequence—[Interruption.] I do not agree that we have not tried—of a total failure to achieve this over the last 15 years. Successive Governments have tried persuasion. They have tried Keynesian demand management techniques. They have offered the carrot and the stick, and incentives to investments. But where are we? I do not want to go into this matter at length, because it takes me too wide and I shall go on too long, or into the question of whether profit is the only or the major incentive. We are in 22nd place out of 24 OECD countries in the level of our investment. We are right down at the bottom of the list.

Tried and tested methods have failed. We need a new strategy. I ask hon. Gentlemen opposite to give this matter one further thought. Are they so sure that if they now had the chance to operate their methods the result would be a revival of investment and success in British industry and exports? I do not think they can be so sure, because, on their past experience, their methods have not worked. Therefore, we need a new approach. This involves—we are pleased that it does—an extension of public ownership. We believe in the principle of public ownership, but we must see it in two ways. We must see it as not only a matter of principle but as the only viable strategy for industrial success for Britain. I believe that if we had a full opportunity to argue these matters out without the pretension of the ideological battleground, we might even convince a few hon. Gentlemen opposite.

Mr. Douglas Crawford (Perth and East Perthshire)

An article in a Scottish national newspaper this morning said that the Cabinet would be meeting on Friday to discuss devolution and that the question whether to bring forward the White Paper would be a knife-edge decision. I hope this will not be so, and that the Government will honour their pledge to set up a Scottish Assembly with powers. But after last night, when, on the Report stage of the Scottish Development Agency (No. 2) Bill, those advocates of giving the SDA industrial and economic powers, the hon. Members for Central Ayrshire (Mr. Lambie). South Ayrshire (Mr. Sillars) and Paisley (Mr. Robertson) voted against an SNP amendment to this effect, one must doubt the good will and honesty of the Government. We have not had a categorical assurance from the Government that the NEB will not operate in Scotland. I attended a conference at Aviemore two or three weeks ago at which the Chairman of the Board said that it would operate in Scotland. The hon. Member for Aberdeen, North (Mr. Hughes) seems to think it would be a good thing for the Board to operate in Scotland.

Mr. Robert Hughes (Aberdeen, North)

I disagree with the hon. Member when he objects to the Board operating in Scotland. I hope it will operate in parallel with the Scottish Development Agency. The basic error of the hon. Member and his colleagues in the SNP is to imagine that the problems of the Scottish economy can be solved solely in a Scottish and a capitalist context and not in an all-United Kingdom Socialist context.

Mr. Crawford

I am not a Socialist of a Conservative; I am a Scottish National, and I am not going to get involved in a Socialist debate. The hon. Member would like to see a London-based agency operating in Scotland. My hon. Friends and I would not.

If there is to be an agency carrying out dogmatic policies—it is up to the people of Scotland to decide whether it should—it ought to be a Scottish-based agency, responsible to the people of Scotland. I presume that the hon. Member for Aberdeen, North is aware of the Scottish Council's report on centralisation in 1969, when it said that as positions of authority within industry diminished, the quality of life in the community ran down. Since then, there has been no cessation in the process of centralisation, and there has been a decrease in the standard of living and quality of life in Scotland.

The question whether the Board should be essentially an English body is a matter to be decided by the people of England and hon. Members representing English constituencies. They should decide whether it should be interventionist, non-dogmatic, or whatever. We are to have an agency in Scotland and, with reservations, my party supports its establishment. Last night, the Conservatives changed their mind and, having opposed it, ended up supporting it. However, we insist that it must not be subservient to the NEB.

4.45 p.m.

Mr. Ian Mikardo (Bethnal Green and Bow)

On a point of order, Mr. Deputy Speaker. May I have your guidance? I am trying very hard to follow the proceedings, and this, as you will know, involves looking at three documents—the Bill, the Lords amendments, and our Amendment Paper. I cannot find anything in the group of amendments we are now discussing which is germane to the point the hon. Member is making. I cannot find anything about Scotland in them. There are references to Scotland in other parts of the Bill, but not in these amendments. Can you show me where references to Scotland appear in the amendments under discussion?

Mr. Deputy Speaker (Mr. George Thomas)

I am much obliged to the hon. Gentleman, who has been in the House almost as long as I have. The hon. Member for Perth and East Perthshire (Mr. Crawford) is straying from the narrow path that he should be following. The points he seeks to make should be made on later amendments.

Mr. Crawford

I am grateful, Mr. Deputy Speaker. The point is that if the Government's attempts to defeat the Lords amendment succeed, there will be more centralisation of decision-making, and the Labour Party in Scotland, married as it is to the doctrine of centralisation and taking away decision-making—

Mr. Deputy Speaker

Order. I am sorry to interrupt the hon. Member. He could make this speech on every amendment for the rest of the afternoon. As we are under the guillotine and time is very precious, it would be helpful if he would keep this argument until we reach amendments which are related to it.

Mr. Crawford

I give you an undertaking, Mr. Deputy Speaker, that I shall not make this speech again tonight. We are concerned about an increase in the centralisation of Scottish industry's decision-making in London, and I shall advise my hon. Friends to vote against the Government.

4.45 p.m.

Mr. David Crouch (Canterbury)

I listened to the speech of the right hon. Member for Lanark (Mrs. Hart) with interest. I am not being discourteous, but it sounded like a Second Reading speech. The right hon. Lady made a valuable contribution for her side, particularly for her side of the Gangway, to the arguments we did not hear in Committee except from the former Secretary of State for Industry. It was a valuable contribution. She kept saying "This is what I think. My right hon. Friend will not agree with me." It was an interesting speech and not out of order, but I disagree with her fundamentally.

I shall not seek to make a Second Reading speech—

Mrs. Hart

The problem is that the amendment goes to the heart and principle of the Bill, and in discussing the amendment one is inevitably discussing the whole principle involved in this measure.

Mr. Crouch

I was making a comment rather than a criticism. The Lords amendment which seeks to delete the expansion of public ownership into profitable areas of private industry is the kernel of the Bill. It disturbs me that this provision should have been included, because I cannot find any requirement that the Board should seek to work commercially and to make profits. Why should the Board, under the Government's direction, seek to take over large chunks of profitable industry, but not also give a commitment that they will continue to be profitable? For many hours and days in Committee we sought to put this principle into the Bill. We dislike this measure, but we were not utterly destructive in Committee.

The NEB represents a milestone in British industrial history and in the relationship between the Government and private and public industry. It is ill-conceived not to write in a requirement that the Board should seek to operate industries at a profit. It is right that we should restrict the Secretary of State and the Board from taking over such companies. The Lords were correct, and it is right that we should now have another opportunity to debate this fundamental issue.

It is wrong for the Secretary of State to have such wide-ranging powers and be able to use the Board to move into profitable sectors of industry without giving a requirement that they will continue to make profits. We are going back 30 years to the original escapades of the 1945–1950 Labour Government which marched into industry with its nationalisation programme. We started off on the wrong foot.

The hon. Member for Bethnal Green and Bow (Mr. Mikardo) and I worked for two years on the Select Committee on Nationalised Industries. We know that no Government, either Labour or Conservative, ever found the right solution. No Government gave sufficient thought to the construction of policies enabling the public sector to be correctly managed in the interests of the State and the nation. This Bill seeks to open the gates to a greater area of Government penetration and intervention. That is the object of the Government. But nowhere does the Bill contain a statement about how to manage the nationalised industries better.

The 1968 Select Committee report on the nationalised industries was the most important report since the war on this problem. It criticised all Governments for not having produced a management structure for a more satisfactory relationship between the public sector and the Government and a more satisfactory performance of the nationalised industries.

I am worried that we are again starting off on the wrong foot. I am not being destructive. This is the cornerstone, to which the Government have not given enough thought. In the same way, at the end of the war the Labour Government embarked on nationalisation saying that they would take whole sectors of the British economy into public ownership. There were reasons for their action. Some of those sectors were sick. I refer to the coal industry. There was no great outcry when the coal industry was nationalised. Since about 1923 the railways had suffered from lack of investment. Therefore, there was no great argument against the nationalisation of the railways. Nor was there any argument against the nationalisation of gas and electricity.

The trouble was that we marched into the nationalisation process without having given sufficient thought to it. It is a pity that Parliament, the Government and civil servants have not devised a better system with which to manage our nationalised industries. We have been carried away by the emotion of our political desires. In 1945 there was a political desire to correct the wrongs of the 1930s. The Labour Party expressed its desire of 70 years' standing for the State to move into industry.

Today our duty is to ensure that what we take over in the name of the public is properly and correctly run. Insufficient thought has been given to that problem. We recognise the zeal of the members of the Labour Party for this Bill. We may not agree with it but we acknowledge and admire that zeal, much as we dislike the Bill. Many Labour Members believe that this measure is right for the country. I do not believe that those Members are wrong-headed. I do not bracket all of them as Left-wing militants seeking to perform an action desired by a minority of the community.

Mr. Martin Flannery (Sheffield, Hillsborough)

Does the hon. Member imply that the railways and mines were well run and profitable when the Labour Government nationalised them? We know that that is not true. However, why did not the Tory Party make any effort to take those undertakings back into private ownership and run them more efficiently? If the hon. Gentleman will suggest better methods of running the nationalised industries, we are more than willing to listen to his plans.

Mr. Crouch

Although I must not wander away from the amendments, I must point out that I did nothing about the nationalisation proposals in 1945 as I was not old enough. I was not a Member of Parliament. I had my reservations about the programme. I shall inform the hon. Gentleman of my views and send him an article I have written.

In 1945 there was a zeal and a zest for nationalisation. That zeal exists today, although it is misguided. The tragedy today is not so much the extent of the advance of State intervention into the private sector. Rather it is the manner in which it is conceived. The motive for the intervention is wrong.

In 1945 the Labour Government commenced their public ownership programme. They said that there would be no further worries about the sick industries which had suffered from underinvestment. They said to the people "You are the shareholders. These are your industries". That is not the way to run an industry. Something more must be said. However, nothing more is said in the Bill. That is the pity of it.

There is a requirement that public ownership should be extended into profitable areas of industry. I should not be speaking now if there was a commitment under the clause requiring the NEB to run industry profitably. That is where the Government have failed. There is now a new Secretary of State for Industry. Let him think about the problem, which is wider than the Bill leads us to believe. If the Bill is passed, the NEB will operate with £1,000 million. The Secretary of State will make the relevant decisions without necessarily asking for the blessing of Parliament. The scope of State intervention will be widened.

Does the Minister believe that the Departments concerned and the appointed members of the NEB are competent to run successfully the industries which will be taken over? What do I mean by "successfully"? The nationalised industries' statutes have always made clear that there were two sides of the nationalised industries' operations. The nationalised industries were required to be commercial and to render a social service. They have social obligations. The dividing line is ill-defined, as one nationalised industry chairman after another has complained after experience of doing the job.

There is no lack of will on the part of the nationalised industries' boards to operate successfully on behalf of the community. Mr. Marsh, the Chairman of British Rail, said recently that he found it hard to determine the social obligation of British Rail and its commercial objective. He received no direction from the Secretary of State for the Environment on that matter.

I doubt whether he could get such a direction. That is the one sector in which it is difficult. There are many areas in the private sector manufacturing industry into which the Bill takes us where we must define commercial obligation and not regard the Bill just as another opportunity of taking the private sector into public ownership for social reasons alone.

5.0 p.m.

We are all concerned about unemployment and the tragedy of our failure to achieve greater industrial development and more jobs in the regions. The Conservative Government's Industry Act 1972 sought to legislate through intervention by the State to encourage industrial development and produce jobs. The Bill, too, has that object. The creation of jobs in the regions is a social requirement of the Bill, but the Bill does not include as a concomitant the essential requirement of industry, namely, that it should work profitably.

I have described the National Enterprise Board as a cornerstone or kernel. I should not be against the establishment of the NEB if I saw it as a State holding company performing clearly defined and correct functions, but the functions of the NEB as specified in the Bill are not correct. Those clearly defined functions should be, on the one hand, to achieve commercial sense in industry and, on the other hand, to perform certain social obligations. There would be no disadvantage in establishing through the Bill the National Enterprise Board as a State holding company or corporation which removed the nationalised industries one stage further away from the intervention, interference and looking over the shoulder that must come alike from sponsoring and Treasury Ministers. We have learned that in the past 30 years, but that lesson has been forgotten. For those reasons I support the amendment.

Mr. Eric S. Heffer (Liverpool, Walton)

The hon. Member for Henley (Mr. Heseltine), my right hon. Friend the Member for Lanark (Mrs. Hart) and the Secretary of State made clear that what we are discussing is at the heart of the Bill. It is interesting that we should be discussing the matter on a Lords amendment and that the Lords should have decided to attack the very heart of a Bill which has gone through all stages in this House.

I understood the House of Lords to be a revising Chamber. I have never liked the House of Lords. Some of my hon. Friends have tabled an Early-Day Motion calling for its abolition and I support that idea. What the House of Lords has done does not amount to a revision of the Bill. If the amendment were accepted it would be a wrecking amendment. The Bill would not mean anything.

Mr. Dennis Skinner (Bolsover)

It does not mean a great deal now.

Mr. Heffer

We all accept that it has been somewhat weakened. If the amendment were accepted it would mean that the policy which the Labour Party put forward in the last two elections would not add up to a row of beans. Their Lordships seem to be having a happy time passing amendments which wreck various Bills. If that is the way they want to go, let them go that way. We are not seeking a constitutional crisis, but they seem to want one. If their Lordships want to mobilise public opinion against a non-elected House let them continue in this way. The quicker they go along that road and work towards their own abolition the better it will be. Their Lordships are introducing constitutional material which will undoubtedly lead us to a constitutional crisis.

I may have wandered slightly from the wording of the Bill, but not from its material content. The hon. Member for Henley is an amazing character. He is a real smoothie. I have appeared on television with him many times, and at the end of the programme I have felt that he could argue that black was white and white was black. We had an example of that this afternoon. He is a remarkable chap. Either he knows what he is doing or he does not, but I think that he does know what he is doing, because he cannot live in the fantasy world he likes to pretend to live in.

The hon. Member for Henley spoke of Norton Villiers Triumph. Long before the Conservative Minister who has now left the House of Commons intervened in the matter, NVT was in a difficult position. Was NVT then a public or a private enterprise? Was British Leyland a publicly-owned or a privately-owned industry? Who is sacking workers throughout the country at present? Industry after industry is sacking workers. Is it privately-owned or publicly-owned industries that are collapsing? As the hon. Gentleman knows as well as I do, we are living through a severe crisis in the system of which he is so proud to be a supporter—the capitalist system. It has failed the nation.

It is no good Conservative Members saying "Look at our investment; we have done rather well". I remember the previous Tory leader when he was Prime Minister. Poor chap, he used to attend all the bankers' dinners and, apart from probably over-eating, he made many speeches to the bankers. He used to say to them "If only you would invest more in industry. We have given you the incentive, we have lowered the tax for you, we have done all that you wanted us to do, so now please invest." They all said "Yes, Prime Minister, that was a very good speech" and did absolutely nothing about it.

The Tories tell us that the actions of the Labour Government during the last 18 months have led to our being in a serious economic crisis, but the hon. Gentleman knows that British industry has been declining because private enterprise has failed us over the past two or three decades.

Mr. Skinner

In manufacturing.

Mr. Heffer

That is another argument. The present Leader of the Opposition says that the trouble is not that we have too little Socialism but that we have too much. She lives in a fantasy world, because we have never tried Socialism in Britain. We do not have anything like it. We have had a capitalist system which has been bolstered by Government intervention along Keynesian lines in order to stop it from collapsing altogether. That is what we have had, and that is what we have at present.

It is obvious that we need to have an entirely new industrial strategy. My right hon. Friend the Member for Lanark spelt out clearly and simply the sort of strategy for which my party has been pressing over the years. If we are to deal with the serious crisis and once again rebuild our manufacturing industry and halt the growth of unemployment and reverse the trend, it must be done through the National Enterprise Board. It means entering into the profit-making sphere. I do not want the Board to end up with all the "lame ducks", because if that happens it will be a "dead duck" and will get nowhere. Conservative Members would be quite happy for it to be such a repository. If the NEB were to take all the companies that have failed, Conservative Members could say, after a while, "There you are, it is public enterprise that has failed".

The hon. Member for Canterbury (Mr. Crouch) always makes interesting speeches. He tries to be as fair and as honest as possible. He is usually moderate in the arguments that he advances. He said that we were all against unemployment. It is like all being against sin—of course we are, except if we are caught at it, and then it is a different matter. We are all against unemployment. The hon. Gentleman should know that if we accept the Lords amendment relating to the establishment of new industrial companies it would cut right across the whole question of the development of new publicly-owned industries, which are essential to deal with our worst unemployment areas.

We have tried the old methods. The Industry Act, which was introduced by the then Conservative Government and which we accepted in many respects, but not all, went beyond even what Labour Governments had done. That was a great carrot to private industry to get into areas such as Merseyside, the West of Scotland, the North-East coast, South Wales and so on which, even when we supposedly had full employment, always had an unemployment rate which was twice the national average for the time. Unemployment in those areas was not reaching disastrous levels, as it is now, but it was always present. The carrot was there. We also tried the system of development certificates, which was aimed at encouraging industries not to expand in the South but to go to these areas. I will not say that that has failed, but it has had to run fast to keep in precisely the same spot.

We need to introduce new ideas and methods. This means the development of public ownership and the creation of new industries and companies which, on the basis of a planned approach, could be in association with and help towards the development of under-developed parts of the world.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

Is the hon. Gentleman aware that the right hon. Member for Lanark (Mrs. Hart) has just been inveighing against multinationals? Why does he want to set them up?

Mr. Heffer

I did not say anything about establishing multinationals. I said that I wanted to establish publicly-owned industries which would produce the type of products that are essential in certain under-developed parts of the world. My right hon. Friend the Prime Minister used to make many speeches about the need for pumps in India. Perhaps we should set up on Merseyside some factories which will manufacture pumps which can be sent to India and other parts of the world. We could do that if we so desired.

5.15 p.m.

If we accept the Lords amendment we shall do two things—first, we shall prevent the development of publicly-owned industries in the profit-making sectors and, secondly, we shall take away the right, under the Bill, to establish publicly-owned companies in areas of greatest need and areas which have the highest unemployment. For those reasons alone hon. Members should throw out these amendments.

The hon. Member for Henley mentioned the steel industry and the fact that the Government had kept their pledge to review the situation on closures. Apparently this is a crime. No one denies that it was necessary to modernise the steel industry. It was precisely because private enterprise had not modernised it that it was essential to bring it under public ownership. The argument is the reverse of what the hon. Gentleman said. It was precisely because private enterprise in the steel industry and all the other industries that had to be taken over had failed this nation that it was necessary to take them over as part of the national assets.

We want to extend public ownership outside that type of industry. We shall have to carry out some rescue jobs, but we want to extend public ownership to the profit-making sector, so that, once and for all, we can wipe out the nonsensical arguments advanced by Opposition Members. They argue that public ownership does not make profits, because we have to rescue companies or industries from the very malaise from which private enterprise is suffering.

Mr. Ridley

It is always a pleasure to listen to the hon. Member for Liverpool, Walton (Mr. Heffer). I shall attempt to follow him in what he has said, but before I do I want to ask him, as I have asked him before, to drop the admonishing finger, because we find it a little exhausting to be waved at in this way.

The right hon. Member for Lanark (Mrs. Hart) cannot have it both ways. She was recently the Minister for Overseas Development and she cannot, therefore, inveigh against the multinationals. The great thing about multinational companies is that they have done more to help the under-developed countries, to build plants where plants were not, and to set up indigenous manufacturing capacity where it was not, than she and all her predecessors in the office that she held put together. If she had ceased to tax companies so that more money would have been available to them for investment overseas and had not spent it in aid, which may—and all too often did—find its way into the wrong channels, she would have been doing the underdeveloped countries a service.

Mrs. Hart

I cannot enter into the complicated arguments now, but I refer the hon. Gentleman to a study by Lawrence Whitehead, of St. Antony's College, Oxford, in which he will find the evidence which supports my argument that the multinational companies, in private investment in developing countries, have taken more out than they put in. That is an authoritative piece of research evidence. If the hon. Gentleman cares to contradict it with new evidence I shall be glad to listen. What is relevant now to the developing world is co-operation between their own public sectors and the public sectors of industrialised countries. They are rejecting private investment because of the element of exploitation. Nevertheless—

Mr. Deputy Speaker

Order. These amendments are wide enough in scope, but I hope that we shall not widen the debate to the issue of multinational companies. It does not now arise. Only courtesy kept me in my seat until the right hon. Lady concluded her argument in her own speech.

Mr. Ridley

I concur entirely, Mr. Deputy Speaker. Only courtesy kept me in my seat and prevented my intervention in her second speech. I accept your protection, and I shall not follow her into these far away fields, much as I would like to do. I hope for an occasion when we may do so.

The hon. Member for Liverpool, Walton talked about the failure of capitalism, of the private enterprise system. The nub of the debate so far has been the failure of private enterprise to achieve as high a level of investment as we should like and as high a level as that of our industrial competitors. In this context one quotes the Japanese, with four times the amount of investment per head, and the Germans with two and a half times as much. I must add that one does not find glaring examples of such success behind the Iron Curtain. These successes have been achieved in free enterprise countries.

The heart of the question whether the National Enterprise Board should be allowed to enter into profitable private enterprise is why the British capitalist system has been less successful in investment, as I agree it has been, than others. The answer is difficult; it is compounded of several factors.

It is easy to say—indeed, it is almost common ground—that there has been insufficient profitability from investment. Why has that been the case? I shall list some of the reasons. First, our frequent changes in taxation and our complicated and penal system of taxation have been a factor. Secondly, I think that price control has been the greatest possible disincentive to the operation of private industry. We started with Lord George-Brown in considering this evil policy, which has been imposed upon industry by all Governments. I can achieve some personal satisfaction from having resisted it throughout It has been an inhibiting factor upon investment.

Thirdly, I would list the restrictive attitude of labour. This, I believe, is the crux of the matter. The story of the Llanwern blast furnace is the reason why outside investors are not going to put money into private industry, because if the men will not work the new equipment without holding to ransom the enterprise that produces it, there is no point in putting in that new equipment.

Why are we so low in the shift work league table? Why is there so much gross overmanning, particularly in the public sector? Why are the Government producing Luddite Bill after Luddite Bill to make it more difficult to dismiss workers who should be dismissed for the sake of industrial efficiency, and Bills which are making it almost impossible to get rid of those in industry who agitate and cause trouble? Why do the Government help to support hereditary restrictive practices in the docks designed not to increase industrial efficiency but to reduce it?

The hard and painful thing about industrial efficiency is that it requires sacrifices often more of individuals than of communities. When one buys a new machine which will do the work of 10 men, nine of those men will have to go. That is what productivity is about. That is the reason for investment. When one comes to the end of the useful life of a piece of plant or a factory, then those people have to go out and go to another factory, perhaps many miles away. Sometimes firms have to dismiss people. Yet the whole ethos of the Government has been to deny these things, to impede the mobility of labour and progress towards industrial efficiency.

When we pull aside the veil of jargon and Socialist ideology we find that the purpose of the National Enterprise Board is to make industry more responsive to the ideas of the trade unions and the workers. That may be a laudable aim, but what are these ideas? Is it the purpose of the AUEW to back the proper manning of machinery in engineering? Is it the purpose of the Transport and General Workers' Union to reduce overmanning in the docks? Is it the purpose of the steel unions to ensure that new plant is commissioned and operated from the beginning with the minimum number of men? Is that what unions seek to do?

The purpose of this whole exercise is to perpetuate outworn practices and overmanning. I will give way to any hon. Member opposite who denies it. The whole purpose of the NEB is that it should not close down factories which should be closed down. The whose purpose is to ensure that a union will be able to get a guarantee that where it has 3,000 men in a plant now there will be 3,000 men there in two years' time.

Mr. Skinner

The hon. Gentleman has asked us to deny the assertion he has made of a Luddite complex among various people engaged in manufacturing and, by and large, dirty industries. One gets the clear impression that it is the people who work in such industries that he is mainly concerned about. He is not so concerned with Members of this House, although some workers would regard this place as terribly overmanned. Will he reflect on the policy of successive Governments in the late 1950s and the early 1960s, under which about 350 pits were closed and about 350,000 miners were thrown on the scrap heap, and many of them have had to travel to five or six pits within 10 years—from Scotland to Wales, to the East Midlands, to the West Midlands, and so on? At the end of it, as a result of the Middle East oil situation, despite some of the warnings that some of us had given—

Mr. Deputy Speaker

Order—

Mr. Skinner

I have not quite finished yet.

Mr. Deputy Speaker

I know. That is my anxiety. The hon. Gentleman is intervening in a speech. Interventions must be reasonably shorter than speeches.

Mr. Skinner

There is nothing in "Erskine May" about the length of interventions. As I see it, an intervention depends to some extent upon yourself—well, almost entirely upon yourself—but also on the kind of argument that is being pursued. The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) made a specific point—

Mr. Deputy Speaker

Order. It would be a pity if we wasted more time on this argument. I merely sought to ask the hon. Member to bring his intervention to a close as quickly as possible in the interests of the House.

5.30 p.m.

Mr. Skinner

Perhaps we can forget about those exchanges, Mr. Deputy Speaker, and carry on with the original point. As a result of the kind of policy which resulted in all those people being on the scrap heap, does not the hon. Gentleman understand that if in the current situation miners were asked once again to see their pits being closed—it is true that in some instances that is happening now—it is likely that there would be resistance on their part to being cast around to all the various collieries in different areas of the country? That is what the hon. Gentleman must understand. Perhaps that is why Members of Parliament, instead of reducing their own numbers over the years, have increased them by five here and 10 there, or whatever.

Mr. Deputy Speaker

The hon. Member's intervention is almost as long as the speech made by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley).

Mr. Ridley

Perhaps I might have a little injury time for the two interventions that I have suffered. I agree with the hon. Member for Bolsover (Mr. Skinner) that what the coal miners did in the 1950s was of great significance for coal productivity. It is one of the few examples from the public sector of a genuine effort to improve productivity, and I pay tribute to it. Would that it could be continued. Coal productivity is not only at a low level but declining.

That brings me to the main argument that I put forward for supporting the Lords amendment. Once a business becomes either totally controlled by the State or owned by the State we get in all cases the politicalisation of the decisions that matter. Once that happens the price of coal is determined not by its market value but by what is good for the electricity industry, the pensioners or the various customers of the coal industry. In that situation wages and productivity are determined by what is politically acceptable to the supporters of the party in power. Redundancy policy is then determined on political grounds rather than on economic grounds. Again, I pay tribute to the circumstances that the hon. Gentleman mentioned. Regardless of political consequences, the Government of the day continued with their closure programme.

The hon. Member for Meriden (Mr. Tomlinson) has asked why the previous Conservative Government held down the prices of nationalised industry products. They did so because it is too easy to take that course. No Government can resist the temptation of saying "Are we not benefitting the people by holding down the price of gas, steel or electricity?" Let us consider pensions. Our national insurance contributions do not pay for our pensions. Our pensions are decided politically and not in terms of what we can afford. They are decided politically on the basis of what pensioners should receive. Every time there is a gap between what it costs to provide for the goods and services and what it is possible to sell them for that gap has to be plugged by the taxpayer.

The thesis of the hon. Member for Liverpool, Walton is that there has been a failure of capitalism and that Socialism is the answer. By adopting that approach we shall compound our errors. The failure has been that of Socialism. Whenever an industry or service finds itself sufficiently caught in the maw of the State the main decisions are not taken on grounds of economic efficiency but on political grounds. Those decisions affect the people who work in the organisations concerned because in the end it is they who will suffer. Must I say it again? I have every sympathy with such people, I understand their problems. However, it is not enough to say that because something inconveniences people it must not happen. That is the way to a third-rate industrial economy which can never pay the standard of living which people want. That is the way to inferiority. It is in asking people to accept the challenge of change, of improvement and of new investment that the future should lie.

Mr. Doug Hoyle (Nelson and Colne)

I always listen with attention to what the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) has to say. It appears that he is claiming that change is being resisted because it will result in people being thrown out of work. Let us consider the example set by Sweden. Change takes place in Sweden, but people are not thrown out of work because retraining takes place at the same time. The example that the hon Gentleman should be putting before us is that set by Sweden, where instead of people being thrown out of work new industry is taken to the people. Is that not really what we want? Should we not follow the example of Sweden, where intervention takes place in the economy by retraining the people rather than putting them on the scrap heap?

Mr. Ridley

I do not want to get side tracked into a discussion about Sweden. If the Labour Party would adopt the Swedish tax régime it might immediately find a great increase in investment in this country. I agree that there should be retraining and full employment, but there are ways and means of approaching that situation. Perhaps we have something to learn on another occasion by debating that matter.

I return to the main point of my argument, namely, that the private enterprise system has been prevented from working in this country because of ever less mild doses of Socialism, regulations, taxation and interference. We have seen the disruption of the profit motive. It will be destroyed completely by listening to those who want an easy life in industry, those who want overmanning and restrictive practices, those who want to frustrate the purposes of investment.

I have given way to every Labour Member who has wished to intervene, but not one of them has denied that such motives are behind the Bill. By definition the Bill makes the situation worse. By pandering to the worst desires of organised labour for Luddism, allowing restrictive practices and overmanning and at the same time making available taxpayers' money to plug the gap between the prices which may be charged and the wages which have to be paid, we exacerbate the economic crisis which the Government have brought about. Far from there being a crisis of capitalism there is a crisis of Socialism. To prescribe ever greater doses of that medicine could soon kill the remaining part of the private sector.

There is not very much that is profitable left in the private sector. It must be remembered that we rely upon the profitable part of the private sector to fund the losses of the public sector. The point is not far away when the private sector will no longer be able to carry the public sector deficit. On top of that, those who work in the private sector are getting to the point where their frustrations, their overtaxed position and the difficulties of providing the taxation revenue which is needed for the public sector are beginning to convince them that they, too, should throw in the sponge and join the public sector. By those means everyone would have an easy life. Of course, it is because we have too easy a life that we have a low industrial performance. The Lords amendment, if it is allowed to stay in the Bill, would be a small contribution towards alleviating that situation.

Mr. Robert Hughes

I begin by taking up one or two of the remarks made by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley). I do so partly because I am a member of the Amalgamated Union of Engineering Workers. I am a sponsored member of that union. I take up what was said by the hon. Gentleman because he referred to my union and because he wishes to apply a different perspective to labour than he does to employers.

All of us in the trade union and Labour movement have been arguing for years that we must have a productive manufacturing industry. We have said that unless we have a growing sector of manufacturing industry there will be a reduction in the number of jobs available. We have also said that the only way in which we can achieve a growing sector is by investment in industry. Of course, investment has not been going in that direction.

The hon. Gentleman says that there are restrictive practices in industry. I would be the last to deny that they exist. He mentioned a specific instance concerning a blast furnace. I shall not discuss that matter, because I do not have sufficiently detailed knowledge of the industry concerned. However, the hon. Gentleman must understand that if he asks for a free market economy he must not be surprised if trade unions face the hard facts of life and do their best to protect their own interests.

My hon. Friend the Member for Nelson and Colne (Mr. Hoyle) made a valid point by referring to the situation in Sweden. We have never argued that there should never be redundancies or that people should be employed from the day they begin work until they retire in the same job and factory. We believe that it is wrong if major decisions are made that change the whole outlook of a man's life and chuck him on to an unemployment queue, with little prospect of obtaining another job. We want to see new industries established and developed, so that people can change jobs.

My union produced an interesting document looking forward to the day when people might have to work in four different industries during their life time, with the opportunity of retraining. It is wrong for Opposition Members to suggest that trade unions are opposed to productivity, investment, or modernisation in industry. We have been crying in the wilderness for years for this to happen, and it has not been achieved by the private enterprise system which the hon. Member for Cirencester and Tewkesbury so enthusiastically espouses.

I found the speech of the hon. Member for Perth and East Perthshire (Mr. Crawford) extremely disappointing. He is the main economic spokesman of the SNP.

Mr. Tomlinson

You are kidding.

Mr. Hughes

No, I am not kidding—it is absolutely true. As we are dealing with an amendment on the question whether the NEB should be able to establish new industries, I expected him, on behalf of his party, to say how it views economic events in Scotland and the rest of the United Kingdom. What sort of economic mix does the hon. Gentleman envisage in Scotland? We have heard nothing about that today.

The hon. Member for Perth and East Perthshire said that he was neither Conservative nor Socialist. Some of us remember him in a previous reincarnation as an economic adviser to the Scottish Tory Party. That explains part of the failure of the Scottish Tory Party to understand industrial events in Scotland and to deal with Scottish economic problems.

Mr. Crawford

The hon. Gentleman knows that the SNP has consistently supported the Labour Government in the establishment of the Scottish Development Agency. We believe that that Agency, not the London-based NEB, should have the responsibility of looking after industry in Scotland.

Mr. Hughes

That is a different argument. We are not today arguing about the future of the SDA. That matter was dealt with yesterday, and we gave a Third Reading to that Bill. I welcome support for that Agency, from whatever quarter it may come. However, at present we are dealing with the NEB, and the hon. Gentleman did not deny that he was opposed to the Board's operating in parallel with the Agency. He appeared to suggest that the economic problems of Scotland could be solved within a Scottish context and that we could neglect other matters. It is a great mistake for the hon. Gentleman to take that view. We want to support every possible method or agency which will take steps to deal with unemployment in Scotland and to restructure the Scottish economy.

The National Enterprise Board has an important rôle to play. I do not see the matter solely in a Scottish context. I do not want to be diverted too far into dealing with the problems facing Scottish industry, but for too long there has been a predominance of heavy industry, or primary manufacturing industry, as it may be termed. We have not been able to modernise or enter industries that might have growth potential for the future. I believe that the NEB should work in parallel with the SDA and should enter manufacturing industry and establish new industries.

5.45 p.m.

We shall need every possible power to deal with the situation. We should seek to go not only into manufacturing industry but into profitable industry. That will generate fresh capital, which the Government can invest in other industries. It will mean that the profits from profitable national enterprise can be used in other ways to help industries that will always be in a loss-making position because they have social responsibilities. Some nationalised industries face great difficulties because we have said that they must operate as purely commercial concerns. This leaves out of account social conscience and responsibility. I am not against profit-making industry.

The hon. Member for Cirencester and Tewkesbury was mistaken in his view that the trouble with industry in the United Kingdom is that it is over-planned, and over-interfered with, and that there is too much Socialism. In some respects I wish that were true, but it is far from true. The planning controls that exist—there are some in operation—operate in the wrong way. They function too much in a negative atmosphere. We have to react to events. When a company approaches a Government Department because it has run into cash flow or sales problems, or has stumbled on difficulty in a new project, it often does so after the event. The Government should be able to go to industries at an earlier stage to discuss future policy. The planning agreement system should do much to correct that situation.

Furthermore, many of the judgments on which we make our economic decisions are, because of the negative nature of our planning, out-dated. Sometimes, by the time information reaches Governments on which decisions are to be made events have changed. They are then faced with making a decision upon circumstances that no longer apply. That may be one of the reasons why some economic judgments made by Governments in the past have been notoriously wrong. They do not look far enough into the future. If we are to go into manufacturing industry, where we can make profits, it is no use waiting until a company is established and beginning to make profits and then deciding to go in—because such a move will be resisted. The nature of the beast is such that it will resist a public enterprise system going into partnership with it, and, indeed, it could hardly do otherwise. There is a basic difference of ideology between those who uphold the capitalist system and those who uphold the system of Socialism. Naturally, there will be resistance and clashes.

Mr. Nicholas Fairbairn (Kinross and West Perthshire)

I am delighted to hear the hon. Gentleman make a distinction between those who uphold the system of capitalism and those who uphold Socialism, but I do not understand what he is talking about. A short while ago he said that public enterprise should make profits so as to invest them in other industries. As profits are related to capitalism, what is the difference?

Mr. Hughes

The difference is that the hon. and learned Gentleman has spent far too much time in the Law Courts, quibbling over words.

Mr. Fairbairn

And winning.

Mr. Hughes

The hon. and learned Gentleman fails to understand the whole basis of the matter if he does not yet understand that in order to invest, one has to have a surplus—or if he likes to term it, a profit. I do not care what one calls it, but the reason why industry is in such a mess is that profits, as a source for capital investment, have not been used for that purpose; they have been frittered away over the years in all kinds of ways—in high living, in the attitude, "Eat today and forget about tomorrow". There has not been the investment there ought to have been in British industry, and the hon. and learned Gentleman well knows it.

Mr. Tom King

I hope that before making the assertion that money has been frittered away in high living the hon. Member studied the NEDO report on investment which showed that 127 per cent. of the net cash flow of companies in the past year was taken by the Government. Does the hon. Gentleman call that high living? How are companies supposed to invest when the Government take such a large percentage?

Mr. Hughes

I am not sure whether the hon. Gentleman is arguing that the private sector should not pay tax, or that it is paying too much tax. That is a different matter. Of course the Government are right to pay for their social policies through taxation. The hon. Gentleman cannot say that the current situation is due to the fact that the Government are taking too much in taxation. In the 13 years from 1945, when we had a Conservative Government, there was not enough investment. We had four and a half years of Conservative Government between 1970 and 1974, when again there was not enough investment. The former Tory Prime Minister did his rounds, making speeches and exhorting companies, but still the investment did not take place. It is necessary for investment to be made. There is no quarrel about that.

The quarrel is how the investment should be made and, once it is made, who is to benefit. I believe that the State ought to reap the benefit of its investment. Unless we are to go through cycles of boom and bust, the State must have a greater influence—not in a negative sense—on future planning. We ought not to allow their Lordships to carry the day by removing the ability of the National Enterprise Board to establish new industries or to move into profitable concerns from the beginning as well as later. It is cardinal to the argument about how we can control investment. We ought to support the Government and disagree with the amendment.

Mr. Wigley

I have listened to the hon. Member for Aberdeen, North (Mr. Hughes) with a little surprise, particularly in relation to the way in which he dealt with the intervention of the hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn). Judging from his words, what he is advocating in using profits within the State sector is nothing short of State capitalism. This is the aspect of the National Enterprise Board which fills my colleagues and me with horror.

I say that after having served on the Committee which examined the Industry Bill and, as hon. Members will know, as one who has considerable sympathy with some of the Government's aims. One of the most dangerous aspects of the Bill is that it could lead to centralism. That should be very much in the mind of the hon. Member for Aberdeen, North and other hon. Members who represent constituencies in Scotland or Wales or other outlying areas.

Mr. Robert Hughes

I do not understand the hon. Gentleman's surprise. Capital investment can come from only two sources—either from the private market, the stock market and so on, or from the State. If investment is a good thing for the future and for job security it cannot be bad if it is done by the State.

Mr. Wigley

I am even more surprised, having heard that. The failures in Wales and, I suspect, in Scotland arising from the present system have been failures because those in power, whether in the private or the public sector, have been too remote. I can give evidence of this in both the public and the private sectors. The Secretary of State for Employment, who is not present at the moment, has been talking about the number of people thrown out of work in the private sector. He should say that in places like Ebbw Vale, where the steel industry is being run down. The steelworks there has the best industrial relations record in the whole of the United Kingdom. Until recently it had not lost a single day in strikes. The only recent strike has been the one-day strike in protest against impending closure.

We are in prospect of losing thousands of jobs at the Shotton Steel Works. That job loss will cripple the economy of Flintshire, Clwyd and most of Northern Wales. That is in the public sector. Throwing employees on to the scrap heap is not the prerogative of private industry. It is carried out by the State industry when it is run in the way that State industry has been run from London, by successive Governments of whatever political complexion.

In their talk of Socialism, I hope that Labour Members do not mean what happened in the steel, coal or railway industries. If this is what they have in store for us in this or any other measure their solution will leave Wales no better than it has been in the past.

I take up a point made by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), who argued against the objectives of the Bill and referred to restrictive practices. Does he not realise that men adopt such practices because of their fear of having no other employment source? Does he not realise that people are afraid of losing their jobs when machinery takes over because there is no alternative employment in their area? Men have been used as raw material, shunted around from one corner to the other, to generate profit, according to the hon. Member.

The hon. Member for Cirencester and Tewkesbury spoke of the subject of politics entering industry. It does, and provided that it enters in the right way there is no objection to that. If it introduces into industry the need for there to be an awareness of the social needs of the immediate community served by the industry and the needs of the distant community in terms of the consumer, it is a good thing. I find it difficult to follow any logic in the politics of the twentieth century which goes back to a free-for-all.

The hon. Member for Aberdeen, North was rather unkind to criticise the hon. Member for Perth and East Perthshire (Mr. Crawford) for not developing the economic policy of his party, when he was prevented from deviating from the words on the Amendment Paper. I am sure that the hon. Member for Perth and East Perthshire can develop his argument perfectly well and that the people of Scotland will respond to what he has to say. I take up a point made by the hon. Member because I contend that it is highly relevant to the debate. Last night we debated the Scottish Development Agency Bill, and gave it a Third Reading. That means that the Bill will come into law irrespective of whether the Bill that we are debating tonight reaches the statute book.

The same thing may well happen tomorrow evening, with the Welsh Development Agency Bill. The problem that arises concerns Lords Amendment No. 11, which refers to the establishing of industrial undertakings. That provision exists in the Bill that we are discussing tonight and also in the Development Agency Bills relating to Scotland and Wales. The powers run in parallel. It is therefore important for us to understand who is doing what in this matter—

Mr. Deputy Speaker

Order. The only question we are concerned with now—and of course no occupant of the Chair enters into an argument with an hon. Member—is whether this amendment, removing the word "establishing", and the other amendments being discussed should be accepted. We are not dealing with the measure which will be discussed tomorrow or the measure which we discussed last night.

Mr. Wigley

Our attitude towards this amendment will depend to a large extent upon the way in which this same provision is implemented in Wales and Scotland. If it is implemented in those two countries and there is the establish- ment of new industry by the NEB, not through the SDA or the WDA but in parallel and across, that could easily create the kind of economic planning problem which these measures ought to be eliminating. We need co-ordination.

Throughout the Committee stage of the Industry Bill and the Welsh Development Agency Bill other hon. and learned Members have tried to clarify the relationship between these bodies. We have been unsuccessful. We have had meetings with Ministers, we have exchanged correspondence. This is pertinent—

Mr. Deputy Speaker

Order. I am trying to help the hon. Gentleman to make his contribution, but I must ask him to accept, as the hon. Member for Perth and East Perthshire (Mr. Crawford) did, that we are discussing here only the question whether we should leave out the word "establishing" and the other two amendments linked with it. The hon. Gentleman's other quarrel ought to be pursued on another occasion.

6.0 p.m.

Mr. Wigley

I hear what you say, Mr. Deputy Speaker. I realise that other hon. Members wish to speak, and I shall not labour this point, but perhaps the Minister will say whether it is the intention of the NEB to set up industry in Wales under the Bill, acting in the same way as the Welsh Development Agency and the Scottish Development Agency are intended to act. This matter is critical, and I believe that it is pertinent to our decision on how to vote tonight. Our attitude will be largely determined by what the Minister says on this point.

My party believes that it is necessary from time to time—not for doctrinaire reasons, but in order to solve the economic problems which face Wales and Scotland, and which may well face the regions of England—for the State to have powers of intervention. There is a need for the State to have powers to establish industry. Over recent years we have seen attempts to direct industry by various methods that have failed.

Both the private sector and the public sector have failed to set up industries in areas such as mine. We learned from a parliamentary answer today, to my hon. Friend the Member for Carmarthen (Mr. Evans), that in the past two years not one job has been created by public enterprise in Wales. Therefore, there is clearly a need for some initiative in this direction. If private industry has failed for a century and more, and public industry is failing now, we must take a new look at the situation.

I have doubts about the effectiveness of the NEB—certainly doubts whether it should have any scope in Wales. I sympathise with those who take the theoretical view that there should be a role for the NEB in setting up industry in those areas where the private sector has failed, but I argue that in Wales and Scotland that job should be left to our two appropriate Boards.

Mr. Hal Miller (Bromsgrove and Redditch)

We are considering amendments made by their Lordships regarding the functions of the National Enterprise Board—in particular, the establishment of industrial undertakings and the extension of public ownership into profitable areas of manufacturing industry. The purposes of the Board for which it may exercise its functions are (a) the assistance of the economy… (b) the promotion…of industrial efficiency and international competitiveness; and (c) the provision, maintenance or safeguarding of employment". Labour Members who have been insisting on the deletion of the amendment have a responsibility to show that the engagement of the Board in the establishment of an undertaking or the extension of public ownership into profitable areas can contribute towards those objectives.

The right hon. Member for Lanark (Mrs. Hart) made plain her brief that the Government had to have control over the economic decisions of key firms. There is little evidence, and the right hon. Lady certainly adduced none, that Government economic decision-making has contributed to the success of, or assistance to, the economy. The assertions that merely taking profitable manufacturing industry into public ownership will contribute in any way to those objectives have yet to be substantiated. The Minister has an obligation to try to put forward a coherent rationale showing why there should be such a contribution from such an extension of public enterprise. Let us examine the record of public enterprise, leaving out the services such as the Post Office and the railways. Let us consider the steel industry, which is a manufacturing industry. Have we any evidence in that industry of the provision, maintenance or safeguarding of employment", of the assistance of the economy", or the promotion…of industrial efficiency and international competitiveness"? Reference has been made to the sorry story of the introduction of the new furnaces at Llanwern, which must act as a considerable disincentive to people undertaking investment, regardless of the ownership.

For too long this evening hon. Members on both sides of the House have concentrated on the question of ownership, which to my mind is largely irrelevant, instead of the question of performance and efficiency, in the direction of which my hon. Friend the Member for Henley (Mr. Heseltine) tried to point the debate. If there were some evidence that any nationalised industry had had some regard to performance and efficiency, particularly in the use of equipment, the manning of equipment and the production flow, we could feel rather happier about accepting the Secretary of State's advice to reject the Lords amendment, but no evidence has been forthcoming.

Let us look at the other enterprises in which the Government have sought to take some economic decisions. My hon. Friend referred to the motor cycle industry. There is no point in going right back to the failure of management. There is no denying that there was such a failure, but there was then a Government rescue operation, by a Conservative Government, followed by a highly political intervention leading to the creation of a third factory, which it was recognised right at the beginning could result only in the bankruptcy of the other two factories in the industry.

When I asked last week what action the Government were taking to safeguard the public funds that had been made available to NVT, I received the highly complacent and misleading answer from the Under-Secretary that the de- cision had been taken in July. The decision had been taken to do nothing about advancing further funds, but what action had been taken to safeguard the funds already committed? That is one of the stories of waste of resources and funds which we can so ill afford and which contribute materially to the doubt whether an extension of Government control over economic decision-making is desirable in manufacturing industry.

As has been pointed out time and again by my hon. Friends and by our nationalist friends, what we need is clear guidelines on how those enterprises under the NEB are to operate if the Board is to extend its operations into the profitable areas of private manufacturing industry. We need a clear assurance that those areas will remain profitable. It is no good the Secretary of State saying that there will be a proper commercial discipline. What is that discipline to be? Why have not the guidelines been produced? On the evidence of the Ryder Report for British Leyland, it is far from clear that any such commercial discipline has yet entered into the arrangements.

We need satisfaction on these points before accepting the Minister's advice to reject the amendments, which are intended to maintain a profitable private manufacturing industry in this country. My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) pointed out that that industry is solely responsible for meeting the public sector requirements for investment and consumption. Any erosion of that tax base can lead only to a lessening of public division.

Labour Members have frequently said that there has been a failure to invest, as if the mere investment of money were a guarantee of success. I am sorry that the right hon. Member for Lanark, with her known interest in the problems of development, is not present, because I wish to draw on my experience at the World Bank. It became clear from the Bank's studies of investment in all sorts of countries, under the Marshall Plan and later in the Third World, that the mere making available of money by itself did nothing to contribute to the success of an economy. There are a whole number of other factors which must be brought into play. It is the absence of any recipe to deal with these other factors which is such a defect of the Bill and is why my hon. Friends and I are so reluctant to agree that the NEB should establish industrial undertakings or extend its public ownership.

One of those factors is the emergence of risk taking. One of the chief characteristics of a national enterprise is its failure to take risks and to encourage risk-taking and its inability to strike out in advance into new directions. The spirit which informed the whole of the speech by the right hon. Member for Lanark was a retreat into isolationism and into the past. We cannot cut ourselves off from abroad, and one of the purposes of the Board is to promote international competitiveness. The right hon. Lady's railing against multinational companies, which are truly internationally competitive, leads one to suppose only that she is shying away from that purpose of the Board.

I was surprised that neither the right hon. Lady nor the hon. Member for Liverpool, Walton (Mr. Heffer) introduced into their contributions the call for import controls which they have made in other contexts and which complete the picture of their retreat into isolationism. If we are to survive in this country we must be internationally competitive, we must import, manufacture and export, and unless we remain competitive and subject to the disciplines of international competitiveness we cannot succeed. My hon. Friend the Member for Cirencester and Tewkesbury quite rightly asked in other advanced countries private enterprise was successful whereas in this country we have experienced such appalling difficulties. Is it not that we have been consuming too much by way of taxation, subsidies and other forms of public expenditure, leaving too little for investment? The attempts by the Government to rectify this equation by introducing the NEB seem to be a step in the wrong direction unless there are the guidelines to which I have referred, unless there is justification for supposing that it will achieve the objectives and unless the resources, not only financial but of innovation and risk taking, are available. It is for all these reasons that I support the Lords amendment.

Mr. Sedgemore

The hon. Member for Bromsgrove and Redditch (Mr. Miller) was more than courageous in telling us that he had been a director of the World Bank, since that organisation has a record of failure in human history which is second to none.

Lords Amendments Nos. 11 and 12 open up the whole question of the various alternative investment strategies open both to the British Government and to British industry. There seem to be three courses which could be followed. The first, which roughly represents current policy, is that we could have a policy of wage control combined with price control, which means limited profits, and we could hope that private industry would finance its investment externally out of the banks, the Stock Exchange, FFI and a consortia of pensions and insurance funds.

That policy appeals to the Treasury but no one seriously believes that it can succeed, and it can be seen to be failing. It is a policy which will see investment this year some 10 per cent. or more below investment in 1970 and which will see investment next year possibly even lower than it would be this year. It is a policy which if pursued would enable the economic historian to look back on this decade and call it the decade of the cowards, the decade in which the Conservative and Labour Parties turned away from themselves and in towards the centre and in the process wrought havoc with the British economy. It is a policy which I plead the Government now to give up.

6.15 p.m.

The second investment strategy is to create, for want of a better phrase, a vigorous, healthy private sector and to hope that British industry will invest the surpluses and the profits which it earns. We should hope too that it would respond in a way in which it has not responded in the last three decades of traditional Keynesian demand management techniques. But this policy is not practical politics or practical economics. It is a policy which is not socially acceptable; the public would not accept the "Barberism" of 1973. It is a policy which is incompatible with the prices and incomes policy which the Treasury wants as a permanent feature of the British economy.

It is a policy which is not practical economics during the present depression. and it is a policy which will not be practical economics during the wafer-thin upturn we may see at the end of this year or in the depression which follows that. Therefore, the lesson for the Conservatives is that it is not practical economics for them if they were returned to power. It is not practical economics for the next decade. It is a policy which does not fit in with the economic and political aspirations of many of the multinational companies which dominate industry in this country.

That takes us to the third of the three strategies, and this is the only strategy which the Government can consider seriously. It is the strategy of greater Government investment in and control over British industry. It is the idea whose time has come—it is the idea called Socialism. One cannot stop an idea whose time has come, and that is what is worrying the Conservatives. They know that there is no way of stopping Socialism. They may be able to slow it down, but they cannot stop it coming.

Mr. Hal Miller

Does the hon. Member agree that this time has come most clearly in East Germany, where they have to stop people getting out rather than stop the idea?

Mr. Sedgemore

If the hon. Member studied even the mild provisions of the Bill and the industrial strategy which was reasonably proposed by the Labour Party conference in "Labour and Industry: The Next Steps", he would find some genuine hope for this country. It is time the Conservatives grew up and stopped prattling about the giant State bureaucracies of Russia and East Germany, because no Labour Member has any interest in the antics of those countries.

The hon. Member knows that increased Government investment in and control over British industry will become in this country part of the conventional economic wisdom, and for all the reasons outlined by my right hon. Friend the Member for Lanark (Mrs. Hart)—I shall not weary the House by repeating them—that is a good enough reason for rejecting the Lords amendments.

There is another reason for rejecting the amendments. They are wrecking amendments. They are designed to wreck not merely Clause 2 but the whole Bill. The Bill represents the will of the House of Commons and the will of the people. It has come back from the other place totally degutted in this respect by their Lordships. The message which should go out from this Chamber is not merely that we reject these amendments but that there will be legislation to follow to expunge the House of Lords, to expurgate it from the record and to expedite its total demise. Conservative politicians will go to their freemasons' societies—to their chambers of commerce—and say that the House of Lords was revising a statute which had left the House of Commons. This is not revision. This is destruction. This is wanton, cabalistic destruction by some of the most virulent reactionaries in our society, and we should make that clear to the House of Lords.

Lords Amendments Nos. 11 and 12 raise a serious constitutional issue because they show that the other House is not a creature of the British constitution. It has become a creature of the Conservative Party.

Long before I came into the House there was an occasion, almost a decade ago, when Mr. Nigel Birch bade farewell to the then Mr. Harold Macmillan with a prophetic quotation from Browning. I give that same prophetic quotation to the House of Lords: Never glad, confident morning again!

Mr. Fairbairn

I would say of the speech by the hon. Member for Luton, West (Mr. Sedgemore): Never glad, confident morning again! All societies and Governments are concerned with the creation of wealth—even the East German Government—and the question is how best to create it.

Even the hon. Member for Aberdeen, North (Mr. Hughes) said that the choice was between State capitalism, which makes profits which are reinvested, and private capitalism, which makes profits which are reinvested. Let it never be forgotten, particularly by Labour Members below the Gangway, that without profits there is no compassion. There is no money for compassion.

Mr. Cryer

What an extraordinary statement!

Mr. Fairbairn

One of the facts to be remembered is that all Governments since the war have taken a great deal of tax and not invested it. The suggestion now is that this is a failure of private capitalism because the money for investment has been collected instead by taxation and squandered in a number of ways. The question is not that we should suddenly become the beneficiaries of £800 million through a legacy from some unexpected source. To hear some Labour Members speak, one might think that it is like the reading of a will, with Granny Britain unexpectedly leaving £800 million to her favourite poodle, to be spent as it liked, and £300 million to her favourite Scottie to spend on investment, and with the amazed beneficiaries not listening to the end of the will, where it is stated that "These legacies will have to be paid out of the estate of my surviving sons who have not already been bled to death by my pet vampire, Denis".

Mr. Skinner

Is that in order?

Mr. Fairbairn

This money has to come out of taxation, derived from profits, before it can be invested.

There are two systems. There is the system in which the decisions are in the hands of those who are affected by them. There is also the bureaucratic system. Hon. Members may say that they are not interested in Soviet bureaucracy, but bureaucracies do not differ.

Look at the new head of the National Enterprise Board. His previous job was affected if he made wrong decisions. He has now moved into a job which will not be affected if he makes wrong decisions. That is the essential difference.

I believe that so-called public investment—not public ownership—is bureaucratic investment as opposed to human investment. That is the difference. Decisions are taken by people who are not affected by the decisions they take. From now on there is no risk in the life of Lord Ryder, provided that he does what he is told.

Mr. Skinner

What is necessary is workers' control.

Mr. Fairbairn

When workers have control they have to take the risks, as they are discovering in the case of the Scottish Daily News.

We hear complaints being made about foreign competitors. Why do we have the naughty old Army buying Japanese cars and the House of Commons buying German plates? It would seem that we cannot have people who run private enterprise systems competing with this country, which is more and more in the hands of public investment, public this and public that.

That is bureaucratic control. It removes efficiency. It removes interest. It removes risk. That is the road to inefficiency, and it is the road to the slaughter of the interests of Labour Members—namely, the funds from which we can pay for compassion, for houses and so on. If the State puts its distant, uninterested, festering fingers into decisions which are better taken by people who are affected by them, it will destroy the very sources of wealth—wealth which Labour Members are so anxious to spend before it has ever been created.

Mr. Max Madden (Sowerby)

Of late the Members of the other House have been, to borrow a phrase from my right hon. Friend the Secretary of State for Employment, sticking their lordly noses into much of our business. As the majority of the Members of that House are there representing wealth and privilege, it is instructive for us to look at what they have been sticking their noses into of late.

We know that they have been seeking to upset proper trade union arrangements so far as they affect the Press. We know that they have been doing that in the name of Press freedom, when it is complete hypocrisy and humbug—

Mr. Deputy Speaker

Order. I shall be grateful if the hon. Gentleman will refer to the amendment that he does not like the Lords sending to us.

Mr. Madden

I must apologise, Mr. Deputy Speaker, if you think I have been straying from the subject, but I believe it is helpful to this debate to know the motives of the other House in putting forward amendments. I think it is in character for the other House, for instance, to oppose the Community Land Bill, which is seeking to stabilise land prices, and here today, to seek to upset industrial change. The purpose of the Bill is to transform industry and to bring within the power of the people some means of controlling their industrial environment.

I shall not dwell on the brilliant though very short speech made by my right hon. Friend the Member for Lanark (Mrs. Hart). She spelt out in the clearest terms the industrial reality which we all see around us. We were told by her of the enormous strength, influence and power of a very small number of large companies in Britain today. The machinery set out in the Bill for a National Enterprise Board is, I believe, the only way to bring some power back to the people, to try to allow them to determine what shall happen in this country industrially and economically.

It is instructive that the amendments are again trying to attack industrial democracy. It is interesting to note that the representatives of wealth and privilege are seeking in these amendments to deny working people the power to have a say in what happens around them.

I was today at the Motor Show. Before hon. Members are carried away with concern, may I say that I was there as a member of the Trade and Industry Sub-Committee of the Public Expenditure Committee, which recently produced a report of some interest to the car industry. By way of continuing that interest we took it upon ourselves to go to the Motor Show, having heard from managers of that industry over many weeks about the difficulties of the motor industry.

We were told that the situation was still very much the same as before. We were told of the concern of those in the industry about productivity and that they are not able to get the same productivity as many of their competitors. They were still concerned about communication in industry and that somehow or other they did not seem to be getting the response from their workers that they would have liked to have.

I asked very innocently, at each of the stands operated by the big four motor companies of this country, whether there were on the stand any representatives of working people, any shop stewards or trade union representatives. They all looked at me in complete astonishment that I should suggest that such people would dare to appear on motor industry stands at the Motor Show.

This again is an indication of the sort of psychology which pervades so much of British industry. Representatives of capital talk about trying to eliminate the "them and us" concept which is so prevalent in industry, yet British managers are not prepared to share a stand at the Motor Show with shop stewards working in the car industry from whose presence I believe that they would benefit a great deal. These are the people who make the cars. Surely they have a right to be there and to listen to the complaints of traders and buyers of their products, and to hear any words of praise. [Interruption.] As my hon. Friend says, they are the people who make the cars. Surely they have a right to be there and listen to the complaints and suggestions of the buyers of their products.

6.30 p.m.

Mr. John Gorst (Hendon, North)

Is the hon. Gentleman aware that the purpose of the Motor Show is to sell cars, not to talk about them?

Mr. Madden

Why does the hon. Gentleman think that people who produce a product have no responsibility for trying to sell it? If he is trying—[Interruption.] I do not wish to comment on the hon. Member's business affairs. Whether he is successful or not I do not know. But if the Opposition are genuinely seeking cooperation in industry, it is not inconsistent to have someone who makes the product at the point where it is sold.

Mr. Crouch

Am I right in concluding that the hon. Gentleman is talking about industrial democracy? If so, he is talking about the next amendment. But, more pertinent to what he has been saying, talking of the Motor Show and the selling of motor cars, does he think that those cars should be sold at a profit and that the NEB should seek to operate those companies at a profit?

Mr. Madden

I do not want to be lectured by the hon. Member about whether I am in order. His speech strayed several times from the subject in hand and I do not want to be led too far astray.

I want to see the operations which are organised and run by the NEB run profitably. That is why I want it to be able to extend public ownership into profitable manufacturing industry. This is the kernel of our discussion and what we want to see permitted to the NEB.

Mr. Alan Clark (Plymouth, Sutton)

I am in sympathy with what the hon. Gentleman has just said. The shop steward would probably make a better job of selling a car than a salesman would make of making one.

Mr. Madden

I shall not comment on that intervention since I am sure that I would be ruled out of order.

Mr. Heseltine

To amplify the importance of the hon. Member's very sensible idea, may I say that that was why the last Conservative Government arranged for exactly that idea to be carried out and for trade unionists to go with industrial management on exercises aimed at selling British goods.

Mr. Madden

Again, I shall not be led astray.

These amendments are wrecking amendments aimed at undermining this measure, which many of us feel was not ideal in the form in which it left this House. It was not effective or consistent or cast in the form on which most of us were elected. Nevertheless, it should be defended and certainly should not be amended as the Lords suggest. Therefore, we shall be seeking to defeat these destructive amendments in the knowledge that the Bill is aimed at improving our industrial environment and giving the people some opportunity to organise their affairs in their own way.

Several Hon. Members

rose—

Mr. Speaker

Order. The impression I get on coming back is that the House thinks that it has limitless time to debate this amendment. I hope that we can come to a decision on this, because Lords Amendment No. 13 is germane to the matters raised.

Mr. Anthony Nelson (Chichester)

I shall try to be brief and I hope that the hon. Member for Sowerby (Mr. Madden) will forgive me if I do not follow his argument closely.

It is no part of a Government's responsibility or of the duty for which we were elected to expend thousands of millions of pounds of taxpayers' money on acquiring stakes in profitable companies or risk capital in companies which neither need nor welcome the State as their bedfellow. Having listened to a wide-ranging debate, I still cannot understand how even the most ardent Socialist can justify diverting massive resources away from the desperate areas of social and industrial need. Are the Government so awash with money that they can afford the luxury of investing thousands of millions of pounds in profitable sectors which neither need nor welcome it?

Mr. Robert Hughes

Why is it that it is in some way shameful for the Government to invest in profitable industry with an opportunity to recover a profit but a good thing for private individuals to do so?

Mr. Nelson

I do not believe that the Government have limitless funds. They have limited resources from raising taxes and borrowing on the market, so it is an implicit assumption that we should use that money to the maximum benefit of the community and the industrial society. The money is best used not by pumping further investment into profitable companies which do not need or want it but by putting the money where it is desperately needed and where its expenditure can be more easily justified.

How, mechanically, will the NEB acquire these stakes in profitable companies? Will it make a partial bid in the market for a percentage of a company? Will it negotiate privately to acquire a block of shares before the announcement of the bid? Will it go into the market and purchase shares? In a contested situation, which is what the majority of cases would be because they do not actually need the money, what limit will there be on expenditure or the price that the NEB pays for a holding?

These are vital factors. The NEB is no ordinary unit or investment trust. It will have criteria entirely different from those of the normal commercial board because it will have pushed into it certain strategic investments for political and not commercial reasons. It is the missing guidelines and criteria which should make the House cautious before agreeing with the Government to reinstate this subsection.

I agree with Lord Aberdare that this subsection will do more than anything else to destroy confidence in the NEB and Government policy. Nor does it concur with the intentions of Clause 2(1) or those stated in the White Paper. The regeneration of British industry has nothing to do with acquiring stakes in successful firms which do not need regeneration, thank you very much. We have no obligation as elected representatives to sanction money for that purpose.

Mr. William Small (Glasgow, Garscadden)

I want to give my views on whether or not the National Enterprise Board should enter profit-making industry. We used to talk about Britain's world role; now we talk about finding Britain's role in the world. The most obvious technology and capital that I see is in firms like Mitsubishi and Chrysler and the other big multinational corporations, every one of which has the trappings of a nation State. This is the competition that this country has to meet. Is the NEB more fitted for this task than private enterprise queueing up for subsidies and giving the impression of our industry continually going to the Minister's door with a begging bowl?

Mr. Keith Stainton (Sudbury and Woodbridge)

We often tend to get this thing out of context. It should be borne in mind that the market capitalisation of, for example, ICI, even at present, is £1,400 million. This Bill will provide £1,000 million.

Mr. Small

I was connected with ICI for 16 years and was entertained by the company only yesterday at a sort of old boys' lunch, so I am familiar with the so-called benevolent capitalism of ICI.

I wish to draw attention to what is going on in the world, including ICI, which I am not criticising. It used to be said of Britain in the past, "I used to carry your bag, white man". The trade union movement is entitled to support sugar agreements and commodity price stabilisation. There must be an equal standard with people in the Western World. The horizon of the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) is his own garden fence. Trade unionists have an international face. We must ensure the quality of standards and prices and the rate for the job.

The NEB can help in locating industry where it is needed. It is not subject to the capricious whim of a particular board or interest. In the broader national interest the NEB can marry capital and technology with the timing and location of industry where it is necessary on behalf of the nation.

Mr. Mikardo

This has been a wide-ranging debate, because the amendments are wide-ranging. It is no wonder that the hon. Member for Henley (Mr. Heseltine) made what is virtually a Second Reading speech, because the amendments create a de facto Second Reading situation. It is not surprising that he and other hon. Members addressed themselves beyond the words of the amendments to the fundamental question of whether we want the NEB or the Bill, because the nature of the amendments is predisposed towards that. One might say in parenthesis that this raises the wider question of whether their Lordships have not in recent times been exceeding their function of acting as a revising Chamber, in seeking to challenge the decisions of the nation as expressed at a General Election. However, that is a wider and different question to which we may have to turn our attention at a later and more appropriate time.

As we have been considering the necessity of the whole Bill and as a serious and cogent though incorrect analysis by the hon. Member for Henley was met by an equally serious and even more cogent and correct analysis by my right hon. Friend the Member for Lanark (Mrs. Hart), it is worth pursuing the arguments a little further and looking harder at the basis of the case which the hon. Member for Henley put forward.

The hon. Member for Henley spoke at one stage of a mixed economy with an inefficient public sector and an efficient private sector. Let us examine that proposition. I am the last person to say that I believe that the public sector is as efficient as it should be. The hon. Member for Canterbury (Mr. Crouch) reminded the House of the considerable studies that were made in that regard a few years ago by a Committee of which he and I were both members. The Committee posed many questions which up to that time had not been answered. Some of them are still unanswered.

Anyone who sets out to suggest that an industry is automatically efficient because it is publicly or privately owned, or who suggests that there is automatically some change in efficiency for the better or the worse when an industry is changed from private to public ownership, or vice versa, is talking out of the back of his neck, as anyone who has worked in industry will know.

Of course, there are some factors which present different areas of scope and opportunity for the management of industry in the public and private sectors. However much the Opposition and leading articles in the Daily Telegraph may ignore the situation, with all the defects of the public sector—no one is more conscious of them than those who have dug into them as deeply as some hon. Members and I have dug—it is an indisputable fact, backed by all the statistics available, that no matter how we measure efficiency by the not very complete yardsticks which we have—by productivity, by effective returns out of each machine hour and each machine pound—by and large, with some exceptions on both sides, the record of the public sector over the past 10 years has been better than that of the private sector.

6.45 p.m.

If one wants support for that proposition one only has to look at the speeches of the Conservative Ministers for Departments sponsoring publicly-owned industries during the Government of 1970–74. I say that specifically to the hon. Member for Bridgwater (Mr. King), who is querying this fact from a sedentary position. One finds those Ministers, one after the other, paying the most glowing tributes to their management and men in the publicly-owned industries for which they were responsible. Although the hon. Member for Bridgwater may sometimes eat his own words, as we saw and heard in Committee, he ain't got a tummy big enough to eat all the words of all the Tory Ministers who paid those glowing tributes to the nationalised industries.

Mr. Ridley

As one of those Ministers, I am not aware of the tributes that I am supposed to have paid. May I excuse some of my right hon. and hon. Friends by saying that speeches which are courteous are prepared by the civil servants and it takes a hard man to cut out the courtesies. However, when we get away from the courtesies, would not the hon. Gentleman at least go as far as to agree that what he has been saying is highly contentious? If no one from the Opposition intervened, he might take it that we agree with him. I have no doubt that once an industry moves from the private to the public sector is suffers a serious reversal in its efficiency and finances and in the call it makes upon the nation for fresh sources of finance.

Mr. Mikardo

I know that that is the hon. Gentleman's belief. I have heard him make the point for years. I merely observe that his belief is not supported by the factual evidence that has been produced under both Conservative and Labour Governments. Of course, I exempt him from the general statement that I have just made. I would never charge the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) with the crime of paying tribute to anybody or anything, because he does not ever do it. However, many other Conservative Members did do so. Their speeches are on record, and they tend to reinforce strongly the general proposition that I have put forward.

Let us examine the efficient private sector. Dare I, in the presence of right hon. and hon. Conservative Members, whisper the words "Rolls-Royce"? Rolls-Royce got into trouble over making the crudest error than any business management could ever make—quoting a fixed price for a product without knowing what it would cost. Was that a great piece of efficiency?

Hon. Gentlemen opposite talk about it being horrible for the State to intervene in the private sector. I remind them that it was a Conservative Government, not a Labour Government, who nationalised Rolls-Royce, and did it in a single day. Moreover, they did it without paying any compensation to the shareholders. No Labour Minister would have dared to do that for fear of being criticised by the Daily Express.

If Conservative Members have not heard the whisper of the name of Rolls-Royce, there are many other names which I could mention. I refrain from mentioning them only because, as the House knows, I am a kindly old man who does not like hurting people's feelings. However, many other companies could be mentioned in that regard. What is this co-called efficient private sector? It is a sector which, measured against the standards of its competitors, has not achieved enough productivity, investment or export sales in relation to its capacity. That is not a success story. Of course, within the global picture, individual companies and establishments are success stories. God bless them all. We need more of them. However, the global picture is by no means a success story.

If the Bill were not needed for any other purpose, it would certainly be needed for the purpose of improving the level of productive investment in British industry. Contrary to what was suggested by the hon. Member for Henley, nothing that successive Governments have been able to do—the hon. Gentleman said that it ought to be done by persuasion and so on—by cajolery or bribery has succeeded in getting an adequate amount of investment out of the private sector, just as none of the grants, loans and the rest of the concessions did. Goodness me, at one period firms could get back over 100 per cent. of what they spent on investment, and still they did not invest. Nothing which has been done has achieved enough investment, just as nothing which has been done by way of cajolery or bribery has succeeded in getting enough diversion of British industry into the regions where it is most needed.

I should be the first to agree that if it could have been done without statutory intervention it would have been better. But successive Governments have tried everything, including giving grants—but that did not last long—of more than 100 per cent.

The hon. Member for Henley—we hear this so often from many quarters; indeed, some of us who were invited to talk to the chaps at the London Chamber of Commerce yesterday heard it there—said "It is because we do not get enough surplus in industry to justify expansion. The wicked Labour Government, by controlling our prices and taxing us so heavily, do not leave us enough surplus." That would be a convincing argument if the failure of British industry to invest started from February 1974. But it did not, did it? It has been there since the beginning of this century.

Since the beginning of this century investment in British industry as a percentage of its resources has been lower than that of our main industrial competitors. That has been true under both Labour and Tory Governments. That has been true in times of boom and in times of slump. That has been true when industry has been both more and less profitable.

Let us look, for example, at the last period under the Conservative Government led by the right hon. Member for Sidcup (Mr. Heath). In the three calendar years 1971, 1972 and 1973 industry was given a bonanza by the Government. Does anyone still remember a Chancellor of the Exchequer called Anthony Barber? [An HON. MEMBER: "Who?"] He gave industry a huge bonanza. There were tremendous cuts in tax burdens. Hundreds of millions of pounds were refunded by way of allowances over and above the direct grants and other facilities. There were no price controls. Industry did very well, but in those three years the level of investment fell by one-third.

If we want to examine seriously why British industry does not invest, we must get rid of the shibboleth that this is a recent phenomenon. It is not. We must also get rid of the shibboleth that there is a causal connection between profitability and investment. The whole history of British industry since the turn of the century shows that. There ought to be a causal connection. It seems natural and what one would expect. But we must get rid of the shibboleth that there is a causal connection betwen the level of profitability and of investment, because the record shows that there is no such causal connection. The plain fact of the matter is that in good times and in bad, with tough Chancellors like the present one and Father Christmas Chancellors like Anthony Barber, Labour Governments and Conservative Governments, sticks and carrots, bribery and cajolery, we have not so far found a way of getting the private sector of British industry to invest enough.

If we cannot get those in industry to do it, unhappily we must do it for them. The NEB and planning agreements are a formula for doing for industry what we have manifestly failed to persuade it to do for itself. I repeat, there are other values in the Bill; but if there were no other justification, there is justification enough. This is enough to justify any hon. Member who values the powers and privileges of this House—above all, the privilege of speaking with the voice of the people, because we were elected by the people—in saying that their Lordships had no business to go so much beyond their function as a revising Chamber and seeking, by these amendments, to frustrate the manifest will of the people.

Mr. Tom Litterick (Birmingham, Selly Oak)

I will try to be brief. I should like first to reiterate the point made by my hon. Friend the Member for Luton, West (Mr. Sedgemore) about these amendments. They propose that the National Enterprise Board shall not establish an industrial undertaking, shall not extend public ownership in profitable areas, and shall not form corporate bodies. With the fourth element, proposed in an amendment which we shall shortly be considering regarding industrial democracy, there would be nothing left of the Industry Bill.

7.0 p.m.

I remind the House that this Bill is a very faded copy of the original White Paper which, I suggest, was an extremely moderate document.

From the reception the White Paper and the Bill received when they were first printed one would have thought we were announcing a revolution. The Bill is moderate even by the standards of Western European practice. In view of the performance of Opposition Members the House should be reminded that the Bill is pretty moderate in relation to the performance of the Tory parties in Western Europe in the conduct of relationships between the State and industry. In June this year the House was told that the Italian version of the NEB had nationalised 1,146 companies in the past 15 years, taken a controlling interest in another 150 companies and a significant shareholding in 50 more. Yet Italy has not had a Socialist Government. Since the war it has had nothing but Tory Governments. I find it hard to believe that hon. Members opposite do not know this.

I also find it hard to believe their protestations of undying devotion to the con- cept that profitability is the essential device in allocating resources; I find it hard in view of what they have done in the past. They are pursuing a propaganda objective. They would have their supporters in the country believe that the detestation of public enterprise they express so vehemently in the House is genuine and that the version of public enterprise presented in this Bill is extreme and peculiar to the British Labour Party.

It is not. It is similar to that in Italy, France, Belgium and even West Germany, where Federal Government have taken a controlling interest in scores of firms, and provincial Governments, which have the same powers, have also taken significant interests in commercial undertakings in order to fulfil the function that this Bill is hoping to fulfil for the British people—to interpose public values between the public and those people who operate the commercial profit-pursuing system.

Their Lordships object to this, but it is none of their business. Nobody elected them, and they have no right to set out in effect to destroy a major piece of proposed legislation. They ought to think very carefully about their constitutional position. This is far more important than anything we discussed last week. I strenuously object to the Lord defining their rôle in our constitutional structure in this way.

Much has been said about the failure of public enterprise. My hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo) went a long way to counter those arguments. The confusion of hon. Members opposite hinges on their peculiar doctrinaire attachment to the belief that there is one way of measuring efficiency—profit. I am sorry that the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) has left the Chamber. If he consulted the Harvard Business School, which is probably his spiritual Kremlin, he would find that not even it recognises that profit alone should be seen as a measure of efficiency. It would insist on some other aspects being taken into account, including social considerations. This is from Harvard, not Moscow.

Hon. Members opposite pretend that we on this side are peculiar, that the situation in Britain is unique, that political influence in British industry is the cardinal influence and that it is a wholly bad one. They seek to prevent the British people from knowing the extent of State intervention, particularly State intervention by Conservative Governments, throughout Western Europe. Perhaps this is because they would be embarrassed if they learned that the Italian economy which, not long ago, was recognised as one of the so-called miracle economies was being fuelled by a vigorous State sector and that this was one of the major reasons for the sudden improvement in the Italian economy. It would also be embarrassing for them to look at the role of the State in other Western European countries.

It is time that the Opposition were honest with their supporters and talked in serious and sophisticated terms about the proper means of allocating capital resources and the proper role of the State as a catalytic and constructive element and followed the efforts of Tory Governments elsewhere in Western Europe. To try to make a simple black and white comparison between public and private industry is fatuous and misleading and performs no public service. There is nothing magic about either public or private enterprise per se. We seek to interpose social values between the harsh priorities of the market and the other priorities of all the people, including hon. Members opposite, some of whom may well become redundant in the not too distant future.

I was born in Clydebank in 1929 which was, as they say, the seminal year when the behind fell out of the whole system. I do not claim any causal connection between the two events. I spent the first decade of my life in the Clyde Valley and my family endured the consequences of the collapse of a system which was not operating under a burden of taxation remotely comparable to that of today. Yet it collapsed. The situation was not peculiar to Britain or the Clyde Valley. It was world-wide. Would hon. Members opposite seriously suggest that the collapse was caused by the existence of trade unions or high taxation? Of course not. The recovery was only effected by somebody called Adolf Hitler, not by the mechanism of the system itself.

When Keynes characterised the investing public as an ignorant rabble—and he should have known, because he made three fortunes and lost two—he was referring to the limitations of the private investor as an allocator of resources. Such an investor was unable, through his imperfect knowledge and narrow view and motivation, to make investment decisions that made any sense. Keynes offered a prescription which turned out to be a delusion. The system was shored up by post-war reconstruction expenditure and later by massive armaments expenditure. Now that it is declining the inability of the private, profit-motivated system to allocate resources and sustain employment is revealed once again.

Clydebank suffered from the so-called free enterprise system, and I now represent a part of the city of Birmingham which is suffering in precisely the same way as did my home town more than a generation ago. Municipalities tell us that the industrial base is too narrow and that there is no new technology. The classic weaknesses are appearing once again. There is no investment, indeed there is de-investment. I presume the hon. Member for Bromsgrove and Red-ditch (Mr. Miller) was not being quite as doctrinaire as he sounded when he expressed his objections to public enterprise, since many of his constituents' jobs depend on public enterprise in Birmingham. The city of Birmingham will not be allowed to go the way the Clyde Valley was allowed to go. I do not claim that the Industry Bill is the whole answer. However, we have a responsibility to the city of Birmingham to Dass this Bill giving the State powers to intervene to prevent the further collapse of entire communities resulting from the failure of the private capitalist system.

Mr. Hal Miller

If the hon. Gentleman had listened to my speech with more attention he would have heard my remark to the effect that I was interested not in ownership but in performance and efficiency. I hope that he will bear that in mind.

Mr. Varley

I sense that the House would like a Division on this group of amendments. It would be impossible for me to cover all the aspects raised. This has been a wide-ranging debate. I make no complaint. My right hon. Friend the Member for Lanark (Mrs. Hart) said that the amendments went to the heart of the Bill. There were references to steel, coal, NVT, British Leyland, shipbuilding, the Welsh Development Agency, the Scottish Development Agency, the Scottish Daily News, and pottery for the House of Commons. I do not intend to take up all those points. However, I shall deal with one matter which some hon. Members regard as serious. I refer to the question of the guidelines for the NEB.

We debated the question of the NEB guidelines on Report. The matter was raised in Committee. Consultations are taking place with both sides of industry. We are also consulting the organising committee of the NEB. When those consultations have taken place, copies of the draft guidelines will be made available to both Houses of Parliament. That assurance should satisfy the hon. Members for Henley (Mr. Heseltine) and Chichester (Mr. Nelson).

Mr. Stainton

Is the Minister referring to the powers of direction under Clause 6?

Mr. Varley

The hon. Gentleman is correct. Effect will be given to the guidelines as a result of the powers contained in Clause 6.

The hon. Member for Henley gave the impression that everything was fine, that if it were not for the Government, industrial investment would go up, that there would be no further shrinkage of our manufacturing base, that not only would there be greater investment but that the quality of investment would be improved and profitability would return. He knows that that is not true. The hon. Gentleman tried to create mischief. He said that industrial strategy had changed since I became responsible for the Department of Industry.

The Government have demonstrated their attitude to the Bill. Although it does not meet all the wishes of Government supporters, in two respects it is a stronger Bill, although I accept that it is not entirely the kind of Bill which they wanted. However, the Bill will remain intact after we have rejected the Lords amendments.

7.15 p.m.

I agree that the Bill does not go all the way to put right all the problems of British industry. However, I was pleased to hear my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) say that he hoped the NEB would not be a repository for "lame ducks". The document approved at the Labour Party Conference set out the role of the NEB. I despair when hon. Members approach me instancing firms in their constituencies which are in difficulties, and asking whether the NEB could become involved. I do not think that that should be the primary role of the NEB. That is why I welcome the document which was passed by the Labour Party conference.

The hon. Member for Henley asked me to indicate a nationalised industry which showed a profit. He promised to look more kindly on the Bill if I could do so. Some nationalised industries have not shown profits—but that does not mean that there have been no profits from nationalised industries from time to time—as a result of massive interference by successive Governments, especially the Conservative Government.

I remember the first Heath initiative on counter-inflation. The nationalised industries were pushed to the front. There was a CBI initiative. The nationalised industries were rigidly monitored and screwed down, although private industry was allowed to develop. Phase two was introduced and statutory controls were brought into the net. Our processing and supply industries are now experiencing problems as a result of the policies pursued by the last Tory Government. The difficulties of the telecommunications industry and the suppliers of electrical equipment arise from the interference by the last administration. I see that the hon. Gentleman acknowledges that.

The hon. Member for Henley now says "Let us return to the Selsdon concept. If we can return to Selsdon everything will be all right." My hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo) made this plain. There was a period from 1970 to 1972, during the period of the Barber taxation reductions, when the Prime Minister and his Ministers pleaded with industry to increase investment. That did not happen. The hon. Gentleman now says that provided we can return to that policy and give it another chance, everything will come right. The hon. Gentleman not only rejects this involvement in industry; he rejects some of the overall Treasury strategy arguments.

We know what happened. I make a bet that the hon. Gentleman will not tell us now that a possible incoming Conservative Government will not take over any aspects of British industry. I should be interested to know, if there were a case comparable with that of Rolls-Royce under a future Conservative Government, whether the hon. Gentleman would give a pledge that a Conservative Government would not interfere. He would not say that. He cannot say so. Anybody who supposes that there will never be further intervention by any Government in industry is living in a fool's paradise.

The hon. Member for Kinross and West Perthshire (Mr. Fairbairn) referred to profits. There was a titter when he said that profits must be generated. I do not think that there is much difference between the Government and the Opposition on that matter. We want to get industry moving ahead again. We want to stop the contraction of our manufacturing base. We wish to expand it. We want the NEB to move into profitable industry and to improve the amount and quality of investment, so as to achieve the aims which the members of the Labour Party hold dear. If we do not do so we shall finish up with seedy and tatty social services and a poor educational system. That is why we must get industry moving ahead as quickly as possible.

I am tempted to comment on the remarks of the hon. Member for Cirencester and Tewkesbury (Mr. Ridley). It is always easy to twit the hon. Gentleman, as he was a Minister in the Department of Trade and Industry when he embarked on the most devastating intervention in industry carried out by a Conservative Government. He had just left. He may have been sacked. I wonder whether he would have sat there and taken the Industry Act 1972, and the nationalisation of the Govan Shipbuilders. It is said that before the 1970 General Election the hon. Gentleman wrote an article or pamphlet which said that Upper Clyde Shipbuilders must be butchered. Not long after that the right hon. Member for Knutsford (Mr. Davies) nationalised that concern. I fear that unless nationalisation occurs in the industry we shall end up with no shipbuilding industry at all.

Of course, we have to have secure jobs, and we can get secure jobs only on the basis of getting inflation under control, improving investment and the quality of investment, and ensuring that working practices are such that we get the best out of that investment. The trade unions are facing that question.

Mr. Ridley

How are we to do that?

Mr. Varley

We can do that only by using the instruments positively and recruiting wide co-operation from the work force. We have to move ahead with the NEB, planning agreements, industrial democracy and all the other policies which the Labour Party holds near and dear. That is the only way forward for the country.

Mr. Ridley

The Minister twitted me—it was not a very effective twit—but will he answer my speech? Does he condemn the blastfurnace men at Llanwern? What will he do to make sure that a destructive refusal to use plant in the public sector does not occur again? Otherwise there is no point in public investment.

Mr. Varley

The hon. Gentleman suggested that my twit was not very effective, but I have a long list of subjects on which to twit him. The Llanwern dispute is subject to an inquiry. The hon. Gentleman should know better than to expect me, as a Minister, to comment on a steel industry dispute which is the subject of an inquiry. I go with him as far as this: if the British steel industry is to be competitive, if it is to produce steel in sufficient quantities, and if its performance is to be comparable with that of the steel industries in Germany and France, it can be achieved only on the basis of using investment in the industry much more constructively. The hon. Gentleman knows better than to think I shall comment on the dispute when it is sub judice. He knows that he could not do so if he were in my position.

The hon. Member for Caernarvon (Mr. Wigley) said that he was in favour of the Welsh Development Agency but was not quite sure about the National Enterprise Board. We get tired of hearing the national parties in the House exploiting every little opportunity. The members of Plaid Cymru run round Wales, to Ebbw Vale and Shotton, stirring up trouble and interfering, just to create difficulties, in the belief that they are enhancing the future of their party.

Is the hon. Gentleman really arguing against the concept of greater public involvement? He probably is. When he first came to the House with his hon. Friend the Member for Carmarthen (Mr. Evans), I was told that members of Plaid Cymru were not like the Scottish Nationals, who were wishy-washy and a bit Tory, a bit Liberal and a bit Labour. I was told that the Members of Plaid Cmyru were red-blooded Socialists. Are they telling us now that they will vote against the establishment of the NEB?

Mr. Wigley

I am not sure what source of information the Minister has for what he was told when my hon. Friend and I first came to the House. I shall not comment on that. I merely suggest that he examines our policies. In my speech I asked him two questions, on which I should be grateful for his comments. Are the powers of the NEB as affected by Lords Amendment No. 11 relevant to Wales? Will Lords Amendment No. 12 be effective in Wales, or will the powers be channelled through the Welsh Development Agency? Power to extend the ownership of companies, which is covered by Amendment No. 11 is possessed by the Welsh Development Agency. I do not want to see duplication. Will the Minister give me a categorical assurance that the NEB will not be involved in Wales on those two matters?

Mr. Varley

I hope the hon. Gentleman realises what he is asking. He supports the Welsh Development Agency, which will have an important role to play in establishing new industry, but he suggests that the NEB does not have any role. That is a very narrow approach, which would defeat the objectives which he supports. It is impossible to define it in that way. The NEB will be there for the benefit of the four countries in the United Kingdom. For example, it will immediately take Rolls-Royce under its wing. I do not know whether Rolls-Royce operates in Wales, but it operates in Scotland. It is proper, therefore, that the Board should take an interest in Scotland. Industry spans the borders of Wales and England and the borders of Scotland and England, and the NEB has a role to play. The hon. Gentleman seems to be saying "Clear out the NEB from Wales and let the WDA take everything over". It is not possible to do that, and it would be extremely damaging to Welsh industry if that were so.

Mr. Crawford

The Minister said that the NEB will take an interest in companies based in England with factories in Scotland. Will the SDA take an interest in companies based in Scotland and operated in England? I am thinking of DCL, Babcock and Wilcox, and Burmah Oil.

Mr. Varley

I cannot answer that question without notice. I understand that the hon. Gentleman welcomes the SDA on the grounds that it will increase industrial potential and activity and extend industry in Scotland. If that is so, NEB involvement should be welcome in Scotland.

Mrs. Hart

Does not my hon. Friend think that the Scottish National Party—I do not know so much about Plaid Cymru—is utterly confused? If the hon. Member for Perth and East Perthshire (Mr. Crawford) looks at the analysis of the number of major conglomerates with centres in Scotland and Wales he will realise that unless the NEB is able to operate in Scotland and Wales, from the base of the centre of the conglomerates in England, nothing will come to the Scottish Development Agency.

Mr. Varley

That is a powerful point, and I have nothing to add to it. I think that the hon. Member for Caernarvon is a red-blooded Socialist gone wrong. I hope that Plaid Cymru will check up and think carefully before voting with the Conservatives tonight.

The hon. Member for Bromsgrove and Redditch (Mr. Miller) dragged in Norton Villiers Triumph. He gave the impression that the problems of the motor cycle industry started in March 1974, but the problems of NVT are the problems of British industry—sectoral retreat, low investment and the pursuit of short-term profits. That is what happened with NVT, and it is happening in a large section of British industry. We are pledged to reverse that trend, and the NEB will help us to do so.

Mr. Hal Miller

I agree with the Minister's diagnosis on what happened in the motor cycle industry but the question I asked, which he has not answered, is: how did Govenment action help, and how will NEB action help? Government support for a third factory effectively ruined the other two. That is a simple question.

Mr. Varley

I expect the hon. Gentleman has read the report of the Boston Consulting Group, which highlights his own prejudice when he says that all these problems started in March 1974. He knows in his heart that that is not so. The problems of the motor cycle industry started a long time ago, with Sir Bernard Docker, Lord Shawcross, and so on, and the difficult decision which Mr. Christopher Chataway had to take when he decided to try to preserve it. It is the classic problem of British industry—sectoral retreat, low investment and short-term profits, and the NEB—provided it selects its partners properly and acts commercially—will be able to prevent that, albeit in a small way in the beginning. There is no doubt that as it develops and expands it will have an important rôle to play.

When the House has rejected these Lords amendments we shall establish an opportunity for public enterprise to compete on equal terms with the private sector.

7.30 p.m.

Mr. Tom King

The House has taken a long time on this series of amendments. I know that it wishes to move to a decision. A number of hon. Members have emphasised that this is the key debate in the series of amendments that we are discussing. Therefore, we should make no apologies for the time that has been spent on these amendments. We should also be grateful to their Lordships for giving us the opportunity to discuss these issues again. It ill becomes members of the Government, especially those who are Ministers in the Government—bearing in mind the mess the Bill was in, because their representative in the other place had to apologise for it—to take exception to the amendments that their Lordships have sent back to us.

Moreover, when we consider, as their Lordships might, that the issues we have discussed tonight were presented to the Committee by a completely different set of Ministers from those we now face across the Dispatch Box and who are justifying the policies, there are good reasons why this matter should have been reconsidered by us tonight.

A matter which the Secretary of State did not answer but which is central to the debate is why the Minister of State in the other place said that successful companies would not be acquired by the NEB and that there was no case for successful and profitable companies to be acquired because they would not need to be regenerated. Some Labour Members have complained that their Lordships are being unreasonable. Their Lordships are being prudent, because if there was no case for successful and profitable companies to be acquired it was wise of them to strike out the inclusion of that subsection. The Government Front Bench seems to be having discussions to decide what was said on that occasion. The matter should be clarified.

I understand the concern expressed by hon. Members of the Scottish and Welsh National Parties over this matter. At the first meeting in Committee the hon. Member for Caernarvon (Mr. Wigley) asked about the relationship of the NEB and the Welsh Development Agency. The same problem arises with the Scottish Development Agency. We have reached the end of the Bill and we are dealing with the Lords amendments. I do not know whether hon. Members are satisfied, but I am no clearer about that relationship. The Secretary of State has said tonight, at the end of the legislative process of the Bill, that there will be some guidelines. Parliament is being asked to approve the establishment of the NEB. At the beginning of all the discussion on this matter we were told that there would be guidelines, and the then Secretary of State mentioned that there might be a White Paper. There was then his rapid departure and all the kerfuffle that went with it, which is all part of the history of the Bill. Suddenly we are told that the guidelines are not ready and that at some stage they will be issued. Once again we are being asked to pass a blank cheque. When the Secretary of State starts talking about red-blooded Socialism, we wonder how strong it runs in different veins of members of the Labour Party.

We welcome the presence of the right hon. Member for Lanark (Mrs. Hart), who played a major part in the original policy formation of the Bill. We missed her in Committee and we listened with interest to what she said today. However, having listened to her and to some of her hon. Friends, including the hon. Member for Liverpool, Walton (Mr. Heffer) and the hon. Member for Luton, West (Mr. Sedgemore), we find it impossible to accept their views. They believe that the private sector is doomed to extinction, and the sooner the better. How does that reconcile with the Government's pledge for a profitable, vigorous and successful private sector?

Those views are irreconcilable because there is a total divide between the views as expressed by the Prime Minister, as restated by the Secretary of State, and the views of those who believe that the private sector is doomed to failure. The alternative that is being put forward has no truth or evidence behind it. It was Aneurin Bevan who said that it was not necessary to look into the crystal ball when one could read the book.

The hon. Member for Birmingham, Selly Oak (Mr. Litterick) had the nerve to quote the IRI as an example of the way the NEB would go. In the past five years the IRI has not once shown a better return on its assets than half of 1 per cent. Therefore, if a vast amount of our assets and wealth is tied up in activities that produce no wealth for the country, how shall we have anything other than tatty social services and social provision in this country?

It is against that background that we listened with interest to find out whether, for the first time, we would receive a cogent explanation and justification of the policy of more nationalisation and the acquisition of profitable and successful companies. The right hon. Member for Lanark analysed the present situation in British industry. We have had similar analyses before, but the right hon. Lady amplified it in some respects. Then the argument stops. This happens in every case. Suddenly we are told "It is not quite what we want "or" British industry is not progressing as well as we want. Therefore the answer is State involve- ment and State ownership." There has never been a logical explanation of why that should be the case.

We argue that the onus of proof is on the Government and the Labour Party. It is not surprising that so many people in this country are concerned and have real doubts about whether that is the answer for our industry. Labour Members point to other countries and ask why we are not doing as well, but every example they point to is a classic example of free enterprise and private sector companies succeeding.

The other argument is that perhaps there might be security of employment. The hon. Member for Walton had the nerve to ask who was sacking people at present. He said it was private industry—in the very week when the Post Office has announced the early retirement of 18,000 of its employees, when the Central Electricity Generating Board has announced a massive closure of power stations and when workers of the British Steel Corporation at Ebbw Vale have been dismissed, as the hon. Member for Caernarvon mentioned. The pretence that has been held out and the clear answer that if we support nationalisation it will give security of employment has surely been destroyed during the past two weeks.

Mr. Heffer

The hon. Gentleman knows full well that I did not say that it was only private enterprise. I pointed out that the crisis that has been developing for the past three decades, and which has given rise to massive unemployment and closures in, for example, British Leyland and NVT, has been brought about by private enterprise concerns. My argument was that Conservative Members have been trying to prove how healthy private enterprise was.

Mr. King

If the hon. Gentleman were to look at the unemployment figures for the six years of Labour Government from 1964 to 1970 he would find that the jobs lost in the public sector were of the order of 600,000 but that unemployment increased by 200,000, because 400,000 new jobs were created in the private sector in that period. If the hon. Gentleman wants to allocate the blame, he should get his facts right.

Against this background we are entitled to ask what justification there can be for moving into this area. My hon. Friend the Member for Chichester (Mr. Nelson) asked how there could be any more pointless or wasteful way to spend more money, particularly tonight, when there are present one or two distinguished visitors who, we hope, might help us out in one or two directions—we know that the Government are acutely short of funds—than merely to acquire existing successful companies that have no need of those funds. The idea that somehow the Government have money to spare for these activities is laughable.

This is not a matter of economic judgment. It is entirely the political belief of the Labour Party. In the end, the Labour Party will say that the onus of proof is not its responsibility because it is all in its manifesto. That manifesto was supported by 28 per cent. of the people. One is entitled to ask how many of that 28 per cent. read it and were aware of the small print. Certainly one is entitled to point out that the main claim in the first of last year's two Labour

Party manifestos, which may have had rather more effect than the small print about pay beds, nationalisation of the aircraft and shipbuilding industries and the NEB, was the slogan "Back to work with Labour". That must have a hollow ring for the 1,250,000 unemployed.

Every Minister of this Government now and in the future when claiming the mandate of the manifesto for a policy should remember that the manifesto was a mandate for full employment. That has been the biggest failure of all. It is against that background that investment in private manufacturing industry by the NEB is the grossest irrelevance which will do great damage to industry and the country. We therefore strongly oppose the Government's intentions.

Question put, That this House doth disagree with the Lords in the said amendment:—

The House divided: Ayes 265, Noes 253.

Division No. 351.]	AYES	[7.44 p.m.
Abse, Leo	Cronin, John	Graham, Ted
Allaun, Frank	Cryer, Bob	Grant, George (Morpeth)
Anderson, Donald	Cunningham, G. (Islington S)	Grant, John (Islington C)
Archer, Peter	Davidson, Arthur	Grocott, Bruce
Armstrong, Ernest	Davies, Bryan (Enfield N)	Hamilton, James (Bothwell)
Ashley, Jack	Davies, Denzil (Llanelli)	Harper, Joseph
Atkins, Ronald (Preston N)	Davis, Clinton (Hackney C)	Harrison, Walter (Wakefield)
Atkinson, Norman	Deakins, Eric	Hart, Rt Hon Judith
Barnett, Rt Hon Joel (Heywood)	Dean, Joseph (Leeds West)	Hatton, Frank
Bates, Alf	Delargy, Hugh	Hayman, Mrs Helene
Bean, R. E.	Dell, Rt Hon Edmund	Heffer, Eric S.
Bennett, Andrew (Stockport N)	Dempsey, James	Horam, John
Bidwell, Sydney	Doig, Peter	Howell, Denis (B'ham, Sin H)
Bishop, E. S.	Dormand, J. D.	Hoyle, Doug (Nelson)
Blenkinsop, Arthur	Douglas-Mann, Bruce	Hughes, Rt Hon C. (Anglesey)
Boardman, H.	Duffy, A. E. P.	Hughes, Robert (Aberdeen, N)
Booth, Albert	Dunn, James A.	Hughes, Roy (Newport)
Bottomley, Rt Hon Arthur	Dunnett, Jack	Hunter, Adam
Boyden, James (Bish Auck)	Dunwoody, Mrs Gwyneth	Irvine, Rt Hon Sir A. (Edge Hill)
Bradley, Tom	Eadie Alex	Irving, Rt Hon S. (Dartford)
Bray, Dr Jeremy	Edelman, Maurice	Jackson, Colin (Brighouse)
Brown, Hugh D. (Provan)	Edge, Geoff	Jackson, Miss Margaret (Lincoln)
Brown, Robert C. (Newcastle W)	Edwards, Robert (Wolv SE)	Janner, Greville
Buchanan, Richard	English, Michael	Jay, Rt Hon Douglas
Callaghan, Jim (Middleton & P)	Ennais, David	Jeger, Mrs Lena
Campbell, Ian	Evans, Fred (Caerphilly)	Jenkins, Hugh (Putney)
Canavan, Dennis	Evans, Gwynfor (Carmarthen)	John, Brynmor
Cant, R. B.	Evans, Ioan (Aberdare)	Johnson, James (Hull West)
Carmichael, Neil	Ewing, Harry (Stirling)	Johnson, Walter (Derby 3)
Carter, Ray	Fernyhough, Rt Hon E.	Jones, Alec (Rhondda)
Carter-Jones, Lewis	Fitch, Alan (Wigan)	Jones, Barry (East Flint)
Cartwright, John	Fitt, Gerard (Belfast W)	Jones, Dan (Burnley)
Castle, Rt Hon Barbara	Flannery, Martin	Judd, Frank
Clemitson, Ivor	Fletcher, Ted (Darlington)	Kaufman, Gerald
Cocks, Michael (Bristol S)	Foot, Rt Hon Michael	Kelley, Richard
Cohen, Stanley	Ford, Ben	Kilroy-Silk, Robert
Coleman, Donald	Forrester, John	Kinnock, Nell
Colquhoun, Mrs Maureen	Fowler, Gerald (The Wrekin)	Lambie, David
Concannon, J. D.	Fraser, John (Lambeth, N'w'd)	Lamborn, Harry
Conian, Bernard	Freeson, Reginald	Lamond, James
Cook, Robin F. (Edin C)	George, Bruce	Latham, Arthur (Paddington)
Corbett, Robin	Gilbert, Dr John	Lee, John
Cox, Thomas (Tooting)	Ginsburg, David	Lestor, Miss Joan (Eton & Slough)
Craigen, J. M. (Maryhill)	Gould, Bryan	Lever, Rt Hon Harold
Crawshaw, Richard	Gourlay, Harry	Lewis, Ron (Carlisle)
Lipton, Marcus	Ovenden, John	Strang, Gavin
Litterick, Tom	Owen, Dr David	Strauss, Rt Hon G. R.
Loyden, Eddie	Padley, Walter	Summerskill, Hon Dr Shirley
Luard, Evan	Park, George	Swain, Thomas
Lyon, Alexander (York)	Parker, John	Taylor, Mrs Ann (Bolton W)
Lyons, Edward (Bradford W)	Parry, Robert	Thomas, Dafydd (Merioneth)
Mabon, Dr J. Dickson	Peart, Rt Hon Fred	Thomas, Jeffrey (Abertillery)
McCartney, Hugh	Pendry, Tom	Thomas, Ron (Bristol NW)
McElhone, Frank	Perry, Ernest	Thorne, Stan (Preston South)
MacFarquhar, Roderick	Phipps, Dr Colin	Tierney, Sydney
McGuire, Michael (Ince)	Prentice, Rt Hon Reg	Tomlinson, John
Mackenzie, Gregor	Price, C. (Lewisham W)	Tomney, Frank
Mackintosh, John P.	Price, William (Rugby)	Toiney, Tom
Maclennan, Robert	Radice, Giles	Tuck, Raphael
McMillan, Tom (Glasgow C)	Rees, Rt Hon Merlyn (Leeds S)	Varley, Rt Hon Eric G.
McNamara, Kevin	Richardson, Miss Jo	Wainwright, Edwin (Dearne V)
Madden, Max	Roberts, Albert (Normanton)	Walden, Brian (B'ham, L'dyw'd)
Magee, Bryan	Roberts, Gwilym (Cannock)	Walker, Harold (Doncaster)
Mahon, Simon	Robertson, John (Paisley)	Walker, Terry (Kingswood)
Mallalieu, J. P. W.	Roderick, Caerwyn	Ward, Michael
Marks, Kenneth	Rodgers, George (Chorley)	Watkins, David
Marquand, David	Rodgers, William (Stockton)	Watkinson, John
Marshall, Dr. Edmund (Goole)	Rooker, J. W.	Weetch, Ken
Marshall, Jim (Leicester S)	Rose, Paul B.	Weitzman, David
Maynard, Miss Joan	Ross, Rt Hon W. (Kilmarnock)	Wellbeloved, James
Meacher, Michael	Rowlands, Ted	White, Frank R. (Bury)
Mellish, Rt Hon Robert	Sandelson, Neville	White, James (Pollok)
Mikardo, Ian	Sedgemore, Brian	Whitehead, Phillip
Millan, Bruce	Selby, Harry	Whitlock, William
Miller, Dr M. S. (E. Kilbride)	Shaw, Arnold (Ilford South)	Wigley, Dafydd
Miller, Mrs Millie (Ilford N)	Sheldon, Robert (Ashton-u-Lyne)	Willey, Rt Hon FredericK
Molloy, William	Short, Mrs Renée (Wolv NE)	Williams, Alan (Swansea W)
Moonman, Eric	Silkin, Rt Hon John (Deptford)	Williams, Alan Lee (Hornch'ch)
Morris, Alfred (Wythenshawe)	Silkln, Rt Hon S. C. (Dulwich)	Williams, Rt Hon Shirley (Hertford]
Morris, Charles R. (Openshaw)	Sillars, James	Williams, W. T. (Warrington)
Morris, Rt Hon J. (Aberavon)	Silverman, Julius	Wilson, Alexander (Hamilton)
Moyle, Roland	Skinner, Dennis	Wise, Mrs Audrey
Murray, Rt Hon Ronald King	Small, William	Woof, Robert
Newens, Stanley	Smith, John (N Lanarkshire)	Wrigglesworth, Ian
Noble, Mike	Snape, Peter	Young, David (Bolton E)
Oakes, Gordon	Spearing, Nigel
Ogden, Eric	Spriggs, Leslie	TELLERS FOR THE AYES:
O'Malley, Rt Hon Brian	Stallard, A. W.	Mr. Lanrie Pavitt and
Orbach, Maurice	Stoddart, David	Miss Betty Boothroyd.
Orme, Rt Hon Stanley	Stott, Roger
NOES
Adley, Robert	Clark, William (Croydon S)	Gardner, Edward (S Fylde)
Alison, Michael	Clarke, Kenneth (Rushcliffe)	Gilmour, Rt Hon Ian (Chesham)
Arnold, Tom	Cockcroft, John	Gilmour, Sir John (East Fife)
Atkins, Rt Hon H. (Speithorne)	Cooke, Robert (Bristol W)	Glyn, Dr Alan
Awdry, Daniel	Cope, John	Godber, Rt Hon Joseph
Bain Mrs Margaret	Cordle, John H.	Goodhart, Philip
Baker, Kenneth	Cormack, Patrick	Goodhew, Victor
Banks, Robert	Crawford, Douglas	Goodlad, Alastair
Beith, A. J.	Critchley, Julian	Gorst, John
Bell, Ronald	Crouch, David	Gow, Ian (Eastbourne)
Berry, Hon Anthony	Crowder, F. P.	Gower, Sir Raymond (Barry)
Biffen, John	Davies, Rt Hon J. (Knutsford)	Grant Anthony (Harrow C)
Biggs-Davison, John	Dean, Paul (N Somerset)	Gray, Hamish
Blaker, Peter	Dodsworth, Geoffrey	Grieve, Percy
Body, Richard	Douglas-Hamilton, Lord James	Grimond, Rt Hon j
Boscawen, Hon Robert	Drayson, Burnaby	Grist, Ian
Bottomley, Peter	du Cann, Rt Hon Edward	Hall, Sir John
Bowden, A. (Brighton, Kemptown)	Dunlop, John	Hamilton, Michael (Salisbury)
Boyson, Dr Rhodes (Brent)	Durant, Tony	Hampson, Dr Keith
Bradford, Rev Robert	Eden, Rt Hon Sir John	Hannam, John
Braine, Sir Bernard	Edwards, Nicholas (Pembroke)	Harvie Anderson, Rt Hon Miss
Brittan, Leon	Elliott, Sir William	Hastings, Stephen
Brocklebank-Fowler, C.	Emery, Peter	Havers, Sir Michael
Brotherton, Michael	Eyre, Reginald	Hawkins, Paul
Brown, Sir Edward (Bath)	Fairbairn, Nicholas	Hayhoe, Barney
Bryan, Sir Paul	Fairgrieve, Russell	Heath, Rt Hon Edward
Buchanan-Smith, Alick	Fell, Anthony	Henderson, Douglas
Buck, Antony	Finsberg, Geoffrey	Heseltine, Michael
Budgen, Nick	Fisher, Sir Niger	Hicks, Robert
Bulmer, Esmond	Fletcher-Cooke, Charles	Hordern, Peter
Burden, F. A.	Fookes, Miss Janet	Howe, Rt Hon Sir Geoffrey
Butler, Adam (Bosworth)	Fowler, Norman (Sutton C'f'd)	Howell, David (Guildford)
Carlisle, Mark	Fox, Marcus	Howells, Geraint (Cardigan)
Carr, Rt Hon Robert	Fraser, Rt Hon H. (Stafford & St)	Hunt, John
Chalker, Mrs Lynda	Fry, Peter	Hurd, Douglas
Churchill, W. S.	Galbraith, Hon. T. G. D.	Hutchison, Michael Clark
Clark, Alan (Plymouth, Sutton)	Gardiner, George (Reigate)	Irvine, Bryant Godman (Rye)
Irving, Charles (Cheltenham)	Montgomery, Fergus	Sinclair, Sir George
James, David	Moore, John (Croydon C)	Skeet, T. H. H.
Jessel, Toby	More, Jasper (Ludlow)	Smith, Cyril (Rochdale)
Johnson Smith, G. (E Grinstead)	Morgan, Geraint	Smith, Dudley (Warwick)
Jones, Arthur (Daventry)	Morgan-Giles, Rear-Admiral	Speed, Keith
Jopling, Michael	Morris, Michael (Northampton S)	Spicer, Michael (S Worcester)
Joseph, Rt Hon Sir Keith	Morrison, Charles (Devizes)	Sproat, Iain
Kershaw, Anthony	Morrison, Hon Peter (Chester)	Stainton, Keith
Kilfedder, James	Mudd, David	Stanbrook, Ivor
Kimball, Marcus	Neave, Airey	Steen, Anthony (Wavertree)
King, Evelyn (South Dorset)	Nelson, Anthony	Stewart, Ian (Hitchin)
King, Tom (Bridgwater)	Neubert, Michael	Stokes, John
Kitson, Sir Timothy	Newton, Tony	Stradling Thomas, J.
Knight, Mrs. Jill	Nott, John	Tapsell, Peter
Knox, David	Onslow, Cranley	Taylor, R. (Croydon NW)
Lamont, Norman	Oppenheim, Mrs Sally	Taylor, Teddy (Cathcart)
Lane, David	Page, Rt Hon R. Graham (Crosby)	Temple-Morris, Peter
Langford-Holt, Sir John	Pardoe, John	Thatcher, Rt Hon Margaret
Latham, Michael (Melton)	Pattie, Geoffrey	Thomas, Rt Hon P. (Hendon S)
Lawrence, Ivan	Penhallgon, David	Thompson, George
Lawson, Nigel	Percival, Ian	Thorpe, Rt Hon Jeremy (N Devon)
Lester Jim (Beeston)	Peyton, Rt Hon John	Townsend, Cyril D.
Lewis, Kenneth (Rutland)	Pink, R. Bonner	Trotter, Neville
Loveridge, John	Powell, Rt Hon J. Enoch	Tugendhat, Christopher
Luce, Richard	Price, David (Eastleigh)	van Straubenzee, W. R.
McAdden, Sir Stephen	Pym, Rt Hon Francis	Vaughan, Dr Gerard
MacCormick, Iain	Raison, Timothy	Viggers, Peter
McCrindle, Robert	Rathbone, Tim	Wainwright, Richard (Colne V)
Macfarlane, Nell	Rawlinson, Rt Hon Sir Peter	Wakeham, John
MacGregor, John	Rees, Peter (Dover & Deal)	Walder, David (Clitheroe)
Macmillan, Rt Hon M. (Farnham)	Reid, George	Walker, Rt Hon P. (Worcester)
McNair-Wilson, M. (Newbury)	Renton, Rt Hon Sir D. (Hunts)	Wall, Patrick
McNair-Wilson, P. (New Forest)	Rhys Williams, Sir Brandon	Walters, Dennis
Madel, David	Ridley, Hon Nicholas	Watt, Hamish
Marshall, Michael (Arundel)	Rifkind Malcolm	Weatherill, Bernard
Marten, Nell	Rippon, Rt Hon Geoffrey	Wells, John
Mates, Michael	Roberts, Michael (Cardiff NW)	Welsh, Andrew
Mather, Carol	Roberts, Wyn (Conway)	Whitelaw, Rt Hon William
Maude, Angus	Ross, William (Londonderry)	Wiggin, Jerry
Mawby, Ray	Rossi, Hugh (Hornsey)	Wilson, Gordon (Dundee E)
Maxwell-Hyslop, Robin	Royle, Sir Anthony	Winterton, Nicholas
Mayhew, Patrick	Sainsbury, Tim	Wood, Rt Hon Richard
Meyer, Sir Anthony	St. John-Stevas, Norman	Young, Sir G. (Ealing, Acton)
Miller, Hal (Bromsgrove)	Scott, Nicholas	Younger, Hon George
Mills, Peter	Shaw, Giles (Pudsey)
Miscampbell, Norman	Shelton, William (Streatham)	TELLERS FOR THE NOES:
Mitchell, David (Basingstoke)	Shepherd, Colin	Mr. Cecil Parkinson and
Moate, Roger	Shersby, Michael	Mr. Fred Silvester.
Molyneaux, James	Sims, Roger

Question accordingly agreed to.

Lords Amendment: No. 12, in page 2, line 40, leave out paragraph (c).

Motion made, and Question put, That this House doth disagree with the Lords in the said amendment.—[Mr. Kaufman.]

The House divided: Ayes 261, Noes 254.

Division No. 352.]	AYES	[7.56 p.m.
Abse, Leo	Buchanan, Richard	Davidson, Arthur
Allaun, Frank	Callaghan, Jim (Middleton & P)	Davies, Bryan (Enfield N)
Anderson, Donald	Campbell, Ian	Davies, Denzil (Llanelli)
Archer, Peter	Canavan, Dennis	Davis, Clinton (Hackney C)
Armstrong, Ernest	Cant, R. B.	Deakins, Eric
Ashley, Jack	Carmichael, Neil	Dean, Joseph (Leeds West)
Atkins, Ronald (Preston N)	Carter, Ray	Delargy, Hugh
Atkinson, Norman	Carter-Jones, Lewis	Dell, Rt Hon Edmund
Barnett, Rt Hon Joel (Heywood)	Cartwright, John	Dempsey, James
Bates, Alf	Castle, Rt Hon Barbara	Doig, Peter
Bean, R. E.	Clemitson, Ivor	Douglas-Mann, Bruce
Bennett, Andrew (Stockport N)	Cocks, Michael (Bristol S)	Duffy, A. E. P.
Bidwell, Sydney	Cohen, Stanley	Dunn, James A.
Bishop, E. S.	Colquhoun, Mrs Maureen	Dunnett, Jack
Blenkinsop, Arthur	Concannon, J. D.	Dunwoody, Mrs Gwyneth
Boardman, H.	Conian, Bernard	Eadie, Alex
Booth, Albert	Cook, Robin F. (Edin C)	Edelman, Maurice
Boothroyd, Miss Betty	Corbett, Robin	Edge, Geoff
Bottomley, Rt Hon Arthur	Cox, Thomas (Tooting)	Edwards, Robert (Wolv SE)
Boyden, James (Bish Auck)	Craigen, J. M. (Maryhill)	English, Michael
Bradley, Tom	Crawshaw, Richard	Ennals, David
Bray, Dr Jeremy	Cronin, John	Evans, Fred (Caerphilly)
Brown, Hugh D. (Provan)	Cryer, Bob	Evans, Ioan (Aberdare)
Brown, Robert C. (Newcastle W)	Cunningham, G. (Islington S)	Ewing, Harry (Stirling)
Fernyhough, Rt Hon E.	Lyons, Edward (Bradford W)	Rose, Paul B.
Filch, Alan (Wigan)	Mabon, Dr J. Dickson	Ross, Rt Hon W. (Kilmarnock)
Fitt, Gerard (Belfast W)	McCartney, Hugh	Rowlands, Ted
Flannery, Martin	McElhone, Frank	Sandelson, Neville
Fletcher, Ted (Darlington)	MacFarquhar, Roderick	Sedgemore, Brian
Foot, Rt Hon Michael	McGuire, Michael (Ince)	Selby, Harry
Ford, Ben	Mackenzie, Gregor	Shaw, Arnold (Ilford South)
Forrester, John	Mackintosh, John P.	Sheldon, Robert (Ashton-u-Lyne)
Fowler, Gerald (The Wrekin)	Maclennan, Robert	Short, Mrs Renée (Wolv NE)
Fraser, John (Lambeth, N'w'd)	McMillan, Tom (Glasgow C)	Silkin, Rt Hon John (Deptford)
Freeson, Reginald	McNamara, Kevin	Silkin, Rt Hon S. C. (Dulwich)
George, Bruce	Madden, Max	Sillars, James
Gilbert, Or John	Magee, Bryan	Silverman, Julius
Ginsburg, David	Mahon, Simon	Skinner, Dennis
Gould, Bryan	Mailalieu, J. P. W.	Small, William
Gourlay, Harry	Marks, Kenneth	Smith, John (N Lanarkshire)
Graham, Ted	Marquand, David	Snape, Peter
Grant, George (Morpeth)	Marshall, Dr Edmund (Goole)	Spearing, Nigel
Grant, John (Islington C)	Marshall, Jim (Leicester S)	Spriggs, Leslie
Grocott, Bruce	Maynard, Miss Joan	Stallard, A. W.
Hamilton, James (Bothwell)	Meacher, Michael	Stoddart, David
Harper, Joseph	Mellish, Rt Hon Robert	Stott, Roger
Harrison, Walter (Wakefield)	Mikardo, Ian	Strang, Gavin
Hart, Rt Hon Judith	Millan, Bruce	Strauss, Rt Hon G. R.
Hatton, Frank	Miller, Dr M. S. (E Kilbride)	Summerskill, Hon Dr Shirley
Hayman, Mrs Helene	Miller, Mrs Millie (Ilford N)	Swain, Thomas
Heffer, Eric S.	Molloy, William	Taylor, Mrs Ann (Bolton W)
Horam, John	Moonman, Eric	Thomas, Jeffrey (Abertillery)
Howell, Denis (B'ham, Sm H)	Morris, Alfred (Wythenshawe)	Thomas, Ron (Bristol NW)
Hoyle, Doug (Nelson)	Morris, Charles R. (Openshaw)	Thorne, Stan (Preston South)
Hughes, Rt Hon C. (Anglesey)	Morris, Rt Hon J. (Aberavon)	Tierney, Sydney
Hughes, Robert (Aberdeen N)	Moyle, Roland	Tomlinson, John
Hughes, Roy (Newport)	Murray, Rt Hon Ronald King	Tomney, Frank
Hunter, Adam	Newens, Stanley	Torney, Tom
Irvine, Rt Hon Sir A. (Edge Hill)	Noble, Mike	Tuck, Raphael
Irving, Rt Hon S. (Dartford)	Oakes, Gordon	Varley, Rt Hon Eric G.
Jackson, Colin (Brighouse)	Ogden, Eric	Wainwright, Edwin (Dearne V)
Jackson, Miss Margaret (Lincoin)	O'Malley, Rt Hon Brian	Walden, Brian (B'ham, L'dyw'd)
Janner, Greville	Orbach, Maurice	Walker, Harold (Doncaster)
Jay, Rt Hon Douglas	Orme, Rt Hon Stanley	Walker, Terry (Kingswood)
Jeger, Mrs Lena	Ovenden, John	Ward, Michael
Jenkins, Hugh (Putney)	Owen, Dr David	Watkins, David
John, Brynmor	Padley, Walter	Watkinson, John
Johnson, James (Hull West)	Park, George	Weetch, Ken
Johnson, Walter (Derby S)	Parker, John	Weitzman, David
Jones, Alec (Rhondda)	Parry, Robert	Wellbeloved, James
Jones, Barry (East Flint)	Pavitt, Laurie	White, Frank R. (Bury)
Jones, Dan (Burnley)	Peart, Rt Hon Fred	White, James (Pollok)
Judd, Frank	Pendry, Tom	Whitehead, Phillip
Kaufman, Gerald	Perry, Ernest	Whitlock, William
Kelley, Richard	Phipps, Dr Colin	Willey, Rt Hon Frederick
Kllroy-Silk, Robert	Prentice, Rt Hon Reg	Williams, Alan (Swansea W)
Kinnock, Neil	Price, C. (Lewisham W)	Williams, Alan Lee (Hornch'ch)
Lambie, David	Price, William (Rugby)	Williams, Rt Hon Shirley (Hertford)
Lamborn, Harry	Radice, Giles	Williams, W. T. (Warrington)
Lamond, James	Rees, Rt Hon Merlyn (Leeds S)	Wilson, Alexander (Hamilton)
Latham, Arthur (Paddington)	Richardson, Miss Jo	Wise, Mrs Audrey
Lee, John	Roberts, Albert (Normanton)	Woof, Robert
Lestor, Miss Joan (Eton & Slough)	Roberts, Gwilym (Cannock)	Wrigglesworth, Ian
Lewis, Ron (Carlisle)	Robertson, John (Paisley)	Young, David (Bolton E)
Lipton, Marcus	Roderick, Caerwyn
Litterick, Tom	Rodgers, George (Chorley)	TELLERS FOR THE AYES:
Loyden, Eddie	Rodgers, William (Stockton)	Mr. Donald Coleman and
Luard, Evan	Rooker, J. W.	Mr. J. D. Dormand.
Lyon, Alexander (York)
NOES
Adley, Robert	Boyson, Dr Rhodes (Brent)	Churchill, W. S.
Alison, Michael	Bradford, Rev Robert	Clark, Alan (Plymouth, Sutton)
Arnold, Tom	Braine, Sir Bernard	Clark, William (Croydon S)
Atkins, Rt Hon H. (Spelthorne)	Brittan, Leon	Clarke, Kenneth (Rushcliffe)
Awdry, Daniel	Brocklebank-Fowler, C.	Cockcroft, John
Bain, Mrs Margaret	Brotherton, Michael	Cooke, Robert (Bristol W)
Baker, Kenneth	Brown, Sir Edward (Bath)	Cope, John
Banks, Robert	Bryan, Sir Paul	Cordle, John H.
Beith, A. J.	Buchanan-Smith, Alick	Cormack, Patrick
Bell, Ronald	Buck, Antony	Crawford, Douglas
Biffen, John	Budgen, Nick	Critchley, Julian
Biggs-Davison, John	Bulmer, Esmond	Crouch, David
Blaker, Peter	Burden, F. A.	Crowder, F. P.
Body, Richard	Butler, Adam (Bosworth)	Davies, Rt Hon J. (Knutsford)
Boscawen, Hon Robert	Carlisle, Mark	Dean, Paul (N Somerset)
Bottomley, Peter	Carr, Rt Hon Robert	Dodsworth, Geoffrey
Bowden, A. (Brighton, Kemptown)	Chalker, Mrs Lynda	Douglas-Hamilton, Lord James
Drayson, Burnaby	King, Tom (Bridgwater)	Reid, George
du Cann, Rt Hon Edward	Kitson, Sir Timothy	Renton, Rt Hon Sir D. (Hunts)
Dunlop, John	Knight, Mrs Jill	Rhys Williams, Sir Brandon
Durant, Tony	Knox, David	Ridley, Hon Nicholas
Eden, Rt Hon Sir John	Lamont, Norman	Rifkind, Malcolm
Edwards, Nicholas (Pembroke)	Lane, David	Rippon, Rt Hon Geoffrey
Elliott, Sir William	Langford-Holt, Sir John	Roberts, Wyn (Conway)
Emery, Peter	Latham, Michael (Melton)	Ross, William (Londonderry)
Evans, Gwynfor (Carmarthen)	Lawrence, Ivan	Rossi, Hugh (Hornsey)
Eyre, Reginald	Lawson, Nigel	Royle, Sir Anthony
Fairbairn, Nicholas	Lester, Jim (Beeston)	Sainsbury, Tim
Fairgrieve, Russell	Lewis, Kenneth (Rutland)	St. John-Stevas, Norman
Fell, Anthony	Loveridge, John	Scott, Nicholas
Finsberg, Geoffrey	Luce, Richard	Shaw, Giles (Pudsey)
Fisher, Sir Nigel	McAdden, Sir Stephen	Shelton, William (Streatham)
Fletcher-Cooke, Charles	MacCormick, Iain	Shepherd, Colin
Fookes, Miss Janet	McCrindle, Robert	Shersby, Michael
Fowler, Norman (Sutton C'f'd)	Macfarlane, Neil	Silvester, Fred
Fox, Marcus	MacGregor, John	Sims, Roger
Fraser, Rt Hon H. (Stafford & St)	Macmillan, Rt Hon M. (Farnham)	Sinclair, Sir George
Fry, Peter	McNair-Wilson, M. (Newbury)	Skeet, T. H. H.
Galbraith, Hon. T. G. D.	McNair-Wilson, P. (New Forest)	Smith, Cyril (Rochdale)
Gardiner, George (Reigate)	Madel, David	Smith, Dudley (Warwick)
Gardner, Edward (S Fylde)	Marshall, Michael (Arundel)	Speed, Keith
Gilmour, Rt Hon Ian (Chesham)	Marten, Nell	Spicer, Michael (S Worcester)
Gilmour, Sir John (East Fife)	Mates, Michael	Sproat, Iain
Glyn, Dr Alan	Mather, Carol	Stainton, Keith
Godber, Rt Hon Joseph	Maude, Angus	Stanbrook, Ivor
Goodhart, Philip	Mawby, Ray	Steen, Anthony (Wavertree)
Goodhew, Victor	Maxwell-Hyslop, Robin	Stewart, Ian (Hitchin)
Goodlad, Alastair	Mayhew, Patrick	Stokes, John
Gorst, John	Meyer, Sir Anthony	Stradling Thomas, J.
Gow, Ian (Eastbourne)	Miller, Hal (Bromsgrove)	Tapsell, Peter
Gower, Sir Raymond (Barry)	Mills, Peter	Taylor, R. (Croydon NW)
Grant, Anthony (Harrow C)	Miscampbell, Norman	Taylor, Teddy (Cathcart)
Gray, Hamish	Mitchell, David (Basingstoke)	Temple-Morris, Peter
Grieve, Percy	Moate, Roger	Thatcher, Rt Hon Margaret
Grimond, Rt Hon J.	Molyneaux, James	Thomas, Dafydd (Merioneth)
Grist, Ian	Montgomery, Fergus	Thomas, Rt. Hon P. (Hendon S)
Hall, Sir John	Moore, John (Croydon C)	Thompson, George
Hamilton, Michael (Salisbury)	More, Jasper (Ludlow)	Thorpe, Rt Hon Jeremy (N Devon)
Hampson, Dr Keith	Morgan, Geraint	Townsend, Cyril D.
Hannam, John	Morgan-Giles, Rear-Admiral	Trotter, Neville
Harvie Anderson, Rt Hon Miss	Morris, Michael (Northampton S)	Tugendhat, Christopher
Hastings, Stephen	Morrison, Charles (Devizes)	van Straubenzee, W. R.
Havers, Sir Michael	Morrison, Hon Peter (Chester)	Vaughan, Dr Gerard
Hawkins, Paul	Mudd, David	Viggers, Peter
Hayhoe, Barney	Neave, Airey	Wainwright, Richard (Colne V)
Henderson, Douglas	Nelson, Anthony	Wakeham, John
Heseltine, Michael	Neubert, Michael	Walder, David (Clitheroe)
Hicks, Robert	Newton, Tony	Walker, Rt Hon P. (Worcester)
Hordern, Peter	Nott, John	Wall, Patrick
Howe, Rt Hon Sir Geoffrey	Onslow, Cranley	Walters, Dennis
Howell, David (Guildford)	Oppenheim, Mrs Sally	Watt, Hamish
Howells, Geraint (Cardigan)	Page, Rt Hon R. Graham (Crosby)	Weatherill, Bernard
Hunt, John	Pardoe, John	Wells, John
Hurd, Douglas	Parkinson, Cecil	Welsh, Andrew
Hutchison, Michael Clark	Pattie, Geoffrey	Whitelaw, Rt Hon William
Irvine, Bryant Godman (Rye)	Penhaligon, David	Wiggin, Jerry
Irving, Charles (Cheltenham)	Percival, Ian	Wigley, Dafydd
James, David	Peyton, Rt Hon John	Wilson Gordon (Dundee E)
Jessel, Toby	Pink, R. Bonner	Winterton, Nicholas
Johnson Smith, G. (E Grinstead)	Powell, Rt Hon J. Enoch	Wood, Rt Hon Richard
Jones, Arthur (Daventry)	Price, David (Eastleigh)	Young, Sir G. (Ealing, Acton)
Jopling, Michael	Pym, Rt Hon Francis	Younger, Hon George
Joseph, Rt Hon Sir Keith	Raison, Timothy
Kershaw, Anthony	Rathbone, Tim	TELLERS FOR THE NOES:
Kilfedder, James	Rawlinson, Rt Hon Sir Peter	Mr. Anthony Berry and
Kimball, Marcus	Rees, Peter (Dover & Deal)	Mr. Michael Roberts
King, Evelyn (South Dorset)

Question accordingly agreed to.

Lords Amendment: No. 13, in page 2, line 32, leave out "industrial democracy in" and insert good industrial relations and the involvement of employees in the affairs of".

Mr. Kaufman

I beg to move, That this House doth disagree with the Lords in the said amendment.

The words "industrial democracy", which the amendment seeks to replace by a rather more nebulous concept, have been used deliberately in the Bill. The Government are committed to a far-reaching extension of industrial democracy in the public and private sectors of the economy. There are those, including myself, who believe that without a rapid extension of industrial democracy there can be no future for productive industry. Industrial expansion depends on the work force participating in decisions. It is right that we should include the concept of industrial democracy as one of the objectives here. We are setting up a committee of inquiry to advise on the detailed implementation of the Government's objective, but the principle is a clear commitment and we intend to introduce legislation in the 1976–77 Session.

Because the NEB will be expected to be amongst the first to implement the Government's proposals, the promotion of industrial democracy has been made a specific function of the Board. There still remains the question of the best form of organisation of industrial democracy, which will be one of the matters for investigation by the committee of inquiry, but this does not mean that the objective to which the Board should subscribe is not clear.

The term "the involvement of employees" is a weak one. I am baffled that the other place should have decided to interfere with this provision. It is even more incomprehensible than are its attempts to remove the other central objectives, upon which we have just defeated them.

Mr. Tom King

Do I understand from what the Minister has said that the Government are to decide what industrial democracy is in due course and then introduce some legislation in 1976–77, but that they now propose that we should agree to this term although no one will know what it will mean in 1976–77? Is that the Government's point?

Mr. Kaufman

We are not proposing it tonight. We proposed it a long time ago, and the House of Commons agreed that it should be part of the Bill. Then along came the House of Lords, which has very little electoral democracy, let alone industrial democracy, and decided that the concept of industrial democracy should be removed from the Bill.

Mr. Ron Thomas (Bristol, North-West)

rose—

Mr. Kaufman

I shall give way to my hon. Friend in a moment. I am sure that he will provide me with enlightenment. On the other hand it is necessary for me to purvey a little to the Opposition benches before receiving an infusion from him. It is necessary for us to work towards the concept of industrial democracy in British industry. We can do so only by experimentation with different forms of such democracy. To lay down a rigid formula in the Bill is completely alien to an evolving concept. That does not mean that we should not provide for its inclusion, as one of the objectives in the Bill. We shall work towards it, and the National Enterprise Board will help in working out the form of industiral democracy. That will not always be the same.

The form which is already being well worked out for British Leyland, and which Mr. Harry Urwin has described as the most advanced form of industrial democracy in British industry today, is not necessarily the ultimate form or the form most suited to other industries. The NEB, which will have a stake in all kinds of enterpirses, will be well suited to assist us in working towards a different concept of industrial democracy, even though the principle is one to which we are committed.

Mr. Ron Thomas

Does my hon. Friend agree that the wording of the Bill is "promoting", and that that fits in exactly with what he has been saying?

Mr. Kaufman

I told the House that my hon. Friend would infuse knowledge to me and he has done so, as he so often does. I am obliged to him.

Mr. Stan Thorne (Preston, South)

Can he have it in writing?

Mr. Kaufman

Not only in writing-it will be in print by tomorrow morning, when my hon. Friend will be able to publish it throughout Bristol. As he knows, my endorsement will do him a great deal of good.

I have spoken of the evolution of industrial democracy. "The involvement of employees" is far too weak a term. Industrial democracy is not just involvement. It is involvement in decision-making in a way that parallels political democracy and in a way which I hope will be paralleled in housing by tenant democracy. That is something towards which I hope we shall work. It means fundamental changes in attitude and in the balance of power and responsibility in industry. There must be provision for the proper democratic respresentation of everyone who contributes to the performance and success of a company. In short, the difference between industrial democracy and employee involvement is the difference between sharing decisions and consulting about them. It is not simply involvement when and if it suits the company on terms dictated by the company in relatively unimportant areas of its activities.

8.15 p.m.

Mr. Adam Butler (Bosworth)

We have had a lengthy debate, as was agreed on both sides, on the heart and kernel of the Bill. The subject of industrial democracy is also a vital one, but I suggest that this is not the occasion for us to indulge in a long debate. There will be other opportunities, and there are other matters which I know hon. Members wish to discuss before the guillotine falls. This matter was discussed at some length in Committee. During discussion of the Bills dealing with the Welsh and Scottish Development Agencies it was also debated whether we should use the term "industrial democracy", or something on the lines of the Lords amendment.

The Minister said—I agree with him completely—that an improvement in industrial relations and the involvement to a great extent of employees in a company's affairs is probably a vital ingredient in our economic recovery. I believe that it will prove to be one of the essential parts of our future social and industrial scene. At first sight, it seems that in seeking to disagree with their Lordships the Government are rejecting the concept of improving industrial relations. That is obviously not so, but they do seek to remove this from the Bill in its present form.

I suggest that what the Government are trying to do is to introduce a selective form of democracy. Neither the Minister nor his predecessor has defined what is meant by industrial democracy. It is questionable whether what the Government are after is democracy in the sense of involving everyone in the democratic process. We have no quarrel with the principle of extending democracy into industrial relations.

Words like "participation" and "involvement" are associated with democracy. Certainly they are the antithesis of dictatorship. They are words which we have used frequently over the years, in speeches, policy statements and legislation. I draw attention to the performance of the Conservative Government in this respect. In the Industrial Relations Act we provided for the disclosure of information, as this Bill seeks to do. In the code of practice, with its legislative backing, we recommended a wide practice of involvement and participation. We also proposed the establishment of joint consultative committees.

Mr. Ron Thomas

As I recollect it, the Industrial Relations Act spoke of the disclosure of information. There was then a report by the CIR on the disclosure of information, and the matter was conveniently dropped.

Mr. Butler

I think the hon. Member will find that the presentation of the report took a considerable time. It came out under the name of Sir Leonard Neal, who was Chairman of the CIR. It was an extremely valuable document, not only in drawing attention to what happens in other countries but in pointing to the way in which we might go.

I draw to the attention of the House the fact that in the Conservative Health and Safety at Work, Etc. Bill—not the one that finally got through this House, having been amended in this important respect at the instigation of the Government—we imposed on employers the minimum duty to consult employees on safety matters. Therefore, I suggest that despite the clamour, and despite the myth to the contrary, in practice the Conservative Party has been more progressive than any party, and I believe that it is more progressive in its current thinking.

We are also essentially practical in our approach to the subject, in our attitude to the way in which we should proceed further down the road of involving all employees to a greater extent. I agree with the Under-Secretary, although what he said does not necessarily accord with what some of his advisers and others might suggest, that it is not possible to produce a blueprint which will fit every works situation. We all know that the variety to be found in industry is infinite, and a single system is not possible. I wish that the hon. Member for Liverpool, Walton (Mr. Heffer) were present. My colleagues and I on the Committee listened to him with varying degrees of interest and pleasure at different times, when he spoke in his capacity as Minister of State and then from the back benches. I recall his saying on one occasion that variety did not allow one to lay down a system. He said that there might be a situation which favoured a supervisory board, or there might be one which favoured a stockholding project. He realised that situations varied, and said that systems of industrial democracy, of involvement, should evolve from the factory floor.

As far as we can make out, the hon. Gentleman's party, on the executive of which he now serves, is seeking to impose systems of democracy which will favour an elite of trade union members, rather than giving rights to all. The Undersecretary made the interesting remark that he wished to involve all those who contributed to the success or welfare of the business. Yet, in all the legislation which has so far emanated from his party on the subject, and in all the White Papers and consultative documents, the rights of involvement have been granted only to trade unionists. Will the Minister clarify his party's attitude? Is it that all employees should be involved, or only trade union members?

Mr. Kaufman

All employees should be involved, and all employees should be trade unionists.

Mr. Butler

That is the sort of trite answer one would expect from the hon. Gentleman, but we shall leave it at that. I thought for a moment that he was going to suggest that only trade unionists were useful people.

Mr. Tom King

It is clear that the Under-Secretary has not read the report, in the House of Lords Hansard, of the speech by Lord Houghton, who recognised that one should not be critical of those who were not trade unionists. The noble Lord, with his great knowledge and experience of trade union activity, moved his own amendments exactly to the points that my hon. Friend is making.

Mr. Butler

I am grateful to my hon. Friend. Nothing in our thinking excludes trade unionists. We recognise that a trade union organisation lends itself particularly to the dissemination of information and the process of consultation among workers. Rather than excluding trade unionists, our philosophy includes them and those who are not so organised, which in this country means six out of 10 working people. We shall treat all employees as equals, and not give rights to one section and not to another.

We fear that the sort of industrial democracy written into the Bill is partial. Indeed, we are concerned that the Government have already begged the question of worker-directors in the terms of reference for the new committee which is to be set up. The terms of reference contain the phrase "recognising the need for worker-directors on the boards of companies", or words to that effect. It is interesting to contrast that with what the Trades Union Congress said in 1974, when it had a composite motion before it, promoted particularly by the Amalgamated Union of Engineering Workers, to the effect that it rejected the concept of supervisory boards mandatorily imposed.

Further, we have noted that the shop stewards of British Leyland, under a scheme which we all wish to see succeed if the future of the company is to be as prosperous as it must be, have demanded that their representatives on the plant committees shall be nominated and not elected. That is an interesting denial of industrial democracy.

I know that the hon. Member for Walton will not mind being used again as a witness in his absence. We heard him say, in our earlier proceedings, that Socialism was public ownership plus worker control.

For all these reasons, we are suspicious of a term which we should all embrace but which has begun to take a shape that we do not like. If the NEB must come into being, we welcome the fact that it will concern itself with the promotion of good industrial relations and the greater involvement of those who work in its undertakings. That is a function only of good management. But we do not like what we see of the Socialist model for industrial democracy. We think that their Lordships' emphasis on the rôle that all employees should play is right. Therefore, I ask my hon. Friends to agree with their Lordships on the amendment, and vote accordingly.

8.30 p.m.

Mr. Thorne

I was motivated to take part in this debate after having considered the 199 Lords amendments and the tardy character of some of them. I was particularly struck, however, by Lords Amendment No. 13 as being a meaningless set of words. It talks of good industrial relations. Some time before I came to this place I was invited by the Dunlop Rubber Company to talk to its managers about good industrial relations. They were interested in the human relations approach. I spoke for a couple of hours and answered various questions, and one gentleman put the whole thing in a nutshell when he said "What you are advocating is a threat to management's right to manage". That is the issue in which we are now involved.

We should explain what is involved in this issue, and that is why we are talking about industrial democracy while the House of Lords and some Conservative Members talk merely about good industrial relations without in any shape or form attempting to define what that means.

There has been a plethora of books in recent years about good industrial relations from people at all points in the political spectrum from Macarthy to Fox, to Flanders to Argyris and Herzberg and others, all addressing themselves to the problem of good industrial relations and coming to one inevitable conclusion, which is that there is some correlation between good industrial relations and workers participating in decision-making within their organisations. I am concerned particularly with that aspect.

Herzberg talks about a healthy work situation and has certain ideas about how to create it. Why are people increasingly addressing themselves to the question of an unhealthy work situation, to bad industrial relations? It is precisely because we have learned very little since the time of the Hawthorne experiments in terms of what motivates workers in the work situation to accept the goals of the organisation they are involved in. This has got to be linked with the whole question of alienation within industrial society. Workers who experience a sense of powerlessness, meaningless isolation and self- estrangement within the work situation are alienated. In many industries the assembly line worker responds to the speed of the machine. Charlie Chaplin made a good film about that. The alienated worker is the person we are concerned with when we talk of establishing good industrial relations.

There still are managements who believe that providing the worker with a morning cup of tea, establishing a social club, and a welfare system within the personnel department, putting curtains in the factory windows and so on, will create an atmosphere of loyalty within the firm and to the firm's goals. Nothing could be further from the truth. That is why the hon. Member for Bosworth (Mr. Butler) was completely wrong when he spoke about the Government imposing industrial democracy. I criticise the Labour movement for failing over 30 or 40 years to introduce real industrial democracy at shop-floor level. Governments of both major political parties have prevented the sort of developments which should have taken place over many years. I am happy that we now have a Government who are beginning to commence to start introducing industrial democracy, and I am sure that when we have it it will be given some meaning by the workers involved.

I realise that the academics will not go the whole hog in spelling out what industrial democracy means when they talk about human relations or, to use their Lordships' term, good relations. What is the logic of the argument they have put in their literature? We are going to have to establish completely new structures in industrial undertakings. If a locality wants to do something about planning its environment—and there is evidence that this is happening—it will not want to exclude from its thinking the industrial undertaking in which its people work. That undertaking is part of the community. Unhappily, because of the nature of their working conditions, all too often people only begin to live after they have slammed the door of the factory and approach nearer and nearer to their homes. The community concept of establishing a participatory democracy, including the industrial undertaking, requires an undertaking which should be publicly-owned within that community.

In that situation the workers at all levels—blue collar, white collar, middle management and so on—will be participating in decisions. It will not merely be about the colour of the curtains or whether the midday break should be at one o'clock or 1.30, but about what products should be made within the undertaking and what marketing policies should be pursued. The workers will be considering in what way people's needs can be met in local community terms and in national community terms.

There are those who say that workers are not qualified to be involved in this sort of thing. I remind hon. Members that on the Clyde there was a situation not very long ago in which the workers took over and for a considerable period, before Marathon came in, ran an enterprise. There was co-operation between white collar, blue collar, technical and shop floor workers, and together they ran an enterprise for a considerable period.

I believe that together with the white collar workers in ASTMS and in various other organisations, we can create the means adequately to run the industry that we hope will soon be in public hands.

Mr. Tom King

The hon. Member has referred to Marathon. Does he believe that those who work in Marathon should enjoy the benefits of State ownership or not? Does he know that his Government gave a pledge to an American company through a trade union leader that the company would not be nationalised?

Mr. Thorne

I do not feel committed to what any previous Government did in giving an undertaking to a capitalist-owned enterprise. I am committed to what is laid down in the Labour Party membership card which I have in my pocket. That card refers to the public ownership of the means of production, distribution and exchange, and as far as I am concerned I am in business for that.

Mr. King

The undertaking was given by Mr. Danny McGarvey on the assurance of the right hon. Member for Bristol, South-East (Mr. Benn). Does the hon. Member support that?

Mr. Thorne

Here again I am, unhappily, not my brother's keeper. What Danny McGarvey says is a matter for Danny McGarvey, just as what the hon. Member for Bridgwater (Mr. King) says is a matter for the hon. Member.

The whole development of British industry, following our previous debate, depends on the Government's willingness to maximise the extent of Government control in industry, coupled with consultation with the whole of organised labour in determining the sort of planning agreements that will present us with the goods that people need.

If we are to achieve that sort of situation, it seems to me to be logical and inevitable that within all industrial undertakings we shall have to ensure that workers from shop floor level right up to the hierarchy—an unfortunate word in some respects—of the organisation participate in the decisions made by those undertakings.

Mr. Richard Wainwright (Colne Valley)

I am happy to follow the hon. Member for Preston, South (Mr. Thorne), to whom the House listened with great attention, because he was right to point out forcibly to his own Government that industrial democracy would be something new to British industry and would require new structures. If the Government want positive support for retaining the clause, they will have to give us a much clearer definition of the principles which they consider are covered by the term "industrial democracy".

The word "democracy" is used sometimes as a convenient cover for proceedings which people in this country would regard as highly undemocratic. We know of "people's democracies" and allegedly "democratic" republics which are no more than tyrannies. We have had some helpful messages from Labour Members below the Gangway, but we have heard nothing from the Government, tonight or in Committee, about what the phrase means.

Mr. Lee

The hon. Member may be right to chide the Government for the imprecision of the term, but would he not agree that it is certainly nearer precision than the banal observation which refers to the involvement of employees in the affairs of companies?

Mr. Wainwright

I do not need the hon. Member to keep me miles away from that vapid wording, which I have no intention of supporting, but if the Government want positive support for the clause they must explain themselves.

Since we are dealing with a proposed State corporation, the Government must tell us whether they recognise that the worst enemy of democracy, particularly in industry, is bureaucracy, that the best way to kill off this infant concept of industrial democracy would be to enshrine it in a labyrinth of meetings so tedious that only those who dare not face their wives would stay and where the chances of action or decision before 11 o'clock at night were so remote that only those with no other home would stay until resolutions were taken. We need some assurance that this concept will not be smothered in bureaucracy from the very start.

Even more important, however, and at the risk of stating the obvious, I ask for assurances on three points. First, it is a commonplace that one of the essential elements of democracy, without which the term is a mockery, is one person, one vote. No one is entitled to know whether that person has duly joined some qualifying organisation. When on polling day, with somewhat trembling emotions perhaps in cases like mine, we watch the voters going to the polls, we may know, as people who pride ourselves on being politicians, that some are voting from the most eccentric motives. But it is not our job, nor is it proper, to ask whether they are qualified to vote as long as their names are on the democratic register. Will the Government come clean and tell us whether by "industrial democracy" they mean literally one employee, one vote?

Second, although democracy naturally implies majority rule, it also in this country implies due care and consideration for the views of minorities. In view of some recent experiences of mob rule the country needs to be reassured about the meaning of the term.

Third—this is of particular importance in industry organised in separate plants, very often owned by separate companies—it is accepted in this country at any rate that democracy must pay some attention to the constituency or the area which the decisions will affect. That is why we have a strong tradition of local as well as national democracy. People would not regard it as democratic if a decision peculiar to one town or village were suddenly settled by wheeling in the votes of a vast population several hundred miles away to overwhelm the people who were locally concerned. That is important when considering industrial democracy because it must include a proper measure of local democracy in issues which concern a particular plant in a particular way.

Here again we are entitled to know whether the Government accept that on the traditional British pattern or whether they have in mind giving allegedly democratic power to officials of national organisations to come in and wield a sledgehammer on local issues. The term does not explain itself. We are entitled to more precise definitions from the Government before we vote.

8.45 p.m.

Mr. Ron Thomas

Of the whole host of Lords amendments, the one we are presently discussing is very important. If we look beyond the amendment we find that the Lords want to delete every reference to relevant trade unions. If we take all the amendments together we see that it is clear that the Lords' intention was to destroy the Bill completely. Indeed, if the Bill were rewritten along the lines of these amendments there would be no trace left of the original measure.

The hon. Member for Bosworth (Mr. Butler) referred to the involvement of people in democracy, and seemed to be linking that concept to the other House. What the Members of the other House know about democracy, I do not know. We have been told on many occasions that they elect themselves and that they have the full support of their constituents. That just about sums up the situation.

In Lords Amendment No. 13 the Members of the other House are attempting to take out something of importance and to insert in its place good industrial relations and the involvement of employes in the affairs of the particular companies. My hon. Friend the Member for Preston, South (Mr. Thorne) made the point that good industrial relations means absolutely nothing. It is the kind of euphemism that we had during the introduction to the Industrial Relations Act. I am sure that every personnel manager, if asked "Have you got good industrial relations in your firm?", would say "Of course we have", even if on the previous day he had issued 100 redundancy notices without involving the work force. What do the words "good industrial relations" mean?

Turning to the involvement of employees in the affairs of a company, I make the point that of course they are involved, because they produce what goes out of the gates. When they are not involved and there is a strike, we soon know about it. They are involved because they are the producers. Therefore, the insertion of those words is also nonsense, but they are typical of the kind of managerial philosophy that we still have in Britain.

The hon. Member for Bosworth spoke a good deal about "consult" and "consultation". There is nothing that is more of a joke in British industry than joint consultative committees. Those committees spend hours talking about the state of the canteen tea, the toilets and the parking facilities. And management is happy if those committees talk all day about those matters. If the shop stewards ask any pertinent questions, they are told "These matters are a managerial prerogative and nothing to do with you. That concerns an area where the management takes the decisions." No one doubts that we need radical changes.

When we talk about industrial democracy, we are talking not about consultation or industrial relations in the accepted sense but about power and authority in industry. We are talking about who makes the decisions about capital invest-thousands will be made redundant, who makes the decisions about capital investment on research and development, who makes the decisions about the introduction of new machinery, new techniques and so on.

A good deal was said in the previous debate about the comparison between private and publicly-owned industry. We have witnessed a number of attempts by workers feeling their way towards industrial democracy and worker control. We know that these experiments have as yet happened only in firms which were already bankrupt when they were taken over. Therefore, this part of the Bill, which is concerned with the promotion of industrial democracy, is closely linked with the previous debate.

If we are to continue to take into public ownership only those industries which go bankrupt and are necessary to prop up the rest of the private capitalist system, there will be considerable difficulties in promoting industrial democracy. In many cases, the representatives will be promoting only the redundancy of their fellow workers. This has been done in mining, the railways and the docks. This image of the trades unions in the public sector being able by all kinds of Machiavellian techniques, to prevent workers being sacked, is a nonsense. The labour forces in the publicly-owned industries have been cut dramatically. My hon. Friend the Member for Bolsover (Mr. Skinner) referred to mining, but the same applies to the railways and the docks.

Unfortunately, in both the public and private sectors we have had a rapid increase in all kinds of "administrative policemen" to make sure that smaller numbers of people actually do the producing.

I believe that only in the public sector can we experiment with industrial democracy. All kinds of ideas have been thrown up in terms of supervisory boards. I do not go along with the idea of supervisory boards. At the same time, I am sure that everyone on the Government side of the House will agree that industrial democracy cannot be imposed on any situation. It has to come from the ideas and experience of those who work in a particular firm or industry who are fed up with the consultative and the conciliation machinery, the avoidance of disputes procedures, and so on, and who want to get involved in decision-making, which is where the power is. That is linked to the need for information— the demand for opening the books and seeing what is going on. These two matters are linked. I hope that the promotion of industrial democracy will lead to a situation in which we try out genuine workers' control—not 50–50 control on supervisory boards, and so on, but experiments in which the workers make the important decisions which affect their lives.

Finally, I should like to add my support to those of my hon. Friends who have already spoken about the Bill and the way that it has been treated in the other House. I believe that it was the present Prime Minister who once said, "When the House of Lords agrees with us, it is superfluous. When it disagrees with us, it is obnoxious". How obnoxious must it become before we get rid of it? I should like nothing better than for the Queen to stand up on 19th November and to say to those Lords, "From tomorrow you are all redundant"—

Mr. Deputy Speaker (Mr. Oscar Murton)

Order. The hon. Gentleman must not bring the Sovereign's name into the debate.

Mr. Anthony Fell (Yarmouth)

The more I have listened to speeches by hon. Gentlemen opposite the more convinced I have become that this certainly ought to have been a short debate—if there should have been a debate at all on this matter, which I doubt, because I do not believe that the Government should have tried to put the Bill back as they wanted it.

Mr. Kaufman

Surely the hon. Gentleman understands that there need not have been a debate at all if the Lords had not sought to interfere with the clause.

Mr. Fell

The hon. Gentleman is always quick to get to his feet. Perhaps he will hold his fire long enough for me to tell him what I am worried about. We had a highly intelligent speech from the hon. Member for Bristol, North-West (Mr. Thomas), in which he raised certain queries in the minds of those of us who have had something to do with industry in the past. The hon. Member for Preston, South (Mr. Thorne) also raised some points that made me wonder. I realise that neither of them has any Leftist pretentions, and therefore I would not suggest to them that the word "democracy" can ever be linked with tyrannies. It is a sad fact that the word is in the greatest danger of becoming a dirty word because it has been so degraded by people who act as tyrants in its name.

However, what worried me most about the speech of the hon. Member for Preston, South was that he foresaw some kind of legislation dealing with industrial democracy in the new programme for next year. Let us hope it is not one of 84 Bills in the next Session.

The hon. Member for Bristol, Northwest talked about worker control, but is that what people are after? Is the Left wing of the Labour Party after worker control.

Mr. Ron Thomas

I am.

Mr. Fell

It is good to hear someone come out and say it.

Mr. Cryer

Does the hon. Member know that Clause 4 of the Labour Party's constitution includes the words: control by the most popular means of administration"? This has been an integral part of our constitution since 1918, and the hon. Member's feeble attempts to make divisions in the Labour Party are a total waste of time.

Mr. Fell

I could not care less about what is an integral part of Labour Party constitution and what is not. The country is being run by a Government, who cannot base everything they do on something which has been an integral part of the Labour Party constitution for the past 50 years.

Mr. Cryer

They should.

Mr. Fell

If it is worker control that hon. Members opposite want, why not insert the words "worker control" instead off "industrial democracy"? If they insist on using the words "industrial democracy", may I add my plea to that of the hon. Member for Bristol, Northwest, who wants to know more about what is in the Goverment's mind?

The Under-Secretary is always courteous. I do not wish my plea to go unheard. Will the hon. Gentleman say what are his plans? Industry is in a mess already without the Government making the situation worse. It is pathetic. Are the Government choosing that part of industry for which they hold no brief? Do they wish to see one section of industry destroyed so as to impose the trial of industrial democracy? If some of the points mentioned by the hon. Member for Preston, South are incorporated in the Bill, the result will be some extraordinary clauses. There will be new structures.

Will the Minister say how a committee will make decisions on research and development? How can an industry be run by committees? That is nonsense, as is recognised by everybody except Left-wing Members who wish to destroy private industry and establish State enterprises. That is not a new concept. The Under-Secretary smiles broadly, although what I say is true.

Mr. Robert Hughes

What is a board of directors if it is not a committee?

Mr. Fell

I may be ignorant about boards of directors. However, it is usually possible, when a small number of people are involved, to come to a decision, especially when one of them is recognised by the others as being the chairman, who will make the final decision if necessary [Interruption.] This is not a matter for laughter. However, I must be careful at this point or I shall leave the subject of the amendment. I do not wish to do that.

Mr. Deputy Speaker (Sir Myer Galpern)

If the hon. Member keeps to the subject under discussion, I shall give him all the protection that the Chair can offer.

Mr. Fell

I am most grateful for your promise of protection, Mr. Deputy Speaker. I hope that I shall not need to call upon your protection as I shall try not to be controversial.

I presume that the Under-Secretary will reply at a later stage. If so, will he explain at least the bare bones of the policy of worker control which the Government have promised to introduce in 1976–77? This evening the Undersecretary promised that such legislation would be introduced in 1976–77. We would like to know the details. It is monstrous that the Minister should announce this as a firm plan without being able to tell us the details. If there is to be a plan for worker control of all nationalised industries, we should be told about it. Should the hon. Gentleman make such an announcement, there would be even less investment. That is why I hope he will refrain from telling us such a dreadful truth. We can do without his throwing a spanner in the works in raising the money which the Government are trying to beg or borrow to live on during the next few profligate months.

Although I shall understand if the Minister does not want to be too frank about worker control, I hope he will tell us what he has in mind when he says that we shall have legislation on industrial democracy in 1976–77. If the Minister wants to ask his Department what it all means, I shall be delighted to continue to speak on the amendment.

The hon. Member for Bristol, Northwest said that he could not understand what their Lordships meant by good industrial relations and the involvement of employers in the affairs of particular companies. It is difficult to believe that as intelligent a Member of Parliament as the hon. Member for Bristol, North-West should not be able to understand those perfectly clear words. Left-wing Members want to put in place of those words "industrial democracy", and that is monstrous. Why not tell the truth and say what they really mean, which is "worker control"? Let us have the truth and not go on beating about the bush. Let the proper words be put in.

Mr. Ron Thomas

If the hon. Gentleman will think back, he will remember that what I said was that the words in the Bill are: promoting industrial democracy in undertakings which the Board control". In that promotion the Minister said that there would be experiments in many ways. We all agree that there are many ways in which experiments can be made to extend industrial democracy, perhaps through the tier-board system. I merely asked whether one experiment would be on worker control.

Mr. Fell

That is nonsense. The nationalised industries are hard pressed and are having the greatest trouble in not making bigger losses every year. Yet the hon. Gentleman says that there should be all manner of experiments, not in private industry but in publicly-owned undertakings only. Have not the nationalised industries enough trouble trying to pay their way without having to cope with that proposal? I hope that the Minister will give us an explanation.

Mr. Lee

The hon. Member for Yarmouth (Mr. Fell) is not in the least inhibited and will not resent being described as far to the right of the Conservative Party. He questioned the point in the spectrum occupied by two of my hon. Friends. We know where the hon. Member stands, and he has a robust candour in his approach, but I do not propose to follow his speech.

At Business Question Time tomorrow, if I am lucky enough to catch Mr. Speaker's eye, I intend to ask by how many extra hours the work of the House has been increased by the activities of the other place in the course of this Session. My hon. Friends have already referred to the constitutional impropriety with which matters of great importance and amendments of great substance have been railroaded into the Bill, as we experienced last week with the Trade Union and Labour Relations (Amendment) Bill. It can be said that we cannot complain about this series of amendments being in the same category, because if those amendments were an offence to the conventions of the constitution these are merely a piece of time-wasting absurdity that has been introduced merely to waste the time of the House.

There may well be—I have tabled an Early-Day Motion on this subject which does not go quite as far as my hon. Friend the Member for Bristol, North-West (Mr. Thomas) has asserted—a case for another Chamber having a last look at legislation and spending some time on textual correction. I cannot believe that amendments of this kind are a good example of that activity. However, what is most offensive is that at a time when we are considering ways of bringing democracy. In one form or another, to British industry, our attempts, albeit inadequate and not wholly defined, are being obstructed by another place which on no construction whatever could be regarded as being democratic.

I am still waiting for an answer to the question I put to my right hon. Friend the Secretary of State for Employment the other day about the Government's attitude if the other place reversed the decision of this House for a second time. I intended to put the question to my right hon. Friend the Secretary of State for Industry just before he sat down after replying to the last debate. I want to know the answer now. What will the Government do if the other place does not accept our disagreement with its amendments? My hon. Friends and I are looking with growing impatience at the way in which the business of this House is being snarled up by the activities of another place. If it is right that there should be a revising Chamber—

Mr. Deputy Speaker

Order. I am afraid that the question of the existence of the other Chamber does not arise on the amendments before us.

Mr. Lee

As I am a strict constitutionalist I shall defer to your ruling, Mr. Deputy Speaker. I shall comment about the other place at another time when it is in order for me to tell you exactly what I propose should be done with that organisation.

It has been said of more than one concept that it is like an elephant: it may not be easy to define but it can be recognised when it wanders into the room. In spite of the fire and fury of the hon. Member for Yarmouth, most hon. Members would recognise the democracy applied to industry or to any other form of institution.

My hon. Friends will accept that in some respects we are further away from a democratic administration of the internal affairs of industry than we were during the wartime years when joint production committees existed. It does not say much for management or for the initiative and lack of appropriate militancy on the part of certain trade unions that that situation should prevail. There are many honourable exceptions but it still happens that some companies will dismiss large numbers of persons and embark upon redundancy policies which will change the locality of industrial production on a large scale, as happened with GEC in Woolwich not so long ago. That can be done with not only no prior consultation but the minimum possible notice and information being given in advance of the events in question, yet we have hon. Members opposite cavilling at the idea of industrial democracy.

9.15 p.m.

We have to realise—it applies over a whole range of our activities—that we no longer live in a deferential society. Authority is questioned in a whole host of ways. Sometimes it takes a disagreeable form. Perhaps I can give an example from a problem which is rather remote from what we are discussing but I think I can keep it in order as an illustration of a kindred situation. It is the problem of football hooliganism. I discussed it recently with a London magistrate and found that we both concluded that one cause of the mindless violence which manifests itself so often and so disturbingly is that whereas at one time football clubs seemed to be owned and participated in by their supporters, they have largely become financial organisations remote from the supporters, who feel that they are less and less involved.

It cannot be said that in industry we are moving in a reverse direction from democracy, but we have not moved far towards it. If we are to live with large-scale organisations, be they public or private—I hope that they will become more and more public and that there will be no more of this muddle-headed talk about the mixed economy being a permanent concept instead of a narrow transitory stage from private to public enterprise—I cannot believe that anyone will solve our industrial relations until and unless power is diffused as widely as possible, until as many people are involved in decision-making as possible. Otherwise, we shall merely build up a head of steam of resentment in people who are not consulted, and we will then find ourselves still wondering why we are not performing industrially as well as we might. I hope that the House will reject these Lords amendments, which are pointless, banal, trivial and impertinent.

Mr. Dafydd Wigley (Caernarvon)

I endorse almost everything said by the hon. Member for Birmingham, Hands-worth (Mr. Lee). I cannot see why hon. Members are unable to interpret a concept of industrial democracy even if all the i's are not dotted and the t's are not crossed. Surely, in a political community, we understand the concept of political democracy, and, by analogy, in an industrial community we would also be able to interpret industrial democracy on the same basic premise that one person engaged in that community should have an equal voice with any other person.

What is the alternative to the concept which has brought horror to some Conservatives—the concept of workers control? It is shareholders' control, often in the hands of shareholders who are only remotely connected with the concern and have little or no knowledge of the everyday life and the detail of that concern. Surely it would be wiser from the shareholders' point of view if there were a greater degree of workers' control.

The hon. Member for Preston, South (Mr. Thorne) referred to control within the community. What is the community? Is it the employees within a concern itself, or is it a broader community? Is it the community that takes in the immediate environment that is affected by the decisions taken in a factory, or is it the community in total—the whole of the State, the community which may be called upon to provide capital and which will certainly be called upon to frame the law that affects the concern?

If we are to have a real involvement of employees the control must be as near to those employees as possible. If control is in the hands of the employees the practicalities may cause difficulties. There may be a need for the involvement of a group outside, either locally or on a State basis.

To a large extent control is indivisible, in that it either resides in the hands of a group or it does not. That is a fundamental matter, which has not been thought out sufficiently deeply in developing the concept of industrial democracy. I regret to hear that the Industrial Democracy Bill will be before the House not in the next Session but in the Session after that. It is a Bill that attempts to deal with a vital matter. Until we have sorted out the issue of industrial democracy, many of the other questions facing industry will remain unanswered.

If we can sort out the question of industrial democracy in a satisfactory manner we can open a new chapter in the history of industry within these islands. If we cannot get it right, the problems that we have suffered for decades will continue.

The rôle of trade unions has been mentioned. I only wish that the trade unions had taken a greater initiative in getting employees to become involved as much as possible in the concept of worker control and industrial democracy. I hope that the unions will take a greater initiative in future.

Reference has been made to decisions being taken by committees. Committees already exist in industry at all levels, but to whom are they answerable? Those who are demanding worker control and industrial democracy would say that they should ultimately be answerable to those employed in a particular concern. That does not necessarily mean that managers must stop managing. There are day-today decisions which no one would expect committees to take. But at the end of the day to whom are the managers answerable? Are they answerable to the hierarchy, that goes through to the shareholders, or to a structure that corresponds much more closely with the political democracy that we have come to accept in other spheres of life?

The sooner that something happens on this matter the better. I hope that the Government will hurry to cross the t's and dot the i's.

Mr. Cryer

I did not intend to become involved in this debate, but I was horrified by the extraordinarily complacent attitude displayed by the hon. Member for Yarmouth (Mr. Fell).

It is important that the House should reject the Lords amendments and support the Government. It seems extraordinary that a Member representing the Conservative Party could make the sort of assumptions that have been made by the hon Gentleman—namely, that British industry is booming, that we are in prosperous times and that we can discuss industrial democracy on the basis that industry is in a properous condition.

Mr. Fell

The hon. Gentleman is very kind to give way. I only want to tell him that he has outlined precisely the reverse of what I said.

Mr. Cryer

I am grateful to the hon. Gentleman for making such a characteristic intervention. It seemed that the implication of his remarks was that industry did not need attention and did not need alteration. The only industry in that position is one that is properous. Of course, the hon. Gentleman said that industry is in terrible difficulties. Clearly an industry that is in terrible difficulties needs to be examined to see what has happened in the past and what can be done in the future.

We need to develop industrial democracy because in most industries there is a fight between the owners of capital and the people who have only one asset to dispose of—namely, their labour. If we are to develop industry, we must change that system.

Mr. Peter Bottomley (Woolwich, West)

Does that apply equally to a retail co-operative?

Mr. Cryer

Of course not. I admit that there are defects in the retail cooperative trade, but retail and manufacturing co-operatives have provided us with a good example of what they can do. I remind the hon. Gentleman that the co-operative movement was founded and developed on lines which these provisions in the Bill are designed to improve and develop. It is not the first time that the Labour movement has worked to develop industry. The Rochdale experiment in 1848 arose because people were being cheated and robbed by the retail trade, and that led to the setting up of co-operative societies. Because people in industry feel that they are being deprived, the Labour movement has introduced this legislation. If the hon. Gentleman does not believe that working people in industry are often badly dealt with and made the subject of injustices, let him go out to the workers and talk to them.

I recently attended a conference on health and safety at work and I received a signed statement from a working man who ostensibly had been sacked for some other reason but had been dismissed because he had brought in a factory inspector to his place of work to examine an asbestos insulator which was being sawn up and was spreading dust all over the place. That kind of thing can happen, and unless we are prepared to change the structure of society it will continue to happen. This legislation is designed to deal with such situations.

Opposition Members have spoken of industrial democracy and also about worker control. Those phrases are synonymous. We are not talking about consultative committees where a few tame workers are brought in, told that they are decent chaps and assured that if they sit down with the gaffer they will be all right. That kind of attitude was prevalent in the past in the British steel industry. Eddie Griffiths was a worker director, and look where he got to. We are not talking about a panacea that is put forward as a charade.

One of the unfortunate factors about a continuing Labour administration is that we often seem to be acting Tories and putting through legislation that does not appear to change the society in which we live. People find that nothing fundamental happens and that their lives are very much the same. It is the task of a Labour Government to change people's lives, because many people's lives are drab and uneventful and need changing. If we can set about changing the nature of society, we shall start on the road to Socialism. The notion that industrial democracy is to be achieved by the setting up of committees and the drinking of cups of tea should be thrown out of the window. We are here not to prop up a capitalist society but to change it.

It would be a wonderful improvement if the National Enterprise Board got cracking on the question of industrial democracy. We are told that this concept will not be introduced until the 1976–77 Session. It would be a refreshing change if the idea of industrial democracy were so implemented that the working people pressed the Government for the NEB experiments to be extended to their industry. That is what we want to see. If that were to happen, the cynical sneers of the hon. Member for Yarmouth would be turned against him.

The popular concept of participation and control has been part of the Labour Party constitution since 1918, but we still have a long path to travel. Therefore, while we are in office we must use our power to ensure that we effect a fundamental change in society. It was not all that long ago that an important figure in the Labour movement, Sir Hartley Shawcross as he then was, said that there was no talent in the Labour movement to enable working people to be brought in to control industries even though on the whole it was desirable that that should happen.

I do not think that even the Conservative Members who are present would oppose the notion of some sort of participation. They trot it out every now and again as some sort of recognition of a movement that is growing. But it has taken the Labour Party a number of years to reach the point of actually incorporating it into its legislation.

9.30 p.m.

While we can talk in pleasant academic terms here, the test of sincerity and effectiveness will be with the people outside. We welcome this Bill and we reject the Lords amendments. The Government would be taking another gigantic step down the road towards industrial democracy if at the same time as rejecting the Lords amendments they rejected the Lords themselves. People outside find it difficult to understand that we debate the Lords amendments and still tolerate the existence of the Lords. We ought to say "O.K. We are going down the path of industrial democracy as a first stage." This is, of course, welcome. But let us democratise our own environment as well. Let us show the people in the factories that we mean what we say when we tell them what is best for them, and that we will travel down the road with them.

Let us accept this fundamental Bill. Let us accept subsection (2)(d), retaining it in the knowledge that it means workers' control. It will take different forms in different circumstances, but basically it means that those who earn their livelihood by the use of their hands or of their brains are the people who will make the decisions. We shall find that when that comes about many more sensible decisions will be made.

For instance, would the working people in Bristol have been so committed to the production of Concorde if they had had the opportunity of deciding about that development in the first place? Would they not instead have decided that something more socially useful, more desirable and probably more preferable should have been carried out? Those workers are committed to Concorde because they were not given any choice in the first place. If it is a question of the dole or jobs, they will chose jobs.

If we get working people involved in decision-making, we might find more sensible decisions being made rather than the decision that was made on Concorde as a result of an Anglo-French treaty which did not have any provision for opting out and which was designed to bolster up the Common Market.

Let us make sure that we go down the road of industrial democracy. Let us make sure that this is fully implemented and that the Government bear in mind that in this sort of debate there is growing pressure from the rank and file of the Labour movement and from the Labour back benches that industrial democracy should be implemented in the factory—and along the corridor as well.

Mr. Kaufman

With the leave of the House, I should like to reply. It was with some bemusement that I felt compelled to listen to the intemperate remarks about the other place that some of my hon. Friends found it necessary to make. My hon. Friends know of my own deep feelings about the House of Lords. It was hurtful for me to hear the sentiments to which they felt they had to give vent. I am interested to note that members of the SNP and Plaid Cymru should have so cheered my hon. Friend the Member for Keighley (Mr. Cryer), who attacked the House of Lords for interfering with our decisions. There seems to be a certain inconsistency in their approach. It is one which we have noted before in the approach of these territorialist Members of Parliament.

Mr. Wigley

Will the hon. Gentleman accept that he has his facts wrong so far as Plaid Cymru is concerned?

Mr. Kaufman

If the hon. Gentleman undertook the act of abstaining—[Interruption]. All I can say is that I did not see him in my Lobby—the Lobby which was voting for the supremacy of the House of Commons over that of the House of Lords.

I was somewhat distressed by the remarks that my hon. Friends felt impelled to make, taking into account that without the wisdom of the House of Lords in inserting this amendment we would not have had this excellent debate on industrial democracy. We should have been deprived of the admirable speeches of my hon. Friends the Members for Preston, South (Mr. Thorne), Bristol, North-West (Mr. Thomas), Birmingham, Handsworth (Mr. Lee) and Keighley. It is excellent that we have those speeches on the record.

Although a great deal of what my hon. Friend the Member for Keighley said seemed to me to be excellent sense, I was sorry that he felt that he had to reprove the hon. Member for Yarmouth (Mr. Fell) for his intervention, because I think that listening to the hon. Gentleman is preferable to listening to most of his hon. Friends. He talks friendly good sense, of an extremist nature, which far more reflects the views of those who elect him than the merchant banker, stockbroker stuff that we have to listen to here from the modern Young Conservatives, which I find utterly odious.

Mr. Peter Bottomley

rose—

Mr. Kaufman

The hon. Gentleman has wandered in and out of the Chamber during the debate. I do not feel that I am called upon to give way to him, when I wish to deal with the serious point raised by his hon. Friend the Member for Yarmouth. The hon. Member for Yarmouth asked what the Government were up to on the question of industrial democracy. I refer him to col. 245 of Hansard for 5th August. I know that he was in the House on that day, because he opposed a very good Ten-Minute Bill. It was on that occasion that my right hon. Friend the Secretary of State for Trade announced the setting up of the independent committee of inquiry into industrial democracy in the private sector.

Parallel with that inquiry—I hope that this assuages the hon. Gentleman's fears that we are looking only at the private sector—we are looking at the rôle of employees in decision-making within the nationalised industries. It is well recognised on the Government benches that nationalisation does not necessarily lead to socialisation. The nationalised industries—my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo), with his experience on the Select Committee on Nationalised Industries, will know this better than practically any other hon. Member—are not a signal example of socialisation or industrial democracy. Therefore, parallel with the efforts that we shall make to induce some industrial democracy into the private sector, we wish the public sector to be improved in this way.

My hon. Friend the Member for Keighley need not be concerned that industrial democracy will have to wait for the legislation after the inquiry. As soon as the National Enterprise Board comes into being, which we hope will be very soon after the Royal Assent is given to the Bill, the concerns in which the Board is involved will be able to go ahead. In the case of British Leyland, which will be a National Enterprise Board company, there has already been considerable action in that direction. The legislation to which I referred has to do with the private sector, consequent upon the work of the committee of inquiry.

Mr. Michael Marshall (Arundel)

Will the Minister confirm that the announcement of the inquiry in another place on, I think, 5th August was greeted with considerable approval in all parts of that House? Does that not put the whole question of the Lords' attitude to industrial democracy into much better perspective than does much of the tosh from the Government benches tonight?

Mr. Kaufman

I always take the other place as best seen in perspective. If the other place welcomes industrial democracy in private enterprise it is even more baffling that it should have sought to remove, as one of the objectives of the NEB, the achievement of industrial democracy in NEB concerns.

Mr. Fell

The Under-Secretary used some such words as "introduce some industrial democracy" into private enterprise. We are getting into more of a muddle. Just what does he mean?

Mr. Kaufman

We are here dealing—as the hon. Member will see if he studies the terms of reference which my hon. Friend announced last August—with means of representation on boards of directors. It is that aspect of industrial democracy, in particular, that the committee of inquiry will look into. Industrial democracy does not consist only of representation on boards of directors, just as it does not consist only of dealing with the tea and the toilets, to which my hon. Friends referred as being only the trimmings of industrial democracy and not industrial democracy itself.

The hon. Member for Colne Valley (Mr. Wainwright) asked a question which I cannot answer in the way he would like. I cannot answer it, because he rightly said that industrial democracy should not be smothered in bureaucracy as it advances. I agree that that would be fatal. If we were to lay down a precise blueprint which we were seeking to impose, that would, from the beginning, establish a bureaucratic structure which would be alien to an evolving democracy. The remarks by the hon. Member for Caernarvon (Mr. Wigley) are particularly germane here. He likened industrial democracy to political democracy. Political democracy in this country has been achieved over centuries of evolution. It is not something for which Simon de Montfort laid down a blueprint, to which we have been working ever since. We have been working towards political democracy through armed and political struggle, through struggle in the streets and through struggle in Parliament.

We have only recently achieved full political democracy in this country. Only since the Second World War have we got rid of multiple franchises abolishing the university vote, for example. It was only a little earlier than that that we had full adult suffrage, with all women over 21, as it was then, having the vote. In the same way, industrial democracy—though I trust it will be achieved in a much shorter timescale—cannot be achieved on the basis of a blueprint which we should stamp on everything. We shall have to evolve towards it differently in different concerns and in different kinds of industry. The coal mining industry, for example, is very different from the steel industry, which, again, is very different from the motor car industry. The pattern for one is not necessarily the pattern for another.

The hon. Member for Colne Valley said that industrial democracy must be local democracy. In some cases he is right. My hon. Friends who represent coal mining constituencies will know a good deal more than I do about this, but in the coal mining industry, where there is a national structure, it might be that an industrial structure relevant to each pithead would be better. These are the things we have to work towards.

9.45 p.m.

What we are seeking to achieve, through the different form of industrial democracy towards which we are trying to evolve, is the participation of workers in major decisions affecting the future of their companies. I cannot go into it in more detail. To attempt to do so in an effort to satisfy the hon. Member for Caernarvon would be to mislead him rather than satisfy him.

Mr. Thorne

I hope we shall not push the boat of political democracy out too far. If we do, we stand to be shot at on two counts. We are involved in a set of amendments which arise from a Chamber which I consider to be completely undemocratic, in that its Members are not present on an elected basis. Secondly, I feel that we can no longer substantiate, if we ever could, the idea that proportional representation should not be accepted by this House.

Mr. Kaufman

My hon. Friend has indicated two idiosyncratic views. Certainly I do not agree with his view about proportional representation. My hon. Friend is perfectly welcome to try it out, if he likes. We can experiment towards that somewhere other than in parliamentary representation.

Mr. Wainwright

The Under-Secretary of State said that he could not give us, tonight, blueprints or details, but he will recall that in no way did I ask for any kind of blueprint or detail. I asked for reassurance on a very small number of principles. I must press him on the principle of "one person, one vote", without having to belong to some qualifying institution.

Mr. Kaufman

May I say,obiter, that one of the other matters to which the hon. Member animadverted was mob rule—the antithesis of political democracy, or any kind of democracy at all. One could not envisage mob rule playing any part in industrial democracy.

Concerning the hon. Member's other question, I think that he is jumping the gun in believing that voting is necessarily an integral part of industrial democracy. Industrial democracy which simply consists of a meeting at which people raise their hands is not necessarily a form of industrial democracy which would be appropriate for every concern. Voting is the method by which we make our decisions in this House. It is the way in which our constituents make their decisions about whether we shall come to this House. Voting in mass meetings is not necessarily the way in which industrial democracy will function from concern to concern.

No system of industrial democracy in this country can be viable unless it is based upon the trade unions. Industrial democracy which is localised to the works council, separated from the trade unions, is a form of syndicalism—a form of selfishness for each concern, in which each concern runs itself without consideration for fellow workers and other councils. People in trade unions have solidarity, and protection through their trade unions, and it would be impossible to envisage a system of industrial democracy to which organised trade unionism was not integral.

Though I have answered the hon. Member's questions, I cannot say that I have answered them to his satisfaction—that is a different matter entirely—but I have sought to answer them honestly. If he is not satisfied with them, that is just too bad, but I did not wish to mislead him or any hon. Member as to the direction in which we are seeking to go. Certainly it is not the direction in which another place is seeking to drag us. I hope, therefore, that the House will agree to disagree with the Lords amendment.

Mr. Adam Butler

I suspect that there is some agreement on this matter, although it may not have been clear from some of the exchanges. The Undersecretary has paid me the compliment of making no attacks on the speech that I have made as the official Opposition spokesman on this matter. However, nothing has been said to allay our fears about what the Government mean by industrial democracy. Indeed, much has been said to increase our concern, not least by the hon. Member for Keighley (Mr. Cryer) and others below the Gangway. My hon. Friend the Member for Yarmouth (Mr. Fell) said that if by industrial democracy the Government mean workers' control, they should say so. This again is what hon. Members below the Gangway have cried for.

We recognise the rights both of employees and of shareholders. The arguments hinges—this is what the hon. Member for Colne Valley (Mr. Wainwright), who voted in Committee to expunge the phrase, was trying to get from the Minister, though whether he succeeded remains to be seen—on what "democracy" means in this sense. The Minister has suggested that the ballot or voting may not come into the question. We regret that in everying said and written by Labour Members it appears that in order to have the legal right to qualify for participation in decision making and all the other things that many of us would like to see, it will be necessary to belong to a union.

That was apparent in the Minister's reply to my question. Labour Members want everyone to belong to a union, and the implication of everything they say and write is that those who are not in a union will not qualify for that legal

right. If that is their interpretation of industrial democracy, we must hold to our decision to uphold the Lords in their amendment.

Question put, That this House doth disagree with the Lords in the said amendment:—

The House divided: Ayes 278. Noes 243.

Division No. 353.]	AYES	[9.52 p.m.
Abse, Leo	Dunwoody, Mrs Gwyneth	Lamborn, Harry
Allaun, Frank	Eadie, Alex	Lamond, James
Anderson, Donald	Edelman, Maurice	Latham, Arthur (Paddington)
Archer, Peter	Edge, Geoff	Lee, John
Armstrong, Ernest	Edwards, Robert (Wolv SE)	Lestor, Miss Joan (Eton & Slough)
Ashley, Jack	English, Michael	Lewis, Ron (Carlisle)
Atkins, Ronald (Preston N)	Ennals, David	Lipton, Marcus
Atkinson, Norman	Evans, Fred (Caerphilly)	Litterick, Tom
Bain, Mrs Margaret	Evans, Gwynfor (Carmarthen)	Lomas, Kenneth
Barnett, Rt Hon Joel (Heywood)	Evans, Ioan (Aberdare)	Loyden, Eddie
Bates, Alf	Ewing, Harry (Stirling)	Luard, Evan
Bean, R. E.	Ewing, Mrs Winifred (Moray)	Lyon, Alexander (York)
Bennett, Andrew (Stockport N)	Fernyhough, Rt Hon E.	Lyons, Edward (Bradford W)
Bidwell, Sydney	Fitch, Alan (Wigan)	Mabon, Or J. Dickson
Bishop, E. S.	Fitt, Gerard (Belfast W)	McCartney, Hugh
Blenkinsop, Arthur	Flannery, Martin	McElhone, Frank
Boardman, H.	Fletcher, Ted (Darlington)	MacFarquhar, Roderick
Booth, Albert	Foot, Rt Hon Michael	McGuire, Michael (Ince)
Boothroyd, Miss Betty	Ford, Ben	Mackenzie, Gregor
Bottomley, Rt Hon Arthur	Forrester, John	Mackintosh John P.
Boyden, James (Bish Auck)	Fowler, Gerald (The Wrekin)	Maclennan Robert
Bradley, Tom	Fraser, John (Lambeth, N'w'd)	McMillan, Tom (Glasgow C)
Bray, Dr Jeremy	Freeson, Reginald	McNamara, Kevin
Brown, Hugh D. (Provan)	Garrett, W. E. (Wallsend)	Madden, Max
Brown, Robert C. (Newcastle W)	George, Bruce	Magee, Bryan
Buchanan, Richard	Gilbert, Dr John	Mahon, Simon
Callaghan, Jim (Middleton & P)	Ginsburg, David	Mallalieu, J. P. W.
Campbell, Ian	Gould, Bryan	Marks, Kenneth
Canavan, Dennis	Gourlay, Harry	Marquand, David
Cant, R. B.	Graham, Ted	Marshall, Dr Edmund (Goole)
Carmichael, Neil	Grant, George (Morpeth)	Marshall, Jim (Leicester S)
Carson, John	Grant, John (Islington C)	Maynard, Miss Joan
Carter, Ray	Grocott, Bruce	Meacher, Michael
Carter-Jones, Lewis	Hamilton, James (Bothwell)	Mellish, Rt Hon Robert
Cartwright, John	Harper, Joseph	Mikardo, Ian
Castle, Rt Hon Barbara	Harrison, Walter (Wakefield)	Millan, Bruce
Clemitson, Ivor	Hart, Rt Hon Judith	Miller, Dr M. S. (E Kilbride)
Cocks, Michael (Bristol S)	Hatton, Frank	Miller, Mrs Millie (Ilford N)
Cohen, Stanley	Hayman, Mrs Helene	Molloy, William
Coleman, Donald	Heffer, Eric S.	Moonman, Eric
Colquhoun, Mrs Maureen	Henderson, Douglas	Morris, Alfred (Wythenshawe)
Concannon, J. D.	Horam, John	Morris, Charles R. (Openshaw)
Conlan, Bernard	Howell, Denis (B'ham, Sm H)	Morris, Rt Hon J. (Aberavon)
Cook, Robin F. (Edin C)	Hoyle, Doug (Nelson)	Moyle, Roland
Corbett, Robin	Hughes, Rt Hon C. (Anglesey)	Murray, Rt Hon Ronald King
Cox, Thomas (Tooting)	Hughes, Robert (Aberdeen N)	Newens, Stanley
Craigen, J. M. (Maryhill)	Hughes, Roy (Newport)	Noble, Mike
Crawford, Douglas	Hunter, Adam	Oakes, Gordon
Crawshaw, Richard	Irvine, Rt Hon Sir A. (Edge Hill)	Ogden, Eric
Cronin, John	Irving, Rt Hon S. (Dartford)	O'Malley, Rt Hon Brian
Crosland, Rt Hon Anthony	Jackson, Colin (Brighouse)	Orbach, Maurice
Cryer, Bob	Janner, Greville	Orme, Rt Hon Stanley
Cunningham, G. (Islington S)	Jay, Rt Hon Douglas	Ovenden, John
Davidson, Arthur	Jeger, Mrs Lena	Owen, Dr David
Davies, Bryan (Enfield N)	Jenkins, Hugh (Putney)	Padley, Walter
Davies, Denzil (Llanelli)	John, Brynmor	Park, George
Davis, Clinton (Hackney C)	Johnson, James (Hull West)	Parker, John
Deakins, Eric	Johnson, Walter (Derby S)	Parry, Robert
Dean, Joseph (Leeds West)	Jones, Alec (Rhondda)	Pavitt, Laurie
Delargy, Hugh	Jones, Barry (East Flint)	Peart, Rt Hon Fred
Dell, Rt Hon Edmund	Jones, Dan (Burnley)	Pendry, Tom
Dempsey, James	Judd, Frank	Perry, Ernest
Doig, Peter	Kaufman, Gerald	Phipps, Dr Colin
Douglas-Mann, Bruce	Kelley, Richard	Prentice, Rt Hon Reg
Duffy, A. E. P.	Kilroy-Silk, Robert	Price, C. (Lewisham W)
Dunn, James A.	Kinnock, Neil	Price, William (Rugby)
Dunnett, Jack	Lambie, David	Radice, Giles
Rees, Rt Hon Merlyn (Leeds S)	Snape, Peter	Watkins, David
Reid, George	Spearing, Nigel	Watkinson, John
Richardson, Miss Jo	Spriggs, Leslie	Watt, Hamish
Roberts, Albert (Normanton)	Stallard, A. W.	Weetch, Ken
Roberts, Gwilym (Cannock)	Stoddart, David	Weitzman, David
Robertson, John (Paisley)	Stott, Roger	Wellbeloved, James
Roderick, Caerwyn	Strang, Gavin	Welsh, Andrew
Rodgers, George (Chorley)	Strauss, Rt Hon G. R.	White, Frank R. (Bury)
Rodgers, William (Stockton)	Summerskill, Hon Dr Shirley	White, James (Pollok)
Rooker, J. W.	Swain, Thomas	Whitehead, Phillip
Rose, Paul B.	Taylor, Mrs Ann (Bolton W)	Whitlock, William
Ross, Rt Hon W. (Kilmarnock)	Thomas, Dafydd (Merioneth)	Wigley, Dafydd
Rowlands, Ted	Thomas, Jeffrey (Abertillery)	Willey, Rt Hon Frederick
Sandelson, Neville	Thomas, Ron (Bristol NW)	Williams, Alan (Swansea W)
Sedgemore, Brian	Thompson, George	Williams, Alan Lee (Hornch'ch)
Selby, Harry	Thorne, Stan (Preston South)	Williams, Rt Hon Shirley (Hertford)
Shaw, Arnold (Ilford South)	Tierney, Sydney	Williams, W. T. (Warrington)
Sheldon, Robert (Ashton-u-Lyne)	Tomlinson, John	Wilson, Alexander (Hamilton)
Short, Rt Hon E. (Newcastle C)	Tomney, Frank	Wilson, Gordon (Dundee E)
Short, Mrs Renée (Wolv NE)	Torney, Tom	Wise, Mrs Audrey
Silkin, Rt Hon John (Deptford)	Tuck, Raphael	Woof, Robert
Silkin, Rt Hon S. C. (Dulwich)	Varley, Rt Hon Eric G.	Wrigglesworth, Ian
Sillars, James	Wainwright, Edwin (Dearne V)	Young, David (Bolton E)
Silverman, Julius	Walden, Brian (B'ham, L'dyw'd)
Skinner, Dennis	Walker, Harold (Doncaster)	TELLERS FOR THE AYES
Small, William	Walker, Terry (Kingswood)	Mr. J. D. Dormand and
Smith, John (N Lanarkshire)	Ward, Michael	Miss Margaret Jackson
NOES
Adley, Robert	Edwards, Nicholas (Pembroke)	James, David
Alison, Michael	Elliott, Sir William	Jessel, Toby
Arnold, Tom	Emery, Peter	Johnson Smith, G. (E Grinstead)
Atkins, Rt Hon H. (Spelthorne)	Eyre, Reginald	Jones, Arthur (Daventry)
Awdry, Daniel	Fairbairn, Nicholas	Jopling, Michael
Baker, Kenneth	Fairgrieve, Russell	Joseph, Rt Hon Sir Keith
Banks, Robert	Farr, John	Kershaw, Anthony
Beith, A. J.	Fell, Anthony	Kilfedder, James
Bell, Ronald	Finsberg, Geoffrey	Kimball, Marcus
Biffen, John	Fisher, Sir Nigel	King, Evelyn (South Dorset)
Biggs-Davison, John	Fletcher-Cooke, Charles	King, Tom (Bridgwater)
Blaker, Peter	Fookes, Miss Janet	Kitson, Sir Timothy
Body, Richard	Fowler, Norman (Sutton C'f'd)	Knight, Mrs Jill
Boscawen, Hon Robert	Fox, Marcus	Knox, David
Bottomley, Peter	Fraser, Rt Hon H. (Stafford & St)	Lamont, Norman
Bowden, A. (Brighton, Kemptown)	Fry, Peter	Lane, David
Boyson, Dr Rhodes (Brent)	Galbraith, Hon. T. G. D.	Langford-Holt, Sir John
Bradford, Rev Robert	Gardiner, George (Reigate)	Latham, Michael (Melton)
Braine, Sir Bernard	Gardner, Edward (S Fylde)	Lawrence, Ivan
Brittan, Leon	Gilmour, Rt Hon Ian (Chesham)	Lawson, Nigel
Brocklebank-Fowler, C.	Gilmour, Sir John (East Fife)	Lester, Jim (Beeston)
Brotherton, Michael	Glyn, Dr Alan	Lewis, Kenneth (Rutland)
Brown, Sir Edward (Bath)	Godbar, Rl Hon Joseph	Loveridge, John
Bryan, Sir Paul	Goodhart, Phillp	Luce, Richard
Buchanan-Smith, Alick	Goodhew, Victor	McAdden, Sir Stephen
Buck, Antony	Goodlad, Alastair	McCrindle, Robert
Budgen, Nick	Gorst, John	Macfarlane, Nell
Bulmer, Esmond	Gow, Ian (Eastbourne)	MacGregor, John
Burden, F. A.	Gower, Sir Raymond (Barry)	Macmillan, Rt Hon M. (Farnham)
Butler, Adam (Bosworth)	Grant, Anthony (Harrow C)	McNair-Wilson, M. (Newbury)
Carlisle, Mark	Gray, Hamish	McNair-Wilson, P. (New Forest)
Carr, Rt Hon Robert	Grieve, Percy	Madel, David
Chalker, Mrs Lynda	Grimond, Rt Hon J	Marshall, Michael (Arundel)
Churchill, W. S.	Grist, Ian	Marten, Neil
Clark, Alan (Plymouth, Sutton)	Hall, Sir John	Mates, Michael
Clark, William (Croydon S)	Hamilton, Michael (Salisbury)	Mather, Carol
Clarke, Kenneth (Rushcliffe)	Hampson, Dr Keith	Maude, Angus
Cockcroft, John	Hannam, John	Mawby, Ray
Cooke, Robert (Bristol W)	Harvie Anderson, Rt Hon Miss	Maxwell-Hyslop, Robin
Cope, John	Hastings, Stephen	Mayhew, Patrick
Cordle, John H.	Havers, Sir Michael	Meyer, Sir Anthony
Cormack, Patrick	Hawkins, Paul	Miller, Hal (Bromsgrove)
Critchley, Julian	Hayhoe, Barney	Mills, Peter
Crouch, David	Heseltine, Michael	Miscampbell, Norman
Crowder, F. P.	Hicks, Robert	Mitchell, David (Basingstoke)
Davies, Rt Hon J. (Knutsford)	Hordern, Peter	Moate, Roger
Dean, Paul (N Somerset)	Howe, Rt Hon Sir Geoffrey	Molyneaux, James
Dodsworth, Geoffrey	Howell, David (Guildford)	Montgomery, Fergus
Douglas-Hamilton, Lord James	Howells, Geraint (Cardigan)	Moore, John (Croydon C)
Drayson, Burnaby	Hunt, John	More, Jasper (Ludlow)
du Cann, Rt Hon Edward	Hurd, Douglas	Morgan, Geraint
Dunlop, John	Hutchison, Michael Clark	Morgan-Giles, Rear-Admiral
Durant, Tony	Irvine, Bryant Godman (Rye)	Morris, Michael (Northampton S)
Eden, Rt Hon Sir John	Irving, Charles (Cheltenham)	Morrison, Charles (Devizes)
Morrison, Hon Peter (Chester)	Roberts, Wyn (Conway)	Taylor, Teddy (Cathcart)
Mudd, David	Ross, William (Londonderry)	Temple-Morris, Peter
Neave, Airey	Rossi, Hugh (Hornsey)	Thatcher, Rt Hon Margaret
Nelson, Anthony	Royle, Sir Anthony	Thomas, Rt. Hon P. (Hendon S)
Neubert, Michael	Sainsbury, Tim	Townsend, Cyril D.
Newton, Tony	St. John-Stevas, Norman	Trotter, Neville
Nott, John	Scott, Nicholas	Tugendhat, Christopher
Onslow, Cranley	Shaw, Giles (Pudsey)	van Straubenzee, W. R.
Oppenheim, Mrs Sally	Shelton, William (Streatham)	Vaughan, Dr Gerard
Page, Rt Hon R. Graham (Crosby)	Shepherd, Colin	Viggers, Peter
Pardoe, John	Shersby, Michael	Wainwright, Richard (Colne V)
Parkinson, Cecil	Silvester, Fred	Wakeham, John
Pattie, Geoffrey	Sims, Roger	Walder, David (Clitheroe)
Penhaligon, David	Sinclair, Sir George	Walker, Rt Hon P. (Worcester)
Percival, Ian	Skeet, T. H. H.	Wall, Patrick
Peyton, Rt Hon John	Smith, Cyril (Rochdale)	Walters, Dennis
Pink, R. Bonner	Smith, Dudley (Warwick)	Weatherill, Bernard
Powell, Rt Hon J. Enoch	Speed, Keith	Wells, John
Price, David (Eastleigh)	Spicer, Michael (S Worcester)	Whitelaw, Rt Hon William
Pym, Rt Hon Francis	Sproat, Iain	Wiggin, Jerry
Raison, Timothy	Stainton, Keith	Winterton, Nicholas
Rathbone, Tim	Stanbrook, Ivor	Wood, Rt Hon Richard
Rawlinson, Rt Hon Sir Peter	Steen, Anthony (Wavertree)	Young, Sir G. (Eating, Acton)
Rees, Peter (Dover & Deal)	Stewart, Ian (Hitchin)	Younger, Hon George
Renton, Rt Hon Sir D. (Hunts)	Stokes, John
Rhys Williams, Sir Brandon	Stradling Thomas, J.	TELLERS FOR THE NOES:
Ridley, Hon Nicholas	Tapsell, Peter	Mr. Anthony Berry and
Rifkind, Malcolm	Taylor, R. (Croydon NW)	Mr. Michael Roberts
Rippon, Rt Hon Geoffrey

Question accordingly agreed to.

Subsequent Lords amendment disagreed to.