§ Order for Second Reading read.
§ 4.25 p.m.
§ The Secretary of State for Industry (Mr. Eric G. Varley)
I beg to move, That the Bill be now read a Second time.
Reports have reached me that the Tory Opposition intend to vote against the Bill tonight. What they do is of no practical consequence but it is of considerable historical interest. By voting against the Bill, the Tory Party will be divesting itself of whatever fragments of industrial policy it still possesses.
The Bill is a straightforward amendment of one subsection of one section of a 19-Section Act which a Tory Government pushed through this House of Commons in 1972. I remember the cheers when the right hon. Member for Knutsford (Mr. Davies), as Secretary of State for Trade and Industry, announced the contents of that measure. I remember the bitter opposition it met in Committee and on Report. The cheers came from the then Labour Opposition, and I remember that we waved our Order Papers to signify our satisfaction. The opposition came from a group of Tory Back Benchers, who rightly saw that legislation as a milestone on the road back from Selsdon.
I remember that I spoke for the Opposition on Second Reading of that Bill. I welcomed it and made clear that we would support it. We did not vote against its Second Reading. It was a very flabby Bill. It provided many opportunities for considerable expense. Clause 7 of that Bill, for example, had no financial limits at all. The Conservatives published no guidelines on how proposals for assistance should be handled. We have had to make good that deficiency.
The Industrial Development Advisory Board was added only as an afterthought, in response to pressure from both sides, and the right hon. Gentleman in charge of the Bill turned down a Tory amendment which would have laid down viability tests for bestowing Government assistance. Having said all that, I would add that it was much to 580 be preferred to the vacuum that it was designed to fill.
In the last few months, Opposition spokesmen have alleged that this or that action by the present Government does not conform to this Government's strategy. But the Industry Act 1972, imprecise and open-ended in many ways, was the only industrial strategy that the Tories had. Now, as I understand it, by voting against this simple, if sizeable, increase of the Section 8 financial limits they are voting to rewrite their own past in a way which would have been envied by the editors of the Soviet encyclopaedia.
By repudiating the 1972 Industry Act —because that is what they will be doing if they vote against it—the Tories will be voting against any industrial policy whatever. No Tory Member is able to get up and give us a summary of the official Tory industrial policy. They can tell us easily enough what they are against—for example, the main economic highlights of their own period in office. They can tell us that they are against the nationalisation of Rolls-Royce; they can tell us that they are against the nationalisation of Govan Shipbuilders; they can tell us that they are against the Industry Act itself. Each of these actions now fills them with profound remorse. We understand that they are against all that.
§ Mr. Tom King (Bridgwater)
If the right hon. Gentleman will contain himself, I might have the opportunity to explain why we oppose the Bill. I humbly suggest that his job as Secretary of State is to present the Bill to the House and explain why the Government think that this expenditure is necessary.
I have been speaking for only five minutes. I shall come to it in a few minutes. I can understand why the hon. Gentleman wants me to run over the ground very quickly. I should have thought that when introducing an amendment to legislation it was right to give a bit of history and background, if not for the benefit of the hon. Gentleman, at least for the recollection of the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), because he played an interesting part in the passing of the legislation. We know that the Opposition are against all that. But we 581 do not yet know—perhaps we shall hear later—what they are actually for.
Meanwhile, we have published our approach to industrial strategy, which has been welcomed by both the Confederation of British Industry and the Trades Union Congress—that is something that the Tories never achieved—and we are steadily getting on with implementing it. During the summer we shall be getting detailed and comprehensive reports from the economic development councils and other sectoral committees analysing the situation in a range of key manufacturing industries and making recommendations for actions by Government, industry and the trade unions.
What is more, we are even managing to make sense of the 1972 Industry Act. Under the right hon. Member for Worcester (Mr. Walker), it was simply a ramshackle machinery for handing out public money in a mainly purposeless way. [Interruption.] The hon. Member for Blaby (Mr. Lawson) has just walked into the Chamber. I know that he was here for a considerable time at Question Time, but he missed some of the historical background to the 1972 Industry Act. I am tempted to go over it again for his benefit. But I should warn him that he needs to be careful about it, because there are skeletons in the cupboard. The hon. Member for Bridgwater (Mr. King) has just asked me to run over it quickly. He asked me to explain the Bill. I thought that for his benefit and others it was necessary to go over the background a little. I shall be glad to do it again if the hon. Member for Blaby wishes me to do so. I recall the articles he wrote in 1972. He used to say that the regional employment premium was a marvellous instrument of regional policy, even though the then Conservative Government were to phase it out. I used to do my homework at that time, and I read a great deal of what he wrote.
I was about to say that we have refashioned the Act and established industry schemes under it. The Conservative Government were first with two industry schemes, the Wool Textile and the Offshore Interest Relief Grant Schemes. But we have expanded and built upon those schemes. Payments and commitments to date under them total £62 million. The closing date for applications under the Wool Textile Scheme has passed, but the 582 Offshore Supplies Scheme, with no terminal date, could continue to incur commitments totalling about £200 million up to 1980.
That is one of the reasons—
§ Mr. Varley
I shall give way to the hon. Gentleman when I have finished this part of my speech. That is one of the reasons why we need the Bill. I will give other reasons, but the fact is that the Offshore Supplies Scheme is one of the reasons why we need the Bill. We need the Bill and the increases under it to fulfil a commitment given by the Tory Government. Are we to be denied that opportunity? If by some chance the Opposition were to be successful in voting against the Bill, we could not carry out a Tory commitment. That is the ridiculous situation into which the Opposition have got themselves.
§ Mr. Ridley
Does the right hon. Gentleman now see his job as dishing out money? Does he see his achievements as being £60 million on this and £290 million on that? What has been achieved for the money? Surely the right hon. Gentleman should be talking about his successes, not failures, in terms of spending.
§ Mr. Varley
I must ask the hon. Gentleman to be patient, because I want to come to some of the other schemes. It is proper and reasonable that I should point out that we would not be able to fulfil the previous Government's commitments if we were denied the Bill. I hope that that is widely understood by all Members.
§ Mr. Michael Heseltine (Henley)
The right hon. Gentleman should understand that the more realistic explanation is that he spent the money on Chrysler, despite his better judgment.
§ Mr. Varley
I am coming to Chrysler. I should not dream of avoiding mentioning Chrysler. Again, I must ask hon. Members to be patient. I shall get to Chrysler in due course. I hope that I may now make progress.
We have gone further than the two industry schemes set up by the Tories when they were in Government. In response to the pressures under which 583 important sectors have been suffering during the recession, the Government have considered closely with particular industries the basis for further schemes aimed at improving the competitive position of whole industries in the medium term.
Schemes for the ferrous foundry, clothing and machine tool industries were introduced last autumn. The initial response has been encouraging. Over 230 applications were received, involving a total potential investment of £140 million. [Interruption,] I understand entirely the position of the hon. Member for Cirencester and Tewkesbury. He has gone back to Selsdon so fast that it would appear that he never left. As far as I know, he is not an official Opposition spokesman on industrial policy. For some time the hon. Gentleman was in the Department of Trade and Industry as a Minister. We know that he wanted to butcher Upper Clyde and so on, and was defeated in that object. Eventually, the right hon. Member for Sidcup (Mr. Heath) regarded him as a great liability and put him on the Back Benches. I do not like rubbing salt in the wounds in this way, but occasionally it is necessary to remind hon. Gentlemen opposite of some of this history.
We have built on those schemes and, despite what hon. Gentlemen say and their scoff now, they are welcomed by serious members of industry. Those who represent areas of the country where the Wool Textile Scheme is in operation know the value of it. I am sure that the hon. Member for Colne Valley (Mr. Wainwright) is ready to acknowledge that straight away.
The yardstick against which proposals for these sectoral schemes and individual projects are evaluated is stated in the criteria for selective assistance placed before the House in January. We could not get any criteria for industry schemes from the Conservative Government. Our main consideration is to raise not only the level but the return on industrial investment. Only in this way can British industry compete more successfully in meeting the requirements of home and overseas markets.
In addition, as a specifically counter-cyclical measure, we have introduced the Accelerated Projects Scheme to encourage 584 companies to bring forward investment projects which have been deferred as a result of the recession. That scheme has been very successful. So far, assistance of £35 million has been approved for 32 projects, involving investment of over £200 million. The scheme has helped to create some 4.000 new jobs and to safe guard 3,000 others. It is expected to bring benefits to the balance of payments of £200 million a year in the 1980s.
On 6th April I also announced a special scheme of cost escalation insurance for the shipbuilding industry for both export and home orders.
These positive measures under Section 8 have been warmly welcomed and endorsed by the Industrial Development Advisory Board and have met with a favourable response from industry.
These powers must continue to be available for re-establishing the competitive position of our industry, and the new financial limits are essential to enable us to respond to the needs of industry.
Under Section 8(7) of the Industry Act 1972, the initial limit on assistance was put at £150 million with provision that this limit could be raised by Order on not more than four occasions by sums not exceeding £100 million on each occasion. The overall ceiling on assistance which might be approved by Order is £550 million. The House has approved two increases of £100 million in the initial limit, through Orders which came into force on 13th March 1975 and 5th February 1976, and the current limit stands at £350 million.
The Bill introduces a new initial limit of £600 million, which may be raised by Order on not more than four occasions by sums not exceeding £250 million on each occasion. The overall ceiling on assistance that might be approved by Orders would then be £1,600 million.
In practice, selective assistance under Section 8 is generally provided in the form of loans or grants phased over a period of years as the needs of the project or scheme require. Thus, a commitment to provide a grant or loan will normally precede by some years the completion of actual payments. To ensure that we do not anticipate the approval of the House, we count against the statutory limit commitments as they are incurred rather than sums actually paid.
585 We do this even though under Section 8(6) of the 1972 Act we are strictly required only to count against the limit sums paid under that section plus any guarantees given. Commitments entered into at present amount to £315 million. This compares with the current statutory limit on Section 8 assistance of £350 million.
For the future, we envisage continuing commitments being incurred through the various industry schemes, the Accelerated Projects Scheme and other measures of assistance to industry. During this financial year the total commitments counting against Section 8 limits could reach the overall ceiling of £550 million that may be approved by Orders. It is for this reason that the Bill proposes a new initial limit of £600 million. Even if no new measures of assistance under Section 8 were adopted, the total of commitments could reach £1,000 million by 1980–81.
The overall ceiling of £1,600 million proposed in the Bill will enable the ongoing programmes to continue and provide the latitude necessary for Section 8 to be used in support of our industrial objectives. Any increase in the limit from the initial figure of £600 million towards a possible maximum limit of £1,600 million would have to be approved by Order of the House. But the Bill provides for an increase from £100 million to £250 million in the instalments by which the statutory limit may be increased by Order. This change reflects our practice of counting commitments—I emphasise that word—in full as they arise and the impact of inflation.
I do not propose to increase the limit of £5 million for the approval of the House by affirmative resolution procedure for assistance to individual projects. In this respect, the control of the House will be even tighter in real terms than applied when the 1972 Act received Royal Assent.
§ Mr. Nigel Lawson (Blaby)
I have been listening with considerable care to the Minister's statistical explanation. How does he relate the figures he has given to the House with Table 5 of the Budget Red Book, which shows expected cash expenditure by the Government on company securities in 1976–77 at £125 million compared with the 1975–76 figure of £481 million? Will there be 586 this substantial reduction, or has the Red Book figure become outdated?
§ Mr. Varley
I do not think the hon. Member entirely understands the position. That is probably my thought. We counted as the actual commitment the contingent liability given. There are many examples, and that would account for it. If there is a further and easier way of explaining it, we will get the information and give it to the hon. Member during the course of the debate. Perhaps that is the reason for any apparent inconsistency between what I have said and the document he quoted.
The increase in the statutory limit does not imply immediate or early new expenditure. For example, an industry scheme will have a prescribed period within which proposals may be considered, and offers of assistance, and so commitments, will be undertaken within this period. But the resulting expenditure will be spread over the subsequent three years or more as payments are made against actual progress of the projects. Moreover, certain guarantees, such as those involved in the Chrysler assistance, are unlikely ever to be called, or liabilities may be less than the sums guaranteed.
I can give an example of what I mean. To date £26 million has been paid to Chryster, but at the turn of the year the figure of £162.5 million was the contingent liability. Many hon. Members thought that £162.5 million would immediately be handed over—
§ Mr. Varley
I am not suggesting that a sophisticated man like the hon. Member for Henley (Mr. Heseltine) did not understand.
§ Mr. Varley
My hon. Friends understood completely. In answering questions on the statement, I got the impression, however, that some Conservative Members did not understand it. I also read articles in the newspapers which demonstrated clearly that they did not understand the situation.
Assistance under Section 8 has been provided to sustain certain companies of key importance to their industries, to 587 strengthen particular sectors under industry schemes and to encourage counter-cyclical investment under the Accelerated Projects Scheme. With all its shortcomings, the 1972 Act has proved its value. That is why we are asking the House to extend its life and range.
The Tory Opposition ought not to shrink in shame from one of the few positive measures that will outlive their unproductive period of office. I confidently ask the House to give the Bill a Second Reading.
§ 4.47 p.m.
§ Mr. Tom King (Bridgwater)
I was interested to hear the Secretary of State refer to the 1972 Act "with all its shortcomings". Some of its most serious shortcomings are the amendments by the Labour Government's Industry Act 1975 which removed from it certain essential protections. It takes a certain nerve to present a Bill to the House which represents expenditure of £1,600 million, to describe it as a straightforward amendment of a single section in an earlier Act and to expect the House to accept it.
The number of Labour Members present in this debate is an indication—despite the distinguished presence of the hon. Member for Bristol, North-East (Mr. Palmer) and two of his hon. Friends—of their total lack of interest in what is supposed to be a key industrial strategy. Maybe they are not so concerned, and have confidence in what the Secretary of State is doing, but I wonder whether I still have any confidence.
The Secretary of State said he used to do his homework when we were in office. Did he do it today before he came here? He quoted the offshore supplies programme and said that it now has a requirement of £200 million by 1980, and that if the"wicked Tories"voted against the Bill tonight he would not be able to go ahead with this important project.
That is not true. There are still tranches of £200 million in the existing powers, without this Bill. We should hear from the Minister tonight what is going on in offshore supplies. On 23rd January this year the Minister of State told us that this scheme—and it has been 588 running for three years—had in that period reached the sum of £910,000. We are now told that in the next three months there is a Government commitment for £200 million. That is a massive sum and we should like to hear more about it.
The Secretary of State seems to adopt two laws when he is speaking. The emptier the benches behind him, the more he attacks the Opposition and avoids discussing his own policies. When he is putting measures forward—thinking back to his speech on Monday on the Iron and Steel (Amendment) Bill—he adopts the philosophy of the larger the sum the more soporific the speech.
It has been quite a week for the Secretary of State. On Monday he asked for £2,000 million for the Iron and Steel (Amendment) Bill and on Thursday he is asking for £1,600 million. A visitor from a poorer country sitting in the Gallery this week could be forgiven for thinking that this must be a rich country. It is a little difficult to appreciate that the pound is at an all-time low and that we face the prospect of a £12 billion borrowing requirement when in the week following the worst troubles of the pound the Government are asking for £3,600 million new expenditure.
It is fashionable to say that the poor level of the pound sterling is caused by the differential in the rate of inflation and the lack of an adequate differential in the interest rate. But a large borrowing requirement undermines foreign confidence in the Government. On Monday, the editorial in The Times said:We should be prepared to make major changes if we are to avoid the real loss of wealth which would follow further heavy falls in sterling … they involve a switch from living on credit and funny money, to living on what we earn, and paying our way in sound money. The financial expression may seem complicated: the underlying fact is known to everyone.That is clear to hon. Members on both sides of the House. As my right hon. Friend the Member for Taunton (Mr. du Cann) said in a letter to The Times this week, Government expenditure is quite outside Parliament's control at the moment.
Nothing could more clearly underline that view than the way in which these measures are being put forward. There is no evidence that the Government are 589 attempting to live within their means or to recognise that the money is not there. It is a humiliating prospect that those who seek to carry the Bill will do so in the knowledge that the Government cannot honour it with funds themselves but will be dependent on their ability to borrow the money from others.
The Secretary of State gave no adequate explanation why the Bill has suddenly been brought forward. He said that there were two further tranches of money available. In February, barely two months ago, we approved a further £100 million. When there is still the possibility of two further tranches of Government money, the Bill is introduced to jump up the figure by a further £1,600 million. It is a disgrace that the Secretary of State should ask Parliament in this way for such a large sum of money. In the debate on the Iron and Steel (Amendment) Bill on Monday, one of my hon. Friends said that if the Secretary of State had been a member of a board which was seeking funds for an investment project and had put forward the sort of case he put forward on Monday he would have been laughed out of the board room and out of his job.
When we are being asked to approve such a massive sum it is a contempt of Parliament that we should be treated to the charade performance of a 10-minute knockabout in which the Secretary of State indulged in speculation about the Opposition's views and then gave only the baldest and most inadequate explanation of the Government's policy.
There is no doubt that there is a crucial need for investment. On the Department's figures, investment is running this year at £1,300 million less than it was in the last year of office of the previous Conservative Government. The Government are desperately trying to fill that gap in the only way they know how—by rushing around and spraying Government money in all directions. Various schemes are being put forward. The Secretary of State read a list of schemes, which included ferrous foundries, machine tools, printing machinery, textile machinery, paper and board, clothing and non-ferrous foundries. The Chancellor of the Exchequer in his Budget speech referred 590 to one of those schemes, on which the Economist commented as follows:Mr. Healey insisted on having a new candidate to name in his Budget speech alongside the £40 million allocation. The best the Industry Department could come up with was the electronic and automation industry. The civil servants were deliberately non-specific because they are not yet sure whether it warrants a scheme.Another scheme for consideration is aid for that commanding height of the economy—poultry processing. I do not know what implication that has for the European approach to evisceration, but my hon. Friend the Member for Banbury (Mr. Martin) may be interested in it. We have a plethora of schemes and, in spite of what the Government say, industry is not rushing to take them up. Why is that? The answer is contained in the representations on price control made by the CBI to the Government. The CBI said bluntly:There is no chance of the private sector embarking on the major investment programme and re-employment that the country needs unless an early restoration of adequate levels of profitability can be foreseen.It would be courteous to welcome the Minister of State to his new job, but I greet him with some misapprehension because I know the Department from which he came. The policy of the Department of Prices and Consumer Protection is in direct conflict with what the Department of Industry is seeking to do. Is the Minister of State a gamekeeper turned poacher, or the other way round? I should, however, like to give him a general welcome to his new responsibilities. I must not make the welcome too long, as I have to say with respect that we do have to welcome new Ministers in the Department of Industry quite often.
The Government claim to recognise the problem. Are they at long last taking to heart their "An Approach to Industrial Strategy", which said that we must ensurethat industry, both public and private, is able to earn sufficient profits on its investment to spur managements to expand and innovate and provide them with the internal finance on which to base investment.There is no way in which we can get the investment needed in this country by artificial means unless there are the funds within industry to make it possible.
591 The damage being done by the Price Code was recognised in a Guardian editorial this week which said:It is essential … that the Code must be replaced by provisions which will not deter new investment as seriously as the present provisions … what do effective price controls imply? They undoubtedly mean less investment.If more investment is now the top priority, we must ensure that industry is able to retain the funds.
If the Secretary of State has not read the CBI's examples of the Price Code's impact, I can give him the whole dossier. One example involves a large engineering company which studied an investment proposal which would have increased efficiency and produced more jobs. However, the extra labour costs could not be passed on in full because of the Price Code's productivity deduction. However, the reduction in costs per unit which the investment would have achieved would have had to be passed on to the customer under the Code, offset only temporarily by investment relief.
As a result, a project which was supposed to show a return of £1 million would, because of price controls, have shown a loss of £300,000. The project was abandoned. The CBI has provided a whole series of examples.
There is another example in a successful engineering company which I visited recently. It had been seriously hit by restraint on profit levels. Does the Secretary of State know that their level is fixed at 10 per cent. and that this company has been unable to generate funds for new investment? Does he know that his Department approached the firm saying it would like the company to consider bringing forward accelerated investment schemes? The firm put forward four schemes to his Department, two showing a return of 10 per cent. and two a return of 15 per cent. The Department said that it would certainly not support the schemes showing a return of only 10 per cent. because they were unviable. It would put money only into the 15 per cent. scheme. But the Minister of State's old Department says the company must not show a return of more than 10 per cent. on its prices. If the company goes ahead with its 15 per cent., in turn it will be told to reduce its prices.
On one hand, the Government are trying to get investment and using all 592 sorts of pump priming while, on the other, they are doing all they can to stop the water rising in the well so that the pump does not work.
If price controls can be justified, it is only in a very limited rôle. I regard them as being like a tourniquet. When a person is bleeding, a tourniquet may be essential, but if it is left on for ever the patient will get gangrene.
If the Secretary of State wants investment, he will not get it by tinkering around the edges of the problem and stuffing in lots of Government money which has to be borrowed from somebody else, thereby reducing the value of the pound still further. We should be creating the climate in which new investment can take place.
On Monday, the Secretary of State was asking for £2,000 million for the British steel industry. I recognise the industry's difficulties, but one of the reasons the Secretary of State had to ask for so much money was that the self-generated financing ratio of the British Steel Corporation had dropped from 55 per cent. to 30 per cent. and the only source of funds was borrowing from the Government.
§ Mr. Arthur Palmer (Bristol, North-East)
The hon. Member is getting very worked up about this. Has he forgotten that it was his Government which imposed unasked-for price controls on the electricity supply industry which is still trying to recover from that blunder?
§ Mr. King
I respect the hon. Member for Bristol North-East and I think he takes my point. The case for price controls may be that they have a short-term validity. The danger lies in prolonging them. Perhaps the hon. Member has made my case. He is clearly opposed to price controls in nationalised industries. The Government say they recognise the need for investment in public and private industry. What is fair for one sector must be fair for the other. It is worrying that the Government are perpetuating the belief that industry can have security and prosperity through these investment funds when, in fact, there is no solution other than for companies to become profitable.
There was a very sober warning given by Sir Richard Dobson yesterday when he said that even in British Leyland—with the massive funds proposed—he 593 could well see the time when neither he nor his board would be able to recommend the Government to put more funds into the organisation. The seriousness of the situation at Leyland is indicated by the fact that lost production has totalled £50 million since last month.
§ Mr. Varley
The hon. Gentleman is incredible. The best thing for him to do would be to get through his speech very quickly. We know the Tories did massive U-turns while in Government, but they seem to be doing even bigger U-turns in Opposition. Before he gets himself worked up with this synthetic anger, he should turn round and look at hon. Members like the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) who know the Opposition are not realistic about industrial policy.
§ Mr. King
I do not think that intervention was particularly helpful. Those of us who care about what happens to industry in this country know the difference between the use we made of the Industry Act 1972, with its precautions, and what the present Government have done with it. By the time we left office, we had spent just £10 million on selective schemes. The Secretary of State has the nerve to imply that we are in favour of endless payments to an endless number of projects. It is utterly disgraceful. It is not fair to suggest that we are adopting double standards.
There were two interesting comments in the Press which I hope the Secretary of State read this morning. First, Lord Ryder said younger management should be given a chance and promoted within industry. Secondly, in the same papers which reported those remarks, there was a reference to the fact that managers had suffered a 13 per cent. drop in their real incomes this year.
If we are looking for the people who have given a year for Britain, we shall find them in middle management. The former Secretary of State for Trade paid tribute to our export performance and to all those who helped to improve it in such a remarkable way between 1974 and 1975. He said it was wholly due to the efforts of British workers and managers in the export markets. No matter how much pump priming the Secretary of State does and how much Government money is spread around, we shall not 594 solve our problems unless we have dedicated and enthusiastic people in our industry who will stay there and help us fight our industrial battle.
It is difficult to get the facts, but I am worried about the number of people who are going to work abroad. In addition, the return flow to this country is effectively blocked. It is almost impossible to bring back the best of our managers from overseas, and this is a problem on which the Secretary of State should be giving serious consideration.
§ Mr. Bruce Grocott (Lichfield and Tamworth)
Will the hon. Gentleman make it plain that his party completely condemns those who were on pretty good incomes who abandoned Britain when, according to his estimate, the country particularly needed them?
§ Mr. King
The hon. Gentleman did not bother to be present to listen to his right hon. Friend the Secretary of State. I take some slight comfort from the fact that he has done me the courtesy of listening to me. However, I am not in favour of turning the country into a concentration camp. I think I carry most of my right hon. and hon. Friends with me on that point.
When the Chairman of the Illinois Central Gulf Railway came over to this country he spoke to Sir Richard Marsh about running a railway. He later said:The trouble with Dick is that the has responsibility without power, and that ain't no good for anything except a prayer meeting.The trouble is that too many people in industry have responsibility without reward. That is no good for anything except a charitable organisation and if we try to run British industry as a charitable organisation we deserve the fate we shall have. We shall see a standard of living that none of us wants.
The Bill proposes a massive increase for which no case has been made. Our intention to oppose the Bill is certainly not a rejection of the principle of selective assistance. The Secretary of State knows that that was the proposal that 595 we embodied in the 1972 Act. We provided safeguards which the Labour Government have abolished. Because those safeguards have been removed, because no case has been made at all for the massive extra sums involved and because the Government are grossly overspent and simply do not have this money, we shall vote against this further extension of profligate public expenditure tonight.
§ 5.12 p.m.
§ Mr. Dennis Skinner (Bolsover)
I welcome the opportunity to take part in this debate. Prior to entering the Chamber I was engaged in some serious discussions on matters concerning irregularities that are alleged to have taken place within the Bank of England. I have been dealing with that matter.
During the last quarter of an hour I have had to endure listening to what the hon. Member for Bridgwater (Mr. King) had to say. I am astonished by the almost synthetic abuse to which we have been subjected. That has happened mainly because the hon. Gentleman was trying to say that he would like to return the position where market forces prevailed completely, absolutely and truly, as they were supposed to do after the famous Selsdon meeting, but at the same time indicating that during the period that the Conservative Government were in office they introduced the Industry Act in such a fine and technical way that it was able to be used without increasing the money supply or distorting the market forces.
The hon. Gentleman cannot have it both ways. The plain fact is that capitalism is on the decline. That is one of the reasons why the Bill is before us today. I have seen many of these Bills since becoming a Member. Each one of them has been some sort of prop to the capitalist system. Incidentally, each one has had to have within it a great deal more money. It has not really mattered whether such a Bill has come from a Labour Government or a Conservative Government. Throughout a period long before I came to this place —this probably took place over the past three decades—the way in which market forces have been able to generate new investment has declined year after year.
Irrespective of what the Tories have said in opposition, when presented with 596 the power of government they have had to face the responsibility of taking one of two options. One of the options has not really been open to the Tories. It cannot be, as it takes them a great leap forward to State control. Therefore, they take the easier option—the one that permits them to say that they are trying to preserve the free market forces, but that in order to help here and there, to prop up a small part of industry in one area, to assist regions in a certain direction, to help a small firm in another area and to mop up unemployment as they did in 1972 and thereafter, it is necessary for them to intervene in a multitude of ways, which, as they claim, do not add up to interference.
That is what the Tories want to do when they are in power. The fact is that it leads them to the Industry Act. Of course, they try to adopt the same approach in a piecemeal fashion.
§ Mr. Lawson
The hon. Gentleman is trying to maintain that the private capital market cannot finance the investment that is required. Does he not realise that finance is not forthcoming from the private market when the venture is not profitable because of Government interference, or whatever else may be the reason? When something is profitable, such as North Sea oil, private capital is available. Private capital flowed into North Sea oil on the largest possible scale—a far larger scale than that of many Government projects.
§ Mr. Skinner
When the Tories were last in power I think that the hon. Gentleman was involved in editing an important Tory periodical. Why did he not make it clear, after the Tories had been elected in 1970, that they had struck out on the wrong course?
§ Mr. Skinner
It may be argued that for a few months the Tories indicated that they were reverting to the jungle of market forces. However, after a further few months, after the Civil Service had got round their necks, they indicated that they could not revert to that jungle. They were told that they would have another 100,000 on the dole in next to no time if they did.
597 When that position was reached, Tory Ministers propped themselves up at the Dispatch Box to trot out the intervention policy. They did so not to my amazement, because the Tories had the same briefs as some of my hon. Friends got in 1974. Tory Ministers appeared at the Dispatch Box and, instead of trotting out the Selsdon philosophy, hey presto, they trotted out the intervention policy. The serried ranks of the Tories on the Government Benches dropped their heads. Almost all of them looked sad. Those on the Front Bench looked cheerful, or tried to look cheerful. They were intervening to a greater degree than The Tories had ever intervened before.
That reversal having taken place, we moved forwards another stage. The right hon. Member for Leeds North-East (Sir K. Joseph), who represents the Tory Party across a wide area—the precise range of which I know not—indicated at the Tory Party Conference that the ratchet had moved another little notch. That is what happened. The 1972 Industry Act came later because of the 1 million unemployed in February. That is when the ex-Prime Minister, the right hon. Member for Sid-cup (Mr. Heath), said at the Dispatch Box—and he could not hear himself speak because of the 1 million unemployed—that he had decided, along with his Cabinet, to change course.
That was not a big job for the right hon. Gentleman. It was not difficult for him to change course. He merely told his Cabinet what he was going to do. About 20 people immediately turned right round. No one protested, not even the present Leader of the Tory Party. I am told that she grumbled in private about the change in direction. She grumbled about the Industry Act but she did not do anything about it publicly. She carried on, and the Tory Party intervened in a fairly dramatic fashion. At about that time they rescued Rolls-Royce. That gave them a clue as to how they could prevent another Rolls-Royce debacle in future.
I came here today, Mr. Speaker, shortly before you took the Chair, to listen to the Tory Front Bench spokesman—the hon. Member for Bridgwater. He told me what the Tories would do if they came back to power. It is not that I do not want to believe the hon. Gentleman; 598 based on past experience, I cannot believe him. When the Tories were in power, I watched the hon. Gentleman, when he was an ordinary Back Bench Member sticking up his hand in the right places and voting in the right Lobby, consistently, day after day and week after week. Rather strangely, most Tory Members followed. The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) has a rather difficult rôle to play in this matter. I am not sure whether he was kicked out or got dropped on the way. He made a few noises. By and large, however, the Tories accepted it.
I have news for the Tory faithful who have been prepared to listen to their Front Bench spokesman—the nine Back Bench Members. It will be the same thing the next time round, if they get the chance. If they get the chance, the intervention policy will continue, because it must.
§ Mr. Tom King
The hon. Gentleman has referred to the Opposition Back Bench Members who listened to my speech. Why does he think that none of the Back Bench Members on the Government side of the House listened to the Secretary of State?
§ Mr. Skinner
As I explained, I was on my way to listen to my right hon. Friend, who is my next-door neighbour, when I got involved in trying to explain to a mass of Lobby correspondents outside this place about the irregularity that has been occurring in the Bank of England. I had to explain that. When I leave the Chamber this evening, I shall be explaining a little further about that sordid affair, which needs a wider reference to the public generally.
§ Mr. Skinner
The Tory faithful will have to put up with the Industry Act and these increases. As I say, if the Tories returned to power I would have no doubt that they would propose even more increases. The plain fact is that a £10 million-a-day intervention is the total of grants of one kind or another—tax reliefs, and so on. The Tory Party, if in government, could not dismantle it. It is too large.
§ Mr. Skinner
I am coming to that. I shall deal with it much later. I am trying to explain to the hon. Gentleman what he will do. I know what he will do tonight. If he gets the chance, he will stand up and vehemently tell us what ought to happen, and he will vote in the same fashion as all his colleagues. They will be one happy band of brothers. But he would not do that in government if he got the Front Bench job that he is currently shadowing. [Interruption.] Is the hon. Gentleman suggesting that he did not speak from the Dispatch Box the other night on some rather important financial matters at about 1 a.m.? That is what he will do if he gets the chance to put forward policies on behalf of his party.
The Tories will do it not only because of the massive amount of money that is being channelled and funnelled into the private sector, which is diminishing all the time because of the falling rate of profits and the difficulties—
§ Mr. Skinner
It has nothing to do with a Socialist Government. The fall in the rates of profit has been going on for a considerable time. I remember putting down Questions, when the Tories were in power, about the rate of profit generally throughout the private sector. I got answers that indicated that it was falling during most of that time. There were slight spasms here and there, but by and large the general trend over about 15 or 16 years has been a falling rate, give or take a few minor variations along the way. That is because of technological changes that have taken place in industry. It is because of the mad desire of most politicians to allow the implementation of services not in the public sector but in the private sector—services that some of us would argue were of too low a priority and which perhaps we could do without.
The manufacturing base has been narrowed more and more as each year has passed. It is because of having to compete with outside interests that have, perhaps, had greater advantages than in- 600 terests in Britain. Taking Japan or the Common Market countries, one can argue that, for a good number of reasons, their ability to produce more efficiently has without doubt made it more difficult for British speculators and firms to compete on the same basis. Our entry into the Common Market did not help us in that regard, either, because it enabled people to transfer their money and investment to other parts of the world, whereas hitherto they had found it more difficult to do so.
For all those reasons the private sector, especially the manufacturing area, has been diminishing over a long period. It is that diminution that we must arrest. Therefore, my right hon. Friend comes forward with a proposition which is, roughly, that we believe that we can prop up the private sector and keep to some extent a modicum of price control—I do not go any further than that—by giving grants of various kinds, especially in areas in which they are needed for reasons of unemployment, for technological reasons or any of the other reasons for which my right hon. Friend is allowed to do these things.
I take a different view. This is where I answer the question raised by the hon. Member for Blaby (Mr. Lawson) about my personal views. He rightly raised the point. As a member of the Parliamentary Labour Party, I take the view, roughly, that because the capitalist system is now showing signs of decline that are more serious than any of those previously shown since the end of the war, and because the contradictions are exposing this to a greater degree, we ought to move in, in a public fashion and in a more dramatic way. We should recognise the difficulties of the private sector in surviving to an even greater degree than is being done by my right hon. Friend and his colleagues—who form a majority of the Parliamentary Labour Party. Let me put that on record. Not every one in the Tribune Group would agree with the point that I am making. I understand that my right hon. Friend represents the majority view, but it happens not to be mine, as an individual point of view.
I would take another great leap forward, and not rely on getting another few notches on the system over a long period, during which we might have another fundamental crisis of high 601 interest rates, high unemployment and all the things attached to economic crises such as those of the past 30 years, each one of which has shown itself to be greater than its predecessor. That would be my way of examining this problem and dealing with it.
I understand my right hon. Friend's point of view when he refers to the current view within the Parliamentary Labour Party as represented by the Cabinet and the Government. Therefore, I shall naturally support my right hon. Friend's application and the Bill to increase the amount of money that he will be able to use, on the basis that I know that for the majority of Labour Members and the majority of people in the Labour movement it will represent the answer to the problem.
I know that we shall return to the problem, and that on the next occasion when we run into an economic crisis—and it may not be as far away as the time lag between the present crisis and the previous one—we shall return once again to the same fundamental problem. Perhaps I shall wander into the Chamber and make a similar speech. We shall have to face the problem.
I understand my right hon. Friend's reasons for introducing the Bill. With his colleagues, he takes the view that by this amelioration they will be able to keep down the unemployment levels in some areas, soften the misery of unemployment, and many of the things they want to do to placate certain problems. I take the view that this is not resolving the problem with which the country is faced, and that it is not doing it in a Socialist fashion; but that is neither here nor there. I am pleased to be able to take part in the debate.
I return to the central point that I made at the beginning of my speech. The Tories are in extreme difficulty in this matter. They introduced the Act in 1972 because there was high unemployment, and they decided to use the tools of that Act in a more limited way than this Bill does, but they used them for pretty much the same reasons. The difference between the Tories in 1972 and the Government today is that my right hon. Friend is taking account of inflation and understands that the crisis is more severe than in 1972. My right hon. 602 Friend therefore needs more flexibility and more money. For that reason I shall support him tonight, in the knowledge that we shall return to the problem over and over again, until it is solved in the way that I have described.
§ 5.31 p.m.
§ Mr. Nicholas Ridley (Cirencester and Tewkesbury)
The House is fortunate because the hon. Member for Bolsover (Mr. Skinner) managed to escape the financial journalists. If he had not he might have been prevented from delivering his speech. It was in the best traditions of parliamentary rhetoric. The only trouble with it was that it was not serious. It was a frivolous speech. His mind must have been more on the problems of the currency markets on which he had been engaging financial journalists. Perhaps one of the reasons for the appalling fall in the value of the pound is that financial journalists have been listening too much to the hon. Member for Bolsover.
The speech of the Secretary of State was also frivolous. Listening to it one would not have believed that there is an appalling industrial and economic crisis. The two speeches from the Government Benches have been entirely devoted to an attempt to tie up my right hon. and hon. Friends in their policy. That may be great fun, and there may even be some justification for it, but it is not serious and it is not a real contribution to the debate.
I want to make a serious analysis of what is wrong, and I know that the hon. Member for Bolsover will not agree with me. I intend to use the debate to analyse what has gone wrong with our industrial effort. It is too simple to try to describe the situation in terms of what the Tories did or what the Labour Government did, and how much investment took place under each Government. One cannot take periods of Tory or Labour Governments and say that things were good at one time but bad at another. There has been a continuing decline.
We have substituted new objectives for industry. Whatever one might feel about the old objectives, the idea was that industry should achieve the best possible return on capital and that it should satisfy the needs of customers. Those two objectives have been thrown out of the window in recent years, to such an extent that I 603 want to treat the House to one quotation from the booklet entitled "The Contents of a Planning Agreement" from the Department of Industry. In that pamphlet there is only one mention of the consumer and that is on page 16, paragraph 26, which says:What evidence is there that the company's procedure for handling customers' complaints is satisfactory? Has the NCC been asked about it?That is the only reference to the market in the whole of the document.
That brings me to the new objectives of industry as evidenced by this Government more strongly than any before it. I see that the financial expert, the hon. Member for Bolsover, has already left the Chamber to discuss currency markets again. What a pity.
The first new objective of industry is that the price charged should be acceptable to the Government. We now have this mad policy of industrial price control, and I must chide the Secretary of State for defending price control today because he voted against it when the Conservative Government introduced it in 1973. I must also chide my hon. Friend the Member for Bridgwater (Mr. King) for trying to dissociate himself from price control, because he voted for it in 1973. I have consistently voted against price control in the 16 years I have been a Member of the House.
§ Mr. Tom King
I respect my hon. Friend's consistency in this matter but I tried to distinguish between what is a short-term emergency and measures which are prolonged long after their useful life. I used the analogy of the tourniquet as an example.
§ Mr. Ridley
I do not want to become involved in the price control argument except to say that the damage price controls are doing to industry is deep and lasting. Anyone who wants British industry to succeed, expand and prosper must want price controls removed. They cannot have it both ways. The time has come to make up our minds.
The second problem, that of jobs and the way in which people lose them, is more difficult: price control can be eliminated easily. Welcome though the unfair dismissal legislation is on humane grounds, it is another burden on Indus- 604 try.It has an immobilising effect on managers who are attempting to introduce labour mobility. The provisions of the Act are counter-productive to efficient, modern industry. If one puts jobs first, industrial efficiency and productivity must come second. That might be right, but the consequences are there for all to see—growing overmanning, growing misuse of labour, the desire of Government to introduce job creation and preservation schemes which can only lead to having more people in jobs than industry can carry.
All Government legislation has been along those lines. One cannot have planning agreements, national enterprise boards and all the claptrap of State control in industry, unless one explains what is its purpose. Its purpose is not to promote industrial efficiency but to keep people in sheltered, protected employment. For real industrial efficiency the National Enterprise Board would have to close down all inefficient industries and rout out overmanning. The board would have to insist on unemployment being created on Merseyside because that is where the overmanning is. The Government and their supporters try to pretend that the whole claptrap is designed to secure greater industrial efficiency. It is not. It is designed to ensure that the industrial priority is to employ people in the greatest numbers possible in the places where the Government want them employed. I understand that but it is counter-productive to industrial efficiency.
§ Mr. Stokes
Does my hon. Friend not agree that it is no good having production unless industry makes the goods that people want to buy? It is the market and the customer who should decide.
§ Mr. Ridley
hon. Friend is correct. That is what has gone wrong.
The worst thing of all is the industrial rescue. When the Government save a major industrial company they signal to all industrial workers that no amount of overmanning, strikes or inefficiencies will carry any penalty, and that, no matter how hard they push wage claims or refuse to accept modern working practices or shift work, there is no ultimate danger to the enterprise, because it will be saved. That is a final reinforcement of the policy of putting people's convenience and their jobs before industrial efficiency.
605 That is what is wrong with British industry. It has resulted in three or four times the manning scales that we should have, a quarter of the amount of shift work which our competitors are doing, and appallingly low use of capital investment resources. It is no surprise that this is the consequence.
I want to take the matter a stage further. The latest pressures from the Labour Party are for import controls, workers on the board, the virtual abolition of the prerogatives of management, and the transfer to trade unions of large areas of industrial decision taking. Those ideas are not in order to obtain more shift work and to have machines manned properly. They are not in order to use our capital stock effectively. They are in order to make life even easier and less uncomfortable, to take all the hardship that is left in British industrial life out of it.
The House can have it as it wishes. I am not necessarily arguing that it is wrong to do those things. I am saying merely that we must understand the reason why our industrial performance is so bad. Germany, Japan and France are pursuing the objective of return on capital employed by satisfying the demands of the market place: nothing else. They do not think about the effect on workers, trade unions or any of the sacred cows of the Labour Party.
§ Mr. Ridley
It may be good or bad. I am trying to explain to Labour Members why a further dose of the medicine that is already poisoning British industry is unlikely to help the patient to recover.
§ Mr. Ridley
In a sedentary intervention, the hon. Gentleman raises the question of planning agreements in France. He will be wise to study the tax structure there. He may have heard that the French economy is beginning to decline, and he may also have noticed that the franc has been weak. That may be coupled with the fact that the French are now introducing the same sort of Socialist taxation policies as we have.
606 The escalating sums of money that we are being asked to vote for industry, to which the Bill is a witness, are the price we must pay for the decline in the standards of efficiency of British industry. We cannot feel happy about substituting the judgment of the State for the judgment of the market. The whole House is agreed on the problem—that the share of private industrial investment has been woefully low and is becoming worse, and that there is a vacuum. Even if we make money available through the City or the Government nobody wants to invest it. I do not think that that is a contentious point.
The Labour Party then says "Let the State decide how to invest it." We say "Let us find a way of encouraging the private sector to invest it." I should like to remind the House of examples of major State industrial investment. I should hardly be wise to mention groundnuts, but that is where all this started. I should like to mention the atomic energy programme. The State has invested £l½billion and has nothing. We have not sold one atomic power station round the world. We have the hovercraft, another colossal British industrial failure, and the hovertrain. We have the 500 megawatt sets, which set back electricity generation for years. Now we have that all-time sales winner, the Concorde.
§ Mr. Skinner
Is not the hon. Gentleman forgetting something which is a bit nearer home and much more recent? In the context of all the other matters he has mentioned he should refer to the Crown Agents' bid to involve themselves in the property market, which has already resulted in the taxpayer having to find £85 million. That was passed by the House, and I cannot remember the hon. Gentleman protesting in the same way as he is protesting tonight. The sad fact is that it will cost a hell of a lot more before the mess is cleared up.
§ Mr. Ridley
I am always grateful to the hon. Gentleman for his interventions. He makes my point, that where the State has undertaken major investment it has got it wrong, even more often than the private sector. As far as I know, the Crown Agents do not issue shares or have owners. I believe that they draw their resources from the House.
607 I have given examples of identified investment projects. The list of companies taken over by the State in order to inject money into them to make them succeed is equally dismal: Beagle, the Scottish Daily News, Meriden, the Kirkby co-operative, and now the two great motor companies, Chrysler and British Leyland, where all that I have described is only too evidently true. It is too soon to judge for sure, but the evidence that we have about the use of money under the Bill on projects to encourage investment, or for buying into private sector companies in the hope that they will take off, must be very depressing for Labour Members. It must sometimes cause them sleepless nights, after they have called for more State investment, to think of the results of such State investment as has already taken place.
There is no doubt that our most successful competitors are succeeding through private sector investment. Although there are examples of semi-partnerships, they are partnerships with the financial parts of Government or the banking system, rather than through the trade unions and Socialist politicians, who, in this instance, are pursuing objectives totally different from those of the State planning which is taking place in France or Japan. I do not think that one will find the trade unions in Japan saying "Put another £1,000 million into this industry because of the jobs it will save. "Hard-headed bankers there say "You could use your cash better if you took it out of that industry and exploited this market." That is why we find ourselves bedevilled with colour television tubes, motor cycles and motor cars from Japan. It is because of an absolutely dedicated, hard-headed sense of where the best market is and how the best use can be made of investment. Not till the Labour Party gets that attitude into its view of how State funds should be used will it have a success story.
I shall now be constructive. There has been a great deal of teasing and bantering about what the Tories would do. I plead not guilty to any equivocation over prices and incomes, State help for industry, or any of these matters. I shall tell the House what I continue to believe the right solution to our industrial problems to be. I draw attention to Shannon, in Eire, where there is a 608 province—if that is the right term—which is free from tax liability till 1991. Any company which starts operations there does not have to pay tax till that date. If we could give a guarantee of that kind we would begin to encourage investors.
I am sorry that the hon. Member for Liverpool, Walton (Mr. Heffer) is not here because I believe that if he were prepared to go to Merseyside, one of the more depressed industrial areas, and tell industrialists that their investment will be respected by Government and by the taxman for 20 years ahead, that the shareholders will have a good and fair return on their money, and that managers will not be taxed out of existence by having to pay more tax than their counterparts pay in other countries, that surely would make an enormous difference, because that area would obtain the required investment. The hon. Gentleman could go even further and say to the trade unions on Merseyside "Throw out restrictive practices, cut out overmanning and throw aside the process of having six men to do a two-man job". If that line were followed there would be so many industrialists rushing up to Merseyside that the trains, already oversubscribed, could not even carry them.
The Labour Party must realise that the crisis is one of Socialism. What is afflicting this country is the failure of Socialism. In no sense is this a crisis of capitalism. Capitalism has been starved of resources and there has been no encouragement to allow the system to thrive. All that happens is that it is blamed for any failures.
We have only to look at this Bill to see the danger of its provisions. We are being asked to spend another £1,600 million on propping up failed Socialism. The levying of a sum of £1,600 million will do grave damage to what remains of our productive industrial base. The Government cannot obtain the money in taxes, so they will print it. In due course that money will find its way through the system and will cause inflation and disrupt the stable areas of British industry. It will certainly cause more damage to be done, as if enough damage had not been done already.
Why cannot the Socialists realise that all they have cherished for so long, all the rubbish they learned when young, has 609 proved and is proving so dangerous to this country that it is destroying us? When will they learn that their policies are eroding our industrial base and are thoroughly destructive to all we rely upon to survive?
§ 5.54 p.m.
§ Mr. Geoffrey Robinson (Coventry, North-West)
I am grateful for the opportunity to take part in this debate, and I apologise for the fact that I was unable to be present for the Front Bench contributions.
I was interested to hear the speech made by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley). All I shall say of that speech is that it was a rhetorical effort in the parliamentary tradition, and far less sensible than the speech of the previous contributor. The speech made by my hon. Friend the Member for Bolsover (Mr. Skinner) was rhetorical, but he put forward a coherent policy that was consistent with Socialism. It certainly contained a lot more than did the speech of the hon. Member for Cirencester and Tewkesbury. But neither hon. Member tackled the central issue that faces this country. The central issue lies in finding a way to deal with our deep-rooted industrial problems—in other words a solution to our problems that will be acceptable in terms of social democracy and the traditions within which we live.
Let me pass from the macro to the micro level and take the opportunity to say something about certain of the many purpose for which the money that we are voting in this Bill will be used. It is particularly appropriate to do this, since I come from a constituency and an area that will benefit considerably from the provisions of the Bill. I refer to Coventry in particular and the West Midlands in General.
We have seen that operations mounted by Labour Governments against a background of bitter and acrimonious debate in this House—measures pushed through against the relentless opposition of the Conservative Party—have in effect saved Coventry from a devastation that would have made the blitzes of 1941 and 1943 pale into insignificance.
Have Conservative Members fully appreciated what would happen if funds had not been made available to Chrysler, 610 British Leyland and Alfred Herbert? Indeed, would Conservatives have denied those funds if they knew that it would affect the livelihoods of 50,000 people in Coventry and in the areas surrounding the city? I invite the hon. Member for Cirencester and Tewkesbury to say whether he would vote against such provisions.
§ Mr. Robinson
At least we now have it clear that the hon. Gentleman shows indifference to the livelihood of 50,000 people in and around Coventry. Does he believe that such a policy is practical in the Britain of the 1970s?
§ Mr. Speaker
Order. I appreciate that the hon. Gentleman is a new Member, but he must remember that when he says "you" he means me.
§ Mr. Robinson
I shall do my best to comply more completely with the conventions of the House. Perhaps I should have said that the hon. Member for Cirencester and Tewkesbury is farther away from reality than I thought. The hon. Gentleman's attitudes are just too theoretical. It is no good his coming forward with magnificent pieces of rhetorical but totally unrealistic political and economic atavism. What he propounds is nothing more nor less than that.
§ Mr. Norman Tebbit (Chingford)
Will the hon. Gentleman say how many people will be unemployed in Coventry when our creditors refuse to lend us this £1,600 million, which will be additional to all the other many millions that we are now trying to borrow?
§ Mr. Robinson
The public sector borrowing requirement is a matter of great concern. I do not disagree with the hon. Gentleman on that score. I think that we can raise credit for a limited period in future. I do not think that we shall be denied that money by our creditors, and it will be well spent in the areas to which it will go. If it is not well spent, it will be as much the fault of the managers as of the men.
§ Mr. Ridley
The hon. Gentleman says that we can raise the money for a limited amount of time. What happens when we reach the limit?
§ Mr. Speaker
The hon. Member I or Macclesfield (Mr. Winterton) has been in the House longer than has the hon. Member for Coventry, North-West (Mr. Robinson), and should know the rules.
§ Mr. Robinson
Bad habits seem to be contagious.
I wish to deal first with the Chrysler situation. The Labour Government should in no way apologise for their rescue operation of Chrysler. The decision was correct. The Government, particularly my right hon. Friend the Secretary of State for Industry, devised a finacially and organisationally ingenious formula. The operation was perhaps as skilful as some of those mounted the then Industrial Reorganisation Corporation, which was abolished as an act of rash and reckless political prejudice by the Tory Government in 1970.
It is true to say that the right hon. Member for Knutsford (Mr. Davies), as the then Secretary of State for Industry, tried to avoid that decision, but he was overruled by the reckless political prejudice that prevailed in the Cabinet at that time. It is the same Cabinet that embarked on policies of confrontation and conflict, the consequences of which are still working themselves through our industries and in particular those in the Midlands.
If hon. Members opposite will not accept that, they are refusing to come to terms with our central problem in regard to industrial relations, particularly in those areas in the Midlands that I know something about. Unless they are unable to realise that they will never succeed.
With regard to Chrysler, there is one matter in particular to which we shall have to pay attention. The management of Chrysler in the United States 612 must be pinned to the commitments it gave. If Chrysler is to succeed in this country, the key to its success will lie very much in Detroit. Unless we pin down the American management to honour its commitments, Chrysler will not succeed. It will be an acid test of the Government's ability to make a multi-national corporation honour its commitments, which are essential to the national requirements of the United Kingdom.
§ Mr. Michael Marshall (Arundel)
The House listens to the hon. Gentleman with great interest, knowing his experience in the motor industry. Does he agree that if he is supporting the case for Chrysler he is doing so only at the expense of British Leyland? Is it not foolish to have this competition between these two parts of the motor industry?
§ Mr. Robinson
We have a much smaller motor industry in the United Kingdom, with fewer producers and fewer models, than many European countries. There is a perfectly good place for Chrysler within the United Kingdom and within the world-wide operation of the Chrysler Corporation.
Hon. Members opposite are continually braying about industrial relations. The problems of industrial relations are put forward as being the only one we have in British industry, and in the motor industry in particular. Hon. Gentlemen opposite understand that there are not only industrial relations problems but also problems relating to design and development, which have nothing to do with industrial relations. Moreover problems of industrial relations have nothing to do with those of manufacturing or technology, or even the ability to sell things, particularly abroad. All those matters are equally relevant to the problems we have to solve. Hon. Members opposite are ignorant of the real world and their outlook does nothing to provide a solution to the problems of industry.
None of this is meant to minimise the importance of good industrial relations. But strikes and the rest are not all the fault of the unions, or of the men. If hon. Gentlemen opposite do not believe me, let me given them a quotation from Don Lander of Chrysler, who I imagine has had as much experience in industry 613 as any Member in the House. The following quotation, from a brochure put out to the employees of Chrysler, says:We have to accept that our old methods of management contributed to the crisis we faced. In future, we must be more sensitive, more participative and more communicative.I cannot imagine anything further removed from the ideas of the hon. Member for Cirencester and Tewkesbury.
As to British Leyland, we would do well not to treat it here as a political football. Nobody opposed more than I did the particular scheme that was pushed through for the structural reorganisation of British Leyland. I should not have the privilege of being in the House had another scheme been adopted. Having said that, I maintain that it is vital that the company be given a period of respite from public criticism and from the concentrated, orchestrated, attacks on it made through the media and through the House. It should be left to get on with the job —but not for ever and a day, because time is limited. The reorganised company has had only 11 months so far, and when one considers it takes five years to bring a new model into production. With the company's deep-seated problems, that is not a long time.
Let us take it, particularly its organisational structure for a while, out of the area of political debate, in which in any case the problems will not be solved. Let us also remember that if we are to witness a one-sided minatory posture on the part of management against the men—I found this implicit in the remarks of the new chairman at yesterday's hearing—we shall not succeed either. The men will not yield to threats. They will not take to bullying. But they will respond to a challenge and to a genuine opportunity to participate and co-operate in the company.
I ask my right hon. Friend not to be too impressed with the would-be hard nosed pressure from the other side that the investment funds should be strictly held back and put forward only in line with improvements in the company. It is not an effective sanction.
§ Mr. Heseltine
The hon. Gentleman will understand, with his unique experience, that the hard-nosed approach came from the Prime Minister, when he indicated the way in which the Govern- 614 ment would support the company, and that it also came from the chairman of the company, whom the Secretary of State for Industry did not bother to meet before appointing him.
§ Mr. Heseltine
I appreciate the niceties of the Secretary of State's excuses, but I want to ask the hon. Member one question. In the next few weeks British Leyland will have to take decisions involving hundreds of millions of pounds, because one cannot have an ongoing forward capital investment programme for new models without taking decisions on that scale. What scale of money would the hon. Gentleman believe it right to commit now, when the standards that are expected, in terms of improved productivity and performance, have not been forthcoming? How much money would the hon. Gentleman commit without adequate assurances?
§ Mr. Robinson
I really cannot answer that question without access to accounts, plans and proposals to which I am no longer privy. I do not know whether the hon. Gentleman has access to them.
Let us try to get back to the real world of industry. We all know that the money will be spent. We all know that it must be spent. It should be spent as soon as plans are ready. It is as simple as that. That is the answer I offer to the hon. Gentleman opposite.
In the context of industrial relations, I want to talk about one other venture that hon. Gentlemen opposite opposed with the same atavistic ignorance that they have demonstrated so amply today, and for which I am grateful to them. I refer to the Meriden Co-operative. There was a special debate, because the problem was considered to be very urgent. Let us consider what has been achieved in the first year—a year that was made triply difficult because of the delay, caused by hon. Members opposite, in setting up the co-operative by the collapse of NVT and by the tremendously difficult trading position in the United States market.
As I mentioned when I last spoke in the House, the co-operative goes into its second year in much better shape than that it went into in its first year. As to manning levels, the ratio achieved in terms of indirect workers to direct workers 615 is 1:5. That is better than anything that I know in any comparable engineering Industry in Britain or Europe. Secondly, a level of production of 350 motor cycles a week has now been achieved, with about 600 workers. That is compared with the figure of some 1,600 workers that the oracular pronouncements of the Boston consulting group considered would be necessary to produce the same number of motor cycles.
That example proves my point. It proves also what has consistently been put forward on the Government side of the House, in terms of what can be achieved with good will and co-operation between men and management. If we work together instead of fighting each other, and if we compete internationally in this way, we can achieve on a much wider scale what is now being achieved at Meriden.
§ Mr. Speaker
I did not want to interrupt the flow of the argument of the hon. Member for Coventry, North-West (Mr. Robinson), but it is out of order to address the House from within the Gangway. The hon. Member must stay within the seats.
§ 6.09 p.m.
§ Mr. Richard Wainwright (Colne Valley)
I listened with great interest to the speech of the hon. Member for Coventry, North-West (Mr. Robinson), and was very glad to hear—and will accept—the good news that he brings us from Meriden. It does altogether surprise me. I appreciate that the hon. Member may have been drafted into the Chamber rather hurriedly to cover some of the nakedness on the Government Benches, but I was very disappointed to hear him, so soon after entering the House, make the bankrupt plea that a major recipient of public money ought to be spared the limelight of public attention. The idea that British Leyland can escape the public eye after the sacrifices that taxpayers are making for it—
§ Mr. Robinson
What I think I said was that the form of reorganisation that has been chosen for British Leyland should not be the subject of continued debate. I said earlier in my speech that we shall be discussing British Leyland and Chrysler frequently in the House, and that it is quite right that we should do so.
§ Mr. Wainwright
Yes, but the idea that the form of reorganisation chosen for Leyland can or should escape public attention is quite a hopeless proposition, because it is axiomatic in a democracy that any project which costs public money not only will be but always should be under very close public scrutiny. I felt that I must say that in order to resist any suggestion that this matter could be, even temporarily, taken out of politics.
In my view, it is one of the great objections to injecting fantastically large sums of public money into any concern that inevitably its management is then subject to the hurly-burly of constant political criticism. That is one of the debits which we have to enter when drawing up a balance sheet on nationalisation or public finance of industry.
The poverty of thinking in this pedestrian Bill almost rivals the lack of intellectual resource in the original Act of 1972. That is a great pity, because the way in which this legislation for helping industry has been drawn up—and the original begetters must bear the larger share of responsibility—regrettably plays into the hands of people holding the primeval views of the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), who has now left us after his diverting contribution. There is no proper administrative framework, no proper system of monitoring the results of this public expenditure, no system of budgeting in a democratic way for the allocation of this money, and no system of comparing one applicant with another in a really ruthless way. Because all these elementary precautions are missing it is possible for critics with the stance of the hon. Member for Cirencester and Tewkesbury to make a heyday of the whole proposal, and this is very unfortunate.
In my brief contribution I do not intend to enter any total protest against the allocation of public funds for industry. Even in the regrettably poor framework of the Industry Act 1972 I believe that many notably good things have been done. The Secretary of State was right to say that I admired the way in which the wool textile scheme has been working out. If the hon. Member for Cirencester and Tewkesbury had been here, I would have taken him step by step through the fact that the application of the wool textile scheme under the Industry Act 617 greatly reduced employment in the wool textile industry and resulted in a very much better level of return from the labour employed. It was all done very carefully. There is an extremely good little NEDC for the industry, and the ground work was prepared with conspicuous care, in marked contrast to the rather shotgun performance that we have had during the past 12 months in respect of various parts of the motor car industry.
However, if we are to go on allocating such enormous tranches of national resources in this way the Government owe it to the British public to produce an orderly framework in which it can be done. It is very disappointing to find today that we are being asked once again simply to give statutory backing for the finance without any attempt to develop a proper framework.
I shall not labour this point because it has been made before from the Liberal Bench. In my view, there should be a provision for an industrial budget in which this House can hear from the Secretary of State the intentions of the Government, always subject to the emergencies of business and commerce, for at least six months ahead.
It is notable that the Secretary of State gave us virtually no clue in his speech about which industries are to receive the first tranches of this money. The whole proposal was presented to us on South Sea Bubble lines which, I am afraid, will make the foreigner who is watching us carefully feel that we do not know where we are going and that we are simply playing it by ear from day to day.
Secondly, since this kind of legislation has been in operation now for more than four years, surely we could have some system under the scrutiny of this House for comparing one applicant industry with another so that we might satisfy ourselves that industries are being treated fairly one against another, and, incidentally, that parts of the country are being treated fairly one against another, because up to now the regional distribution has been monstrously unfair and has indicated that those who shout loudest and make the most urgent threats will get most of the money.
§ Mr. Hal Miller (Bromsgrove and Redditch)
Surely there are also political overtones in the allocation.
§ Mr. Wainwright
I believe so. I do not want to moralise to the House—indeed, if I did I should have to include the manifest vote catching in some Conservative schemes, especially in the steel industry—but it is opening the door to political jobbery of a very dangerous kind, which, again, would be more likely to be avoided if there were some orderly procedure under which these vast sums could be kept within parliamentary scrutiny.
In regretfully having to make clear that I and my hon. Friends intend to oppose this measure I conclude simply by saying that there would be no need for public finance on anything like this massive Scale if only the economy had been and were being managed competently. What is, at heart, the reason why so many industries are likely to be queuing up for participation in what is permitted by the Bill is that the rates of commercial interest which they would have to pay if they approached the normal sources of finance are quite beyond the capacity of a normal manufacturing enterprise. We have reached a stage, owing to our economic mismanagement, where we are having to maintain a rate of interest that makes it impossible for anyone conducting a normal type of efficient manufacturing enterprise, without some whizzbang product or a monopoly position, to hope to be able to pay the bank the present monstrous going rate, which is a Government responsibility, and also produce a reasonable return on the capital employed in it.
In that position, it is regrettable that this House is asked simply to alter the figures in legislation which was badly conceived at the start and which has never been improved during the four years in which it has been in force.
§ 6.19 p.m.
§ Mr. Hal Miller (Bromsgrove and Redditch)
Following the excellent contribution by the hon. Member for Collie Valley (Mr. Wainwright), who made a number of my points for me, my remarks will be briefer than I originally intended. I pay tribute, therefore, to the clarity of the hon. Gentleman's thought and to his presentation.
619 I must say that the performance of the Secretary of State today was well below that which the House not only has come to expect of him but has the right to expect of one of Her Majesty's leading Ministers. I am sure that if he has his remarks put before him tomorrow in his Department he will feel some sense of regret.
The right hon. Gentleman set out to pretend that his Government and his Department had attempted to improve the operation of the Industry Act. He referred in particular to the introduction of the Industrial Development Advisory Board, provision for which he was taking credit for having inserted in the original Act. He went on to talk about the criteria. This, coming from a Government who have consistently overruled or neglected the advice of the Industrial Development Advisory Board on such projects as NVT—I shall come to the remarks of the hon. Member for Coventry, North-West (Mr. Robinson) shortly—really sticks in the craw. I do not know how the right hon. Gentleman has the gall to make such statements.
As for the criteria, we are still waiting for a public announcement of the criteria that are, for instance, to be applied to British Leyland when the next tranche of money is to be made available. All the Questions I put down in the House trying to elucidate these criteria have met with no satisfactory response at all. I hope hon. Members will agree, if they were present at the meeting yesterday of the Sub-Committee—I regret that so few were there—which is inquiring into the motor industry, that it is apparent that these criteria do not exist and had never been communicated to the company. How it was to meet its objectives and on what basis the Government are to make the next tranche available is obscure. All we are told is that more money is to be provided in the Bill for more enterprises but without the necessary criteria.
I have some sympathy with the remarks of the hon. Member for Coventry, North-West. The Secretary of State, in attempting to justify this increase in money, did not even refer to his own Government's inflation. There was no going back to the 1972 levels of money. Why? It was for the very excellent reason that the 620 spendthrift Government he represents have even outstripped their own rate of inflation. The attention of the hon. Member for Bolsover (Mr. Skinner), who is so interested in financial speculation, would be far better turned to the activities of his own Government.
There is no end to it. That is the other very interesting admission we had from the hon. Member for Coventry, North-West, and this is one of the difficulties we are now in. I agree with the hon. Member that once one is in this position something has to be done. We cannot simply pretend that it has never happened, because the public's ability or willingness to pay the taxes has a limit, as has the willingness of foreign lenders to extend credit. We must have some limit on the amounts of money which are being made available in this way.
§ Mr. Nicholas Fairbairn (Kinross and West Perthshire)
Does not my hon. Friend feel that it is particularly absurd to squeeze industry to the point of death by taxation and then to use the money thus removed to give it back a little life in the most inefficient possible way which may be achieved by the use of money?
§ Mr. Miller
Yes. I am grateful to my hon. and learned Friend.
That brings me on to the remarks I was about to make. I had turned to the subject of inflation and its effect on industrial cash flow and the need for funds. This has not only affected the value of stocks. Interest rates coming on top, as a result of the Government's borrowing policies, have also heavily penalised companies which have to hold large amounts of stocks as part of, for instance, the assembly process in a motor manufacturing company.
Companies have also been squeezed by absolutely rip-roaring wages once the flood-gates were completely opened in order to buy the October 1974 General Election. That was what happened in 1974. That election was bought, and everybody is now paying the price for it. Companies have also been squeezed by the operation of price control. The remarks of my hon. Friend the Member for Bridgwater (Mr. King) were very apposite in this respect.
While welcoming the Minister of State to his new responsibilities—we do so 621 genuinely—we regard him with some suspicion as to whether he is a sheep in wolf's clothing or a wolf in sheep's clothing to be led like a lamb to the slaughter like other Treasury Ministers. This remains to be seen. But Mr. Beckett, the managing director of Ford's, in an interesting address to Aston University, made clear the adverse effect of price control schemes on investment in the motor industry and why his company had to abandon several large investment projects. I know that he has discussed this with the Minister's former Department, and I hope that in his closing remarks the Minister will deal with this.
Successful companies have been squeezed. The money has been taken by the Government and is being redistributed to companies which have been unable to continue to operate in the circumstances which the Government have created. There is a double burden on success. Success is penalised and failure is rewarded. That is the motto of this Government's industrial policy. We are not considering social policy here; we are trying to consider the creation of resources necessary to sustain the country and its population.
To come to the British Leyland situation and the funds which will be needed for that company, I have great sympathy with the remarks of the hon. Member for Coventry. North-West and I greatly admired his presentation. But I rather regretted that his "cheapjack" crack at Question Time about the British Leyland management was not in character and did not accord with the more responsible note he was striking this afternoon.
On the question of the British Leyland situation and the funds which will be required, the next tranche of funds will not simply be £100 million. We are not discussing £100 million. The Bill inevitably means that the whole programme must go through. I agree with the hon. Member for Coventry, North-West that we are deluding ourselves if we imagine that it is only £100 million for the next investment stage. The whole amount has to go through if it is to go ahead. It is in that sense that I understood the remarks yesterday morning of the chairman, which I heard personally, that the board might not be able to recommend it. I do not think that this was an attack or militancy or bluff in any way. What 622 he was trying to say, in answer to the Select Committee's questions, was that, if the performance of management and men—I do not make a distinction—in the company did not give the board confidence that the whole programme as originally proposed could be carried through, it might feel it necessary to recommend against it.
§ Mr. Robinson
Since the members of the board are responsible for the management of the company, that would surely be a vote of no confidence in themselves. Does the hon. Gentleman really think that that was the spirit in which Sir Richard Dobson made his remarks?
§ Mr. Miller
I had the advantage of listening to the whole of the evidence. The hon. Gentleman was not present and he has taken an extract from the newspapers. If he is misquoted as often as I am, he will realise how damaging such things can be. I was being interviewed by a journalist this morning on this very point, and I tried to explain what the effect of the chairman's remarks had been in the Committee. I assure the hon. Gentleman they were entirely responsible. What he was saying was that, if there was unnecessary delay or a commitment to success was not achieved in the corporation, he and his colleagues would feel it their duty to recommend that the whole programme as originally envisaged should not go through. If the Government still wished it to go through, presumably they would feel the need to resign
For the Secretary of State to tell us, however, that these funds are restoring an internationally competitive position in the company, and to pretend to us that criteria are being laid down and that the Government have a strategy when we have the example of Chrysler, is too much to stomach. It was nearly too much for the Secretary of State himself to stomach, according to the remarks he made at the time—unless he intends to tell us that he was misquoted by the Lobby Press.
§ Mr. Miller
The Chrysler decision was taken against the whole trend of the Government's own industrial strategy and has seriously weakened, on their own admission, the competitive position of 623 other motor car manufacturers in this country.
This is where I agree with my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley). There is a real danger that the spending of public money in this way, unless it is carefully monitored and criteria are set and met, will inevitably weaken the country's whole industrial strategy. That is the danger with Chrysler. We shall not have Chrysler assembly operations in Coventry. British Leyland has now announced that the assembly at Canley is to end. This weakness will spread throughout.
§ Mr. Varley
The hon. Member is going on at great length about the criteria for assistance to British industry. He acknowledges that no criteria at all for British industry were published when the 1972 Industry Act was laid before the House. I know that he was not here then, but he was a Conservative Party candidate during the 1970 election and he knows something about these matters. He is a leading man in the Conservative Party. What criteria did he think the then Government were following with Rolls-Royce, the nationalisation of Govan Shipbuilders Ltd. and the assistance given by Mr. Christopher Chataway to NVT? What precise formula was laid down by the then Conservative Government?
§ Mr. Miller
I shall discuss the question of NVT, about which I know a little, but on the other matters I am not well informed.
§ Mr. Robinson
I wanted to go back to the hon. Member's point about Can-ley and the linking of that to the continuation of Chrysler operations. He is surely not seriously suggesting that there is any link between the continuation of assembly by Chrysler in the United Kingdom and the removal of the assembly operations from Canley to an under utilised assembly facility of British Leyland at Solihull so that the space at Canley can be used for an enhanced and expanded machining operation.
§ Mr. Miller
The hon. Gentleman knows that that is not the whole story behind Canley, but there is not time to go into it now. I shall discuss it with him outside the Chamber.
624 What I was trying to illustrate in my remarks about Canley was that the competitive position of the industry, far from being strengthened, can be weakened by propping up too wide a range of industry which cannot succeed in the light of the over-capacity of the motor car industry.
But I must return to the Secretary of State's point about the criteria for NVT. This was a carefully-prepared plan for reducing the number of motor cycle factories from three to two, concentrating the manufacture, enabling a new range of models to be produced with sufficient backing to withstand the competition. The only result of this Government's action in insisting on keeping the three factories—I shall come to the Meriden co-operative in a moment; I am not discussing the merits of Meriden as a cooperative and NVT as a company—was to ensure that another factory closed. There never was room for three factories: there had to be two. As a result of the Government's action, we have ended up with one. But there was a clear business plan before money was originally put into NVT. There was a carefully-thought-out approach.
To come back to NVT and the remarks of the hon. Member for Coventry, North-West about its success at the moment, the interesting point, as he himself made clear, is that the manning level, now that it is run as a co-operative, is far reduced from that which obtained when it was operating under the Triumph Company. Similarly, the industrial record has been a great deal better, but that is not as a result simply and necessarily of public money being poured in.
To conclude, the Secretary of State this afternoon—
§ Mr. Miller
I am not familiar with the circumstances of Rolls-Royce. I have dealt with subjects about which I know something. I am not a speculator. I am not informed on this subject and—unlike some people—I do not see why I should pretend to be informed when I am not.
The Secretary of State has failed the House today in his obligation to provide us with a clear indication of what this additional money is to be used for, the 625 manner in which it is to be spent, the manner in which that expenditure is to be controlled and monitored and the rôle, if any, that the House of Commons will be able to play in that process. These are real and serious questions. As the hon. Member for Coventry, North-West made plain with the British Leyland situation, we have not yet reached a satisfactory basis for ensuring the necessary industrial continuity, and at the same time the public accountability about which we hear so much from the Labour Party is never, in effect, put into practice.
§ 6.36 p.m.
§ Mr. Stan Thorne (Preston, South)
I am sorry, but I, too, shall have to talk to some extent about public accountability. My hon. Friend the Member for Coventry, North-West (Mr. Robinson) was taken up by the hon. Member for Colne Valley (Mr. Wainwright), but I suspect that his point was that, once public money had been put into British Leyland and Chrysler, we should allow them the time to organise themselves so as to use it effectively. At no time did my hon. Friend say that there should be no accountability in respect of that money.
I notice that the hon. Member for Colne Valley and the rest of his party are no longer here, even though they have decided to vote against the Bill.
I find it difficult to understand the point of the hon. Member for Colne Valley and Conservative Members. They say that they are not prepared to support a measure which assists industry. Yet, as the Secretary of State said, that is precisely what they did—rightly, in the circumstances—a few years ago when public money was necessary to protect the jobs of Rolls-Royce and other workers. I welcome the decision to increase investment in this industry.
What perturbs me is public accountability. Massive sums of public money have been put into private industry in recent years. I am not sure that the public have ever had a real assessment of how effective that investment has been over time. That applies to the previous Government and to this Government. I hope, that at least the Secretary of State will give assurances about follow-up action in respect of some of the money 626 which will be used when the Bill is passed.
There are some areas I would commend to his attention. It seems to me that a further Government input to NVT would be valuable. It has perfected a new motor cycle engine which could be a substantial winner in world markets. The present attitude of the Department of Industry to NVT should be reappraised.
I turn next to a situation which has recently developed at Seddon Atkinson in my constituency. Seddon Atkinson is part of a multinational, International Harvesters. It makes motor trucks, in competition, obviously, with importers of the Swedish Scania truck. When workers in this firm face redundancy because of decisions taken outside Britain by International Harvesters it is relevant to consider in what way we can intervene. I favour the utilization of the National Enterprise Board in planning agreements for this purpose. It seems to me that some of the arguments put at the time the Labour Party was creating the concept of the National Enterprise Board envisaged, where employment prospects of British workers were threatened by the activities of multinational companies, that there would be an intervention by a Labour Government to protect those jobs. Here is a classic instance where that could be done. By establishing planning agreements, by ensuring some control on the imports of Scania trucks, for example, we could improve employment prospects.
I hope it may be possible for the Secretary of State to indicate why it is necessary by this Bill to increase the amount of money for FFI without strings, whilst the National Enterprise Board faces economic difficulties about the amount of money available to it. There seems a certain ambivalence on the part of the Government in this respect. I would prefer to see an increase in the amount of Government inputs into industry where they intend to establish planning agreements, where they intend to be involved in the decision making in those industries, rather than feeding money to certain sectors through FFI, where the degree of accountability leaves much to be desired.
Whilst I indicate my intention to support the Bill, because I am quite certain 627 these inputs are necessary, I would like the Secretary of State to address himself to those criticisms—if that is the right word—when he winds up this debate, which, I hope, will not be too late.
§ 6.40 p.m.
§ Mr. Neville Trotter (Tynemouth)
I am appalled at the size of this proposal. It suggests that the Government are considering for years ahead, massive artificial aid for industry as an alternative to the healthy and prosperous industry that we should be seeking.
Looking at this Government's record we see that their first act in 1974 was to impose higher taxes on companies. Then there is massive inflation coupled with price controls. Everything that has been done has made industry sickly and made it difficult for industry to make a profit and reinvest. The acts of this Government have not been conducive to a healthy industry. I do not believe the massive artificial aid suggested today is a step in the right direction. No doubt some aid to industry is necessary, but not on this massive scale. It is an attitude of defeatism, of suggesting that the future is very gloomy indeed.
The Chancellor of the Exchequer stated in the Budget debate:I appreciate that the availability of finance is by no means the most important determinant of investment. The outlook for demand and the prospect of profits arc both crucial to investment decisions."—[Official Report, 6th April, 1976; Vol. 909, c. 251.]That is true. Those are the factors sadly lacking in the economy today. What is needed is a return to more normal trading conditions and to a normal state of the economy, rather than the introduction of massive artificial aid.
§ Mr. Fairbairn
Does my hon. Friend appreciate that, for the average constituency, the proposed increase is £2 million? What are the criteria upon which that sum is to be raised?
§ Mr. Trotter
I entirely accept that, and I shall come later to which constituencies are the beneficiaries. Certainly, little of it has been seen in my area, and perhaps it has also not been seen in my hon. Friend's constituency.
I have not been convinced by any arguments from the other side of the House as to the need for this massive 628 scale of increase. We have had a figure of £315 million as being committed to date, half of it, £165 million, for Chrysler. We have been told of commitments of only £150 million for all the other schemes. I have the impression that each of the other schemes has been fairly small. The limits in existence under the original Industry Act provide for a further £235 million being made available by means of orders. With that amount of money still to spend, why are the Government dashing into raising the limit to the staggering figure of £1,600 million? Could it be that the Government consider more tragedies are likely to occur? Are there to be more Chryslers? This seems the most likely explanation. If this is the scale of the aid needed, there must be some serious catastrophies ahead of us.
Presumably there will be repayments made of some of this money for some of it is in the form of loans. Are not these loans eventually to be repaid? Surely money is to flow back into the fund? It is incredible that there are apparently no plans and no justification for expenditure on this scale.
It is also incredible that at this time there are only two Members of the Government party present in the Chamber. For a large part of the debate we have seen only a handful of Members on the Government side of the House. We are being asked to agree to £800 million for each of the two Members of the Labour party now present in the Chamber. It is an extraordinary state of affairs. It shows a lack of interest in this massive spending by the Government. They have become so used to the spending of money on this scale that it no longer concerns them.
Where is the money coming from? It is coming from one of two sources. Either from taxation on the individuals in this country or on those businesses fortunate enough still to be able to make profits; or, more likely, from borrowing abroad. What are the foreigners to say about this? They are the people we now depend upon to balance the books of this spendthrift Government. What are they to think when the Government cannot even persuade their supporters to sit and listen to, if not take part in, the arguments on the spending of a further £1,600 million?
629 My hon. and learned Friend the Member for Kinross and West Perthshire (Mr. Fairbairn) mentioned £2 million for each constituency. Where has it all been going? Not much has been going to the North-East. I hope the Minister in his reply will correct me if I am wrong, but I have yet to hear of any large-scale developments on Tyneside as a result of the spending of this money. There are no proposals for future large developments there. The people on Tyneside are involved either in paying the taxes or in repaying the borrowing from which the money is emanating. There has been a cynical use of a large amount of money in the past to buy votes in Scotland. I do not know if that is the intention of the Government for the future. Certainly I cannot support this measure.
§ 7.50 p.m.
§ Mr. Tony Durant (Reading, North)
I wish to intervene for a few moments because I am anxious about the subject of national expenditure. What a moment this is to be discussing this subject when we consider what has happened to the pound in the last few weeks and the position regarding all matters of finance in this country!
We are asked to pass a measure without knowing where it is going, what it is for and exactly where it has come from. It seems incredible that we have a Government who say that local government must have cash limits, which is a good thing and with which everybody agrees. Then we say that we must put cash limits on the nationalised industries, cut down on their enormous subsidies and show some control and accountability. We say that the workers of the country must have some control on their wages and that that must be by negotiation. We say that middle management must play its part by some form of control. But when it comes to the Government, they have a blank cheque. They have a large sum of money, but there is nothing specific about where it has come from or how it is to be used. This is not good enough.
I agree with the hon. Member for Colne Valley (Mr. Wainwright), who rightly said that there is no accountability. I sympathise with the former Labour Member Lord George-Brown, who in his day tried to have a national plan. At least some attempt was made 630 to show some direction of industry. Instead, we have a hotch-potch of help, irrespective of what happens, to those who need help, without rhyme or reason or any concerted direction.
Who are the creators of the wealth that we need? They are the profitable businesses, particularly small businesses. A small business would get short shrift if it went to the Treasury and said: "This little company of 20 employees is in financial difficulty." I should not think that it would get much money from the Government. It is always the large concerns which make the big losses and create the problems which get the money. The wealth creators—private enterprise—are left out in the cold. They are taxed and penalised in every direction.
My hon. and learned Friend the Member for Kinross and West Perthshire (Mr. Fairbairn) referred to £2 million per constituency. We should repeat that figure again and again. Our electors should know that this evening we are being asked to pass a Bill which will put that kind of strain on their pockets. Is that what they want? Will they be prepared to do it?
My experience in my constituency is that most people are fed up to the back teeth with taxation. It is one of the great problems of our nation. When I visit parts of my constituency and talk to the ordinary working man, he shows me his pay slip and says "Is it worth it? Should I bother to do any overtime? What is the point? I am not getting the return." Therefore, he does not bother, and laziness creeps in. That is perfectly understandable.
Again, why should middle management executives worry and sweat if they are unable to take home the money they have earned? They understand that they are getting a certain amount, but the pound notes in their pockets are so much less because they are taxed beyond belief.
We should work towards the creation of private wealth. We need risk capital. At the moment, our main investment comes from overseas or from establishments—for example, insurance companies—which go only for safe investment. We need speculative money. That will come only from individuals who are 631 prepared to take a chance by putting their savings into something which has an element of enterprise and might grow. We shall not get that kind of investment with this Government's approach, because they spend money liberally.
I am reminded of the Sorcerer's Apprentice who thought that he could take a short cut by a little magic. He got the thing going, the buckets were moving marvellously using the brooms, but the whole thing got out of control and he could not stop it. More and more kept coming. In the end the whole place was a mess. He was using only a bit of simple magic to put the thing right, as he thought. I suggest that that is the Government's approach. They appear to think that it does not matter. They think that they are oiling the wheels and getting the thing going. But that is the Sorcerer's Apprentice's approach, and the situation will get worse.
The hon. Member for Bolsover (Mr. Skinner) was right when he said that the choice was whether to go the whole hog and nationalise everything. The Government are moving in that direction. The hon. Gentleman was right when he said that they will be back later for more money.
That kind of approach worries me greatly. That is why I have come to listen to and take part in the debate. It is appalling that we should be asked to give a blank cheque for this money without knowing where it is going. I ask my hon. Friends to come into the No Lobby with me.
§ 6.55 p.m.
§ Mr. Geoffrey Pattie (Chertsey and Walton)
It is a matter for regret that we shall have to wait until tomorrow to read in the Official Report the considerable number of gems left behind by the Secretary of State. It is a pity that we do not have them here to feast our eyes upon them now.
The right hon. Gentleman said that the Bill would mean that control by this House would be even tighter. I am sure that my hon. Friends will find that statement as unreassuring as I did when they recall, as I do, the huge sums of money 632 that we have ladled out under Section 8 procedures in the last few months—usually as a result of the special 90-minute debates late at night.
This wretched little Bill is a grossing-up exercise which is a clear condemnation and some indication of the Government's economic mismanagement. For what was previously to be £150 million we now have to read "£600 million", and for £100 million in another part of the Bill we have to read "£250 million".
Labour Members—if there were more than three of them present—would find it hard to understand our concern that the Government have no idea what they will do with these sums of money when they have doled them out. We share their concern for the plight of people who are caught in the economic cross-fire and whose jobs will be at risk, but we feel no reassurance that the Government have any kind of monitoring procedures over what will happen to this money We know full well that it will be only a short time before they come back with another appeal adding further noughts to the figures in the Bill. That is the frustration which is felt in the House of Commons. Hon. Gentlemen talk about accountability, but that is to make a mockery of the English language, apart from anything else.
The Secretary of State, in one of his more casual asides, said that the liabilities under the Chrysler agreement were unlikely ever to be called. I should have thought that most people, apart from the Secretary of State in his more optimistic moments, were aware that the Chrysler deal will not work.
The Industrial Development Advisory Board has considered it unlikely that Chrysler will achieve viability after 1980. The head of the CPRS said that it would be a great uphill struggle. Indeed, no less an authority than Mr. Terry Beckett, of the Ford Motor Company, only this week said that by 1980 there will be excess capacity in the motor industry of between 480,000 and 1.1 million vehicles. That is the kind of back-drop against which the Government are making these absurdly optimistic assessments about the future of Chrysler.
The hon. Member for Basildon (Mr. Moonman) wrote an open letter to Mr. 633 Riccardo in The Times on 1st March in which he said:And a critical assessment of the terms of the Government deal reveals that it lacks any sense of operational urgency or managerial instinct or competence … a two-year 'make or break strategy' … is no more than a figment of an optimistic, zealous imagination.There seems to be no business plan, no investment strategy, no sense of direction —other than a short-term job-saving operation—and no proper assessment and monitoring of how it will work. The money is being taken and poured over the side. No statements of which I know have been made regarding what control mechanism is being established to monitor the progress of this operation. The prospects for Chrysler are as grim as they could possibly be. Yet the Secretary of State said that it was unlikely that the liabilities under the Chrysler agreement would ever be called. If this were not such a tragic matter, it could be part of the plot in a Gilbert and Sullivan operetta. It is probably just as well for the Secretary of State for Industry that those two talented gentlemen are no longer with us.
§ 7.0 p.m.
§ Mr. Nicholas Fairbairn (Kinross and West Perthshire)
It would defy the intelligence of anyone to believe it possible that at this time, with the present state of the pound, the Government should propose an increased allowance in their spending of £1,050 million. That is nearly £2 million for each constituency, or in the case of my constituency, which has one-thousandth of the country's electors, £1 million. That is the level of this irresponsible legislation, forgetting everything else such as the borrowing requirement of £12,000 million.
One might ask the Minister of State where the money is coming from. Either it will be borrowed, which it probably cannot be—and if it is borrowed it certainly cannot be repaid—or will be removed by taxation from the very people it sets out to benefit. Nothing could be more inefficient than taking money out of industry and feeding it back through the Government. That is the worst way to use money.
When a drunk, bankrupt profligate is signing cheques, one is entitled to ask what he wants the money for. When 634 a man is in debt to the extent that this country is—and our creditors have no confidence in our capacity to repay—and he goes around the streets saying "I want another £1,000 million. I just want it.", one is entitled to ask why he wants it. That is what the Government are saying, yet they have not put forward a single proposal for this money. They are going to spend a lot of money, yet they are not prepared to say upon what or why.
What justification is there for such an astronomical figure, even in the devalued state of the pound? The Government have turned £3 into the worth of £2 both at home and abroad. In an ordinary household, one has a duty to keep in some balance one's outgoings and incomings. In a state of bankruptcy and debt, which more than anything is the cause of the collapse of the currency, the Government constantly waste and spend money they have not got and cannot borrow.
Before the Government add another £1,000 million to the £12,000 million borrowing requirement, they should tell us where it is coming from, say specifically what it is for and give us the basis for choosing their figures. Why £1,000 million more? Why not £800 million or £100,000 million? There are no criteria upon which the House is being asked to vote money for unknown projects with no control.
This is a total fairyland and fantasy in which the House of Commons thinks that it is entitled to do what no one else can do—that is, spend money it has not got on projects it does not know by criteria it does not announce. That is the habit of a man without sanity. The one thing which is making the world laugh at us is seeing in power a team which is so out of touch with reality that it imposes upon itself no financial restraints and gives no explanation of its profligacy.
§ 7.5 p.m.
§ Mr. Nicholas Winterton (Macclesfield)
I wish to raise a matter of considerable importance. The Government have come to the House asking us to sanction a large sum for them to spend. Much of it is likely to be spent on inefficient industry which in turn will have to be subsidised by what remains of the efficient private sector.
635 I want to draw the Government's attention to Group 20 based at the Manchester Business School. This is a group of redundant skilled, experienced and qualified executives who have applied to every Government agency for small sums to help them set up projects to provide not only them but many other people with employment. Every Government Department has completely disregarded the group's applications, saying that its brief does not permit it to give such aid.
Here the Government are asking the House to write out a cheque for £1,050 million, most of which, as has been said, looks likely to go to the highly inefficient, out-of-date industries. Yet this group of young, skilled and qualified people cannot obtain any financial assistance from the Government. These people are middle management. They are skilled entrepreneurs who often provide employment for the ordinary working man and woman. They are the seed corn of future prosperity and expansion, yet not a single Government Department is interested in them.
I hope that the Minister will have the courtesy to listen to what I am saying. I am appealing on behalf of people who are out of work because of the evil, pernicious and irrelevant measures followed for two years by the present Government. These people want to work. They were made redundant and their unemployment was not of their own making. British Leyland is getting hundreds of millions of pounds of taxpayers' money—British Leyland, where irresponsible action by certain sections of that company has put people out of work while the position of those sections is guaranteed at taxpayers' expense. But the position of people who are not represented by powerful trade unions is of little interest to the Government.
I do not believe in State handouts to lame ducks, but I believe in ensuring that the seed corn of skill is properly used and encouraged so that public money is not wasted and unemployment is reduced.
The Minister might ask his civil servants to look into the letters I have sent to Government Departments about Group 20, who are the sort of people who represent the future prosperity of the country.
§ 7.10 p.m.
§ Mr. Michael Grylls (Surrey, North-West)
This is a singular parliamentary occasion, marked by the absence of Government supporters. When the Secretary of State introduced the Bill only one Government supporter was present—the hon. Member for Bristol, North-East (Mr. Palmer), who has now left the Chamber.
§ Mr. Grylls
I shall come to the hon. Member for Bolsover (Mr. Skinner) in a moment. A few hon. Members were brought in, including the hon. Member for Bolsover —
§ Mr Grylls
I shall give way in a moment. The hon. Member for Bolsover came in and made one of his usual speeches, pulled out of the appropriate drawer, and disappeared quickly. That was the extent of the Government's interest in the Bill. The hon. Member for Bolsover, having been brought in by the Whips to make his speech—he had been talking to journalists outside—did not reappear during the rest of the debate. He went out quickly to resume his conversation with the journalists—about what, I do not know—and the Government Benches were left empty.
§ Mr. Skinner
As I told the House, I was engaged in telling the Press about the irregularities and illegal currency dealings at the Bank of England. That meant that I had to come in late to the debate, and leave early. As for the inane suggestion that the Whips told me to come in to make a speech, the hon. Gentleman must be out of his tiny mind.
§ Mr. Grylls
That is as may be. I shall leave the hon. Member for Bolsover to his journalists and witch hunts. It is more important to consider the Secretary of State's speech. This mammoth Bill—perhaps the most extravagant that has ever been introduced in the House—was introduced by the Secretary of State in a cheap and unworthy manner. I say that, having listened to him on many occasions and having some regard for him. The hon. Member for Colne Valley (Mr. Wainwright) put it well when he said that the Secretary of State had dealt with the Bill in a South Sea Bubble fashion.
637 He made a few party points against the Conservatives, which might have been good in a constituency speech on a Friday night, but he had almost nothing to say about the Bill. That was an abuse of Parliament and the legislative process. We in Parliament are used to being abused and insulted by the Government, but that was an abuse and insult to the public at large, who will have to pick up the tab for the Bill.
The expenditure proposed in the Bill is on a scale that would have been unimaginable two years ago. If one adds up the £1,600 million authorised by the Bill, the £1,000 million allowed for the National Enterprise Board, and the £1,400 million granted to Leyland, the staggering total is £4 billion—£222 for every household in the land. That is profligacy gone crazy. We have seen some examples of profligacy by the Government, but this one takes the biscuit.
As my hon. Friend the Member for Tynemouth (Mr. Trotter) said, the Bill was introduced in a spirit of defeatism, in the belief that the way to solve our industrial problems is to throw around more money. All that a Government bankrupt of ideas can think of is to throw money around. As my hon. Friend the Member for Reading, North (Mr. Durant) said, the Bill represents a blank cheque up to £1,600 million.
The Secretary of State did not say what the money was for. Had he come to the House with a well presented case and told us where the money would go and what return there would be on this huge amount of taxpayers' money, we might have been convinced, but he did not even do us the courtesy of telling us that. He referred vaguely to the offshore scheme needing more money. We are doubtful about that because, according to our calculations—I should be grateful if the Secretary of State or his hon. Friend the Minister of State, who is to wind up the debate, would listen—
§ Mr. Grylls
I hope that the Minister of State will have something to say. The Secretary of State has said nothing about why we need the Bill. I hope that the Minister of State will say for what the money is needed, and why it is needed 638 in April 1976. According to our calculations the two further tranches available under existing legislation, by order, should last for another year.
A few weeks ago we considered the public expenditure White Paper. That must have been prepared in February, but it contained no reference to this expenditure. When the Government prepared the White Paper in February, if they expected to need this money why did they not include it? We knew that the White Paper was incorrect. What happened between February and now to convince the Government that they need more money? The figure mentioned for this purpose in the White Paper is £770 million. Where will the Government get the other £900 million? Will it come out of contingency reserves? I notice that assistance to industry is not included in the cash limits referred to in the White Paper. I am not surprised at that.
In his speech in the Budget debate the Secretary of State spoke of his industrial policy as being modest. We did not know then that this Bill was coming along, but he gave us a clue when he said that the momentum was quickening. We did not think that it would quicken to such an extent that we should be asked to vote for a further £1,600 million. If that is a modest policy, what is an immodest policy?
The hon. Member for Colne Valley made a sensible comment about the Industry Act that was introduced by the previous Conservative Government. He said that well-thought-out schemes such as the Wool Textile Scheme can do tremendous good. The majority of schemes put forward by the Government have been shot-gun performances. For example, there was the Chrysler scheme—that will not be successful. How many more shot-gun schemes will there be? If well-thought-out schemes are available in the Department, why are we not told about them when we are asked for the money? In which departmental drawer are they—or have we rumbled it, and are there no well-thought-out schemes, and is the money needed just to react to events and disasters?
In his speech in the Budget debate the Secretary of State said that the key to industrial success was a reduction in the rate of inflation and an increase in 639 productivity. I agree with him. He did not mention overmanning. Does he believe that wild spending under Section 8 of the 1972 Act, as proposed in the Bill, will help to achieve industrial success? Our answer is that it will not. We further believe that the expenditure of this extra money will make inflation even worse. Most people in the country and in industry would accept that that is so.
There is no proof in any country in the free world that the direction of capital on a massive scale like this will do any good for industry. In fact, it will do positive harm. It will distort the market and make it more difficult for successful companies to raise money.
This policy is one more step down the road to a regimented economy. Grants on such a scale are not suitable for use under the 1972 Act, which is one of the reasons why we shall vote against the Bill.
We do not believe that there is sufficient machinery to carry out the aims of the Bill. The Industrial Development Advisory Board has done some good work, and it is not sensible for the Government to ignore its advance. In 1974–75, the Government overrode the board's advice on five occasions, for political reasons, including the aim of getting votes in Scotland and Coventry. The choice of resource allocation by the Government will always lead to disaster, certainly when it is done on this scale. It will also lead to the erosion of a free society.
The Government should be improving market forces and helping profitability in industry. The Chancellor of the Exchequer seemed to recognise this need in his Budget speech, when he said it was important that there should be profitable industry. If there is profitable industry, money is available for expansion. The trouble is that, under this Government, industries which have been successful—like the British Aircraft Corporation, which has just announced record profits and record exports of £200 million—are nationalised. What incentive is that to industry? The accolade for success is nationalisation.
In the Washington Post article, which has been much quoted tonight, Mr. Hugh Mulligan wrote: 640In the delirium brought on by the British disease, economic dreamers on the far left saw Britain rising from her sickbed in shining socialist shrouds as 'the Yugoslavia of the West'. Aghast Tory traditionalists saw her in danger of becoming 'just another seedy socialist republic.'.I do not know whether I am a Tory traditionalist, but I do not want our country to become a "seedy Socialist republic". The Bill is one more step in that direction.
I hope the House will show its anger and disgust at the frivolous way in which the Bill was introduced by the Secretary of State, and at the Government's impertinence in bringing it forward. It is an arrogant and irresponsible act, at this time of economic crisis, to produce this Bill—this bit of paper which will cost the taxpayer £1,600 million. Never has there been a more expensive piece of paper.
The Industry Ministers are not bad men—but good men advocating foolish measures are just as dangerous to industry and the country. That is why I ask my hon. Friends to vote firmly and decisively against this disgraceful Bill.
§ 7.24 p.m.
The Minister of State, Department of Industry (Mr. Alan Williams)
I hope that it will not detract from the atmosphere of indignation which the hon. Member for Surrey, North-West (Mr. Grylls) has produced, in himself if not in the whole House, if I start by thanking hon. Members opposite, especially the hon. Member for Bridgwater (Mr. King), who have been kind enough to welcome me to the industrial scene. I noted that in nearly every case there were certain doubtful remarks about my departmental antecedents, and no doubt I shall have to live down my disreputable past in this new post. In their first week or so in office new Ministers are easy sport, so no doubt we shall have some interesting exchanges during my speech.
If the incredible allegation by the hon. Member for Surrey, North-West that the Government Whips had dragooned my hon. Friend the Member for Bolsover (Mr. Skinner) to take part in the debate were true, I would take up the matter with the Whips' Office. However, I am aware that the Whips are not necessarily the most influential force in the House as far as my hon. Friend's activities are concerned.
641 The purpose of this legislation is to increase both the initial tranche and subsequent additional tranches provided for under the Industry Act. The initial sum, which was previously £150 million, becomes £600 million and the subsequent four tranches are increased from £100 million to £250 million. However, each additional measure will still require a resolution in the House and will therefore be subject to further discussion.
§ Mr. Lawson
If the Minister wants to get £1,000 million in additional tranches, he could have increased the four tranches of £100 million to 10 tranches of £100 million. That would have maintained parliamentary scrutiny at the same level as before. By increasing the four tranches to £250 million each, he is taking power away from the House and reducing parliamentary scrutiny.
I am trying to cover as many of the points made in the debate as possible. The question of control was raised in several speeches and, although I understand why the hon. Member raises it now, I shall be dealing with it a little later.
We have already approved two of the tranches under the existing scheme. The current limit is now £350 million. However, we have commitments amounting to nearly £320 million on further projects, including some under the Accelerated Projects Scheme. It is highly likely that we shall reach the ceiling of £550 million this year.
Hon. Members have asked why we have provided for so large an increase. We have tried to be as straightforward with the House and the public as we can. I am not making a party political point, but under the existing Act the revenue which has to count against the statutory limits comprises guarantees and net payments which have actually been made. We feel it is right not only to take into account the payments made, which is what the Act appears to require, but also that, in judging whether we are near the ceiling, we should take into account future commitments, whether for next month, next year or five years' time.
We are grossing up everything and making the figures appear larger because we are not taking account of any money 642 which may be trawled back. We are trying to give a more variable assessment —[Interruption.]Conservative hon. Members said that they wanted to hear an explanation. I am trying to give it as fairly and honestly as I can. The point to bear in mind—this can be demonstrated by looking at the figures to which we are currently committed—is that we have obligations marked against the statutory limit of £121 million. In fact. we have entered into commitments for the future of another £192 million. We are accounting for the total of £313 million.
We are trying to be more accountable to the House so that the House will understand the situation more clearly. We are doing so so that we cannot drift into a situation where, because of a bunching of payments, which can happen because often the decision is in the hands of industrialists rather than the Department, we temporarily override the limits without the permission of the House of Commons. I hope that the Opposition will accept that this is a genuine problem and one that we have tried to accommodate with reasonable integrity towards the House.
A further point to bear in mind is that within the ceilings we have guarantees. In many cases the ceilings will never be called upon. That is why it is important to differentiate. The hon. Member for Bridgwater has said that the Bill marks the spending of £1,600 million. It does not. It is important that the House understands the distinction. I am sure that the hon. Gentleman understands it. What he said was probably a slip of the tongue. Nevertheless, I feel it is right to emphasise the point. We are talking about commitments, including commitments which may never arise. In a sense, we are underwriting agreements that may be entered into but which we may never be called upon to meet. Therefore, we are not talking in terms of £1,600 million under the Bill, but in order to enter into such undertakings we have to have sufficient flexibility in order to be able to offer industry that facility.
A further reason for the size of the increase is that we are hoping to get new industry schemes and more accelerated investment projects. As regards industry schemes, hon. Members will be fully aware that two such schemes were entered 643 into under the Conservative Government —namely, the Wool Textile Scheme and the Offshore Supply Scheme. It is worth repeating the point, made by my right hon. Friend the Secretary of State at the outset, that the offshore scheme was open-ended. That was not our doing, but it was open-ended.
The hon. Gentleman says "So what?" The "So what?" is that it could conceivably reach up to £200 million.
My right hon. Friend is correct: we are meeting the blank cheque that Conservative Members initially signed.
Opposition hon. Members have asked about the increase in the sums involved under the offshore scheme. The payments to date have been relatively small. They were less than £1 million by the end of last year. However, there are commitments for £45 million. Some of those commitments may be as much as eight years ahead. That is in the nature of the sort of industry with which we are dealing. The obligation is imposed upon the Government when the decisions are made by the industrialists covered by the scheme. It is for that reason that we think it may expand to a substantial scale. I hope that it will be realised that in setting our ceiling we are having to accommodate a possible £200 million rather than the £1 million that now stands against the scheme.
§ Mr. Tom King
The Minister is clearly trying to help the House by explaining the figures. He has now said that, in operating in what is obviously a prudent financial manner and taking total commitments into account, £313 million is now committed. I assume that that includes commitments under the Offshore Supply Scheme. I think that the Minister of State has said that the present money will last until the end of this financial year, virtually a year from now. If that is so, why has the Bill been brought forward now when the funds are not actually needed for a year?
I have already indicated that the commitments under the offshore scheme are open-ended and not completely in our control. We cannot be sure what scale it will attain. We have to make provisions in ample time if, therefore, it appears that we shall have to meet the ceiling by the end of this year. It is as well that the House should have ample opportunity to discuss the matter. The Opposition will have a greater chance to discuss our going to the ceiling of £600 million than if we had gone to the ceiling of £550 million, because in that event there would have been two limited Order debates, instead of which we now have this Second Reading debate, a Committee stage and all the subsequent stages, including the Bill going to another place. In terms of accountability, for the extra £50 million which is initially offered within the Bill we have given hon. Members massively greater powers to comment to the House of Commons.
§ Mr. Richard Wainwright
Surely, in making that claim the hon. Gentleman will bear in mind that the House has been given no details about the spending of the higher sum. At least under an Order we would have known those details.
I have assumed that hon. Members want me to answer the points that they have made before I conclude my speech. I am trying to answer them. I am trying to develop my points in a logical fashion. I am trying to explain to the House why certain things are happening. I want to make the matter clear point by point.
A further factor to bear in mind—it is foolish to treat this as something that can politically be swept under the carpet, ignored or turned into a political football by the Opposition—is that inflation has massively eroded the real ceiling of the existing legislation, because there was no provision in the initial legislation to ensure that the £550 million was in real terms. We must accept that in real terms world inflation—including our inflation—has eroded the real impact of the original legislation.
As regards controls, I have indicated that Orders will be necessary for each subsequent tranche. [Interruption.] It 645 may be two and a half times as big, but in real terms it still does not work out very much bigger in spending power than the original tranches. [Interruption.]That is not exactly a great secret. Surely Opposition Members are not pretending that inflation has come as a surprise to them.
I have entered into an undertaking with the Opposition to try to complete my speech within a limited time. That is what I am trying to do. At the same time I am trying to answer the debate. I hope that the hon. Member for Blaby (Mr. Lawson) will allow me to develop my speech in my own manner. Each subsequent tranche of money will have its own Order. There will be a Committee stage and consideration in another place for the new legislation which is coming forward—[Interruption.] I am not sure, Mr. Deputy Speaker, whether you are supposed to be in control of the proceedings of the House or whether that control is in the hands of the hon. Member for Blaby, who mutters from a sedentary position.
§ Mr. Deputy Speaker (Mr. Bryant Godman Irvine)
I have been noticing the sedentary observations being made by the hon. Member for Blaby (Mr. Lawson). I hope that the hon. Gentleman will try to contain himself.
I am grateful, Mr. Deputy Speaker. Normally I should not wish to embroil you in that way, but I believe that most of the House wants to know the answers and wants the debate to have a decision at a reasonable time.
The second control is the fact that £5 million of the ceiling remains. That is the amount that remains on individual schemes. The £5 million remains in real terms. That means that the House exercises tighter control over individual schemes than previously. The third control is the Industrial Development Advisory Board. The fourth control is that we have now published, unlike the Opposition when they were in Government, a meaningful set of criteria. Each individual project is monitored. We are 646 monitoring each project within the Department, and the appropriate division monitors the work. We have recruited specialists into the Department to help us in our work. They are specialists from industry.
They will in the sense that they will be part of whatever the Minister's decisions are on further investments and further assistance for firms. It may be part of the explanatory information that we would probably give. However, as it is part of the normal administrative advice within the Department, obviously we would not be publishing the normal working papers of the Department.
The hon. Member for Bridgwater complained of a plethora of different schemes. That was his phrase. But it would be absurd to have an excessively rigid approach to industrial assistance. Therefore, flexibility is essential. Far from seeing it as a point of rebuke, I should have thought that flexibility was a commendation of the way in which Departments administer the legislation, because we are flexible both in the type of assistance and in the way in which each type is used to meet the needs of individual firms.
The hon. Member for Colne Valley (Mr. Wainwright) asked for evidence of the way in which we shall be using extra funds that are made available. I have indicated that there are further industrial schemes, sectoral schemes, to come forward. The Paper and Board Scheme is the immediate one, but there are several others under consideration. Under the Accelerated Projects Scheme, which is a cyclical rather than an employment-creating scheme, a further 95 applications are being processed, and this should generate about £330 million of investment; and another 50 possible applications are now being discussed, which could generate another £180 million or so of investment. This investment comes over a wide range of industry.
I believe that the Government have used the Section 8 powers imaginatively and effectively to bring forward investment, to increase investment and to create 647 and save jobs. It must be seen in conjunction with the Section 7 work, where 110,000 jobs have been created and 56,000 safeguarded since we came to office, and in conjunction with the largest ever advance factory building programme.
The economic context must also be borne in mind. The House has to remember that although we have been through the worst world recession for over 40 years and our industry has tremendous liquidity problems, it is essential that we catch the upturn in the economy. That is what we are aiming to do with the legislation—to ensure that the new investment is available at the appropriate time and that there is maximum flexibility in the aids, assistance and incentives that we can give to new footloose industry.
The hon. Member for Bridgwater said that he thought the Price Code was at the heart of many of our problems. I should remind him that it was his own party which introduced the Price Code, that we introduced the investment relief —something that the Conservatives did not do—and that the code is currently being reviewed.
|Division No. 114.]||AYES||[7.45 p.m.|
|Abse, Leo||Coleman, Donald||Freeson, Reginald|
|Allaun, Frank||Concannon, J. D.||Garrett, John (Norwich S)|
|Anderson, Donald||Conlan, Bernard||George, Bruce|
|Archer, Peter||Cook, Robin F. (Edin C)||Gilbert, Dr John|
|Armstrong, Ernest||Corbett, Robin||Ginsburg, David|
|Ashley, Jack||Cox, Thomas (Tooting)||Golding, John|
|Ashton, Joe||Craigen, J. M. (Maryhill)||Gould, Bryan|
|Atkins, Ronald (Preston N)||Crawshaw, Richard||Gourlay, Harry|
|Atkinson, Norman||Crosland, Rt Hon Anthony||Graham, Ted|
|Bagier, Gordon A. T.||Cryer, Bob||Grant, George (Morpeth)|
|Barnett, Guy (Greenwich)||Cunningham, G. (Islington S)||Grocott, Bruce|
|Barnett, Rt Hon Joel (Heywood)||Cunningham, Dr J. (Whiteh)||Hamilton, W. W. (Central Fife)|
|Bates, Alf||Davidson, Arthur||Hardy, Peter|
|Bean, R. E.||Davies, Bryan (Enfield N)||Harrison, Walter (Wakefield)|
|Benn, Rt Hn Anthony Wedgwood||Davies, Denzil (Llanelli)||Hatton, Frank|
|Bennett, Andrew (Stockport N)||Davies, Ifor (Gower)||Hayman, Mrs Helene|
|Bidwell, Sydney||Davis, Clinton (Hackney, C)||Heffer, Eric S.|
|Bishop, E. S.||Deakins, Eric||Hooley, Frank|
|Blenkinsop, Arthur||Dean, Joseph (Leeds W)||Horam, John|
|Booth, Rt Hon Albert||Dempsey, James||Howell, Rt Hon Denis|
|Boyden, James (Bish Auck)||Doig, peter||Hoyle, Doug (Nelson)|
|Bradley, Tom||Dormand, J. D.||Huckfield, Les|
|Bray, Dr Jeremy||Duffy, A. E. P.||Hughes, Rt Hon C. (Anglesey)|
|Brown, Hugh D. (Provan)||Dunnett, Jack||Hughes, Robert (Aberdeen N)|
|Brown, Robert C. (Newcastle W)||Edge, Geoff||Hughes, Roy (Newport)|
|Buchan, Norman||Ellis, John (Brigg & Scun)||Hunter, Adam|
|Buchanan, Richard||Ennals, David||Irvine, Rt Hon Sir A. (Edge Hill)|
|Butler, Mrs Joyce(Wood Green)||Evans, Fred (Caerphilly)||Irving, Rt Hon S. (Dartford)|
|Callaghan, Rt Hon J. (Cardiff SE)||Evans, loan (Aberdare)||Jackson, Miss Margaret (Lincoln)|
|Callaghan, Jim (Middleton & P)||Evans, John (Newton)||Janner, Greville|
|Campbell, Ian||Ewing, Harry (Stirling)||Jay, Rt Hon Douglas|
|Canavan, Dennis||Faulds, Andrew||Jeger, Mrs Lena|
|Cant, R. B.||Fernyhough, Rt Hon E.||Jenkins, Hugh (Putney)|
|Carmichael, Neil||Flannery, Martin||Jenkins, Rt Hon Roy (Stechford)|
|Carter, Ray||Fletcher, Ted (Darlington)||John, Brynmor|
|Carter-Jones, Lewis||Foot, Rt Hon Michael||Johnson, James (Hull west)|
|Cartwright, John||Ford, Ben||Jones, Alec (Rhondda)|
|Castle, Rt Hon Barbara||Forrester, John||Jones, Barry (East Flint)|
|Clemitson, Ivor||Fowler, Gerald (The Wrekin)||Jones, Dan (Burnley)|
|Cocks, Michael (Bristol S)||Fraser, John (Lambeth, N'w'd)||Judd, Frank|
§ The Opposition are in no position to lecture the Government on investment. When the Conservatives came to office they destroyed the existing investment incentive system. The regions suffered. Industrial development certificates in many regions fell to one-third of their previous levels. While the damage was done in the early days of a previous Government—within the first month, actually —and confidence was destroyed, by the time they left office investment in real terms had never returned to the level at which it was when they came to office.
§ It is incredible that the hon. Member for Surrey, North-West could stand at the Box knowing that after three and a half years under his Government's administration investment was lower than it had been when they came to office and boast that they had spent only £10 million under their own Industry Act. In other words, it was being used as a sham. We intend of use it as a proper job-creating and investment-inducing measure.
§ Question put, That the Bill be now read a Second time:—
§ The House divided: Ayes 259, Noes 244.
|Kaufman, Gerald||Morris, Rt Hon J. (Aberavon)||Stallard, A. W.|
|Kelley, Richard||Moyle, Roland||Stewart, Donald (Western Isles)|
|Kerr, Russell||Mulley, Rt Hon Frederick||Stoddart, David|
|Kilroy-Silk, Robert||Murray, Rt Hon Ronald King||Stott, Roger|
|Kinnock Neil||Newens, Stanley||Strang, Gavin|
|Lambie, David||Oakes, Gordon||Strauss, Rt Hon G. R.|
|Lamborn, Harry||Ogden, Eric||Summersklll, Hon Dr Shirley|
|Lamond, James||O'Halloran, Michael||Swain, Thomas|
|Latham, Arthur (Paddington)||Orbach, Maurice||Taylor, Mrs Ann (Bolton W)|
|Leadbitter, Ted||Ovenden, John||Thomas, Ron (Bristol NW)|
|Lee, John||Owen, Dr David||Thorne, Stan (Preston South)|
|Lestor, Miss Joan (Eton & Slough)||Padley, Walter||Tierney, Sydney|
|Lever, Rt Hon Harold||Palmer, Arthur||Tinn, James|
|Lewis, Ron (Carlisle)||Park, George||Tomlinson, John|
|Litterick, Tom||Parker, John||Tomney, Frank|
|Loyden, Eddie||Parry, Robert||Torney, Tom|
|Luard, Evan||Pavitt, Laurie||Tuck, Raphael|
|Lyon, Alexander (York)||Pendry, Tom||Urwin, T. W.|
|Lyons, Edward (Bradford W)||Perry, Ernest||Varley, Rt Hon Eric G.|
|Mabon, Dr J. Dickson||Phipps, Dr Colin||Wainwright, Edwin (Dearne V)|
|McCartney, Hugh||Price, C. (Lewisham W)||Walden, Brian (B'ham, L'dyw'd)|
|MacCormick, Iain||Price, William (Rugby)||Walker, Harold (Doncaster)|
|McElhone, Frank||Radice, Giles||Walker, Terry (Kingswood)|
|MacFarquhar, Roderick||Richardson, Miss Jo||Ward, Michael|
|McGuire, Michael (Ince)||Roberts, Gwilym (Cannock)||Watkins, David|
|Mackenzie, Gregor||Robinson, Geoffrey||Walkinson, John|
|Mackintosh. John P.||Roderick, Caerwyn||Weetch, Ken|
|Maclennan, Robert||Rodgers, George (Chorley)||Weitzman, David|
|McMillan, Tom (Glasgow C)||Rodgers, William (Stockton)||Wellbeloved, James|
|McNamara, Kevin||Rooker, J. W.||White, Frank R. (Bury)|
|Madden, Max||Rose, Paul B.||White, James (Pollok)|
|Magee, Bryan||Ross, Rt Hon W. (Kilmarnock)||Whitehead, Phillip|
|Mahon, Simon||Rowlands, Ted||Whitlock, William|
|Mallalieu, J. P. W.||Sandelson, Neville||Willey, Rt Hon Frederick|
|Marks, Kenneth||Sedgemore, Brian||Williams, Alan (Swansea W)|
|Marquand, David||Shaw, Arnold (Ilford South)||Williams, Alan Lee (Hornch'ch)|
|Marshall, Dr Edmund (Goole)||Sheldon, Robert (Ashton-u-Lyne)||Williams, Rt Hon Shirley (Hertford)|
|Marshall, Jim (Leicester S)||Short, Rt Hon E. (Newcastle C)||Wilson, Gordon (Dundee E)|
|Mason, Rt Hon Roy||Short, Mrs Renée (Wolv NE)||Wilson, William (Coventry SE)|
|Maynard, Miss Joan||Silkin, Rt Hon John (Deptford)||Wise, Mrs Audrey|
|Meacher, Michael||Silkin, Rt Hon S. C. (Dulwich)||Woodall, Alec|
|Mendelson, John||Silverman, Julius||Woof, Robert|
|Mikardo, Ian||Skinner, Dennis||Wrigglesworth, Ian|
|Millan, Bruce||Small, William||Young, David (Bolton E)|
|Miller, Dr M. S. (E Kilbride)||Smith, John (N Lanarkshire)|
|Miller, Mrs Millie (Ilford N)||Snape, Peter||TELLERS FOR THE AYES:|
|Molloy, William||Spearing, Nigel||Mr. Joseph Harper and|
|Morris, Charles R. (Openshaw)||Spriggs, Leslie||Mr. James Hamilton|
|Adley, Robert||Channon, Paul||Fox, Marcus|
|Aitken, Jonathan||Churchill, W. S.||Fraser, Rt Hon H. (Stafford & St)|
|Alison, Michael||Clark, Alan (Plymouth, Sutton)||Freud, Clement|
|Amery, Rt Hon Julian||Clark, William(Croydon S)||Fry, Peter|
|>Arnold, Tom||Clarke, Kenneth (Rushcliffe)||Galbraith, Hon T. G. D.|
|Atkins, Rt Hon H. (Spelthorne)||Clegg, Walter||Gardiner, George (Re[...]gate)|
|Awdry, Daniel||Cockcroft, John||Gardner, Edward (S Fylde)|
|Baker, Kenneth||Cooke, Robert (Bristol W)||Gilmour, Rt Hon Ian (Chesham)|
|Banks, Robert||Cope, John||Glyn, Dr Alan|
|Bell, Ronald||Cordle, John H.||Godber, Rt Hon Joseph|
|Bennett, Sir Frederic (Torbay)||Cormack, Patrick||Goodhart, Philip|
|Bennett, Dr Reginald (Fareham)||Costain, A. P.||Goodhew, Victor|
|Benyon, W.||Critchley, Julian||Goodlad, Alastair|
|Berry, Hon Anthony||Crouch, David||Gorst, John|
|Biffen, John||Crowder, F. P.||Gow, Ian (Eastbourne)|
|Biggs-Davison, John||Davies, Rt Hon J. (Knutsford)||Gower, Sir Raymond (Barry)|
|Blaker, Peter||Dean, Paul (N Somerset)||Grant, Anthony (Harrow C)|
|Boscawen, Hon Robert||Dodsworth, Geoffrey||Gray, Hamish|
|Bottomley, Peter||Douglas-Hamilton, Lord James||Griffiths, Eldon|
|Bowden, A. (Brighton, Kemptown)||Drayson, Burnaby||Grimond, Rt Hon J.|
|Boyson, Dr Rhodes (Brent)||du Cann, Rt Hon Edward||Grist, Ian|
|Braine, Sir Bernard||Durant, Tony||Grylls, Michael|
|Brittan, Leon||Eden, Rt Hon Sir John||Hall, Sir John|
|Brocklebank-Fowler, C.||Edwards, Nicholas (Pembroke)||Hall-Davis, A. G. F.|
|Brotherton, Michael||Elliott, Sir William||Hamilton, Michael (Salisbury)|
|Brown, Sir Edward (Bath)||Emery, Peter||Hampson, Dr Keith|
|Bryan, Sir Paul||Eyre, Reginald||Hannam, John|
|Buchanan-Smith, Alick||Fairbairn, Nicholas||Harrison, Col Sir Harwood (Eye)|
|Buck, Anthony||Fairgrieve, Russell||Harvie Anderson, Rt Hon Miss|
|Budgen, Nick||Finsberg, Geoffrey||Hastings, Stephen|
|Bulmer, Esmond||Fisher, Sir Nigel||Havers, Sir Michael|
|Burden, F. A.||Fletcher-Cooke, Charles||Hayhoe, Barney|
|Butler, Adam (Bosworth)||Fookes, Miss Janet||Heath, Rt Hon Edward|
|Carlisle, Mark||Forman, Nigel||Heseltine, Michael|
|Chalker, Mrs Lynda||Fowler, Norman (Sutton C'f'd)||Hicks, Robert|
|Higgins, Terence L.||Meyer, Sir Anthony||Shepherd, Colln|
|Holland, Philip||Milier, Hal (Bromsgrove)||Shersby, Michael|
|Hooson, Emlyn||Miscampbell, Norman||Sllvester, Fred|
|Hordern, Peter||Mitchell, David (Basingstoke)||Sims, Roger|
|Howe, Rt Hon Sir Geoffrey||Moate, Roger||Sinclair, Sir George|
|Howell, David (Guildford)||Monro, Hector||Skeet, T. H. H.|
|Hunt, David (Wirral)||Montgomery, Fergus||Smith, Dudley (Warwick)|
|Hunt, John||Moore, John (Croydon C)||Speed, Keith|
|Hut[...]hison, Michael Clark||More, Jasper (Ludlow)||Spence, John|
|James, David||Morgan-Giles, Rear-Admiral||Spicer, Jim (W Dorset)|
|Jenkin, Rt Hn P. (Wanst'd & W'df'd)||Morris, Michael (Northampton S)||Spicer, Michael (S Worcester)|
|Johnson Smith, G. (E Grinstead)||Morrison, Charles (Devizes)||Stainton, Keith|
|Jones, Arthur (Daventry)||Morrison, Hon Peter (Chester)||Stanbrook, Ivor|
|Jopling, Michael||Neave, Airey||Stanley, John|
|Joseph, Rt Hon Sir Keith||Nelson, Anthony||Steen, Anthony (Wavertree)|
|Kellett-Bowman, Mrs Elaine||Neubert, Michael||Stewart, Ian (Hitchin)|
|Kimball, Marcus||Newton, Tony||Stokes, John|
|King, Tom (Bridgwater)||Nott, John||Tapsell, Peter|
|Knight, Mrs Jill||Oppenheim, Mrs Sally||Taylor, R. (Croydon NW)|
|Knox, David||Page, Rt Hon R. Graham (Crosby)||Taylor, Teddy (Cathcart)|
|Lamont, Norman||Pattle, Geoffrey||Tebbit, Norman|
|Lane, David||Percival, Ian||Temple-Morris, Peter|
|Langford-Holt, Sir John||Peyton, Rt Hon John||Thatcher, Rt Hon Margaret|
|Latham, Michael (Melton)||Pink, R. Bonner||Thomas, Rt Hon P. (Hendon S)|
|Lawrence, Ivan||Powell, Rt Hon J. Enoch||Townsend, Cyril D.|
|Lawson, Nigel||Price, David (Eastleigh)||Trotter, Neville|
|Lester, Jim (Beeston)||Pym, Rt Hon Francis||Tugendhat, Christopher|
|Lewis, Kenneth (Rutland)||Raison, Timothy||van Straubenzee, W. R.|
|Lloyd, Ian||Rathbone, Tim||Vaughan, Dr Gerard|
|Loveridge, John||Rawlinson, Rt Hon Sir Peter||Viggers, Peter|
|Luce, Richard||Rees, Peter (Dover & Deal)||Wainwright, Richard (Colne V)|
|McAdden, Sir Stephen||Rees-Davies, W. R.||Wakeham, John|
|McCrindle, Robert||Renton, Rt Hon Sir D. (Hunts)||Walder, David (Clitheroe)|
|Macfarlane, Neil||Renton, Tim (Mid-Sussex)||Walters, Dennis|
|MacGregor, John||Ridley, Hon Nicholas||Warren, Kenneth|
|Macmillan, Rt Hon M. (Farnham)||Ridsdale, Julian||Weatherill, Bernard|
|McNair-Wilson, M. (Newbury)||Rifkind, Malcolm||Wells, John|
|McNair-Wilson, P. (New Forest)||Rippon, Rt Hon Geoffrey||Whitelaw, Rt Hon William|
|Madel, David||Roberts, Michael (Cardiff NW)||Wiggin, Jerry|
|Marshall, Michael (Arundel)||Roberts, Wyn (Conway)||Winterton, Nicholas|
|Marten, Neil||Ross, Stephen (Isle of Wight)||Wood, Rt Hon Richard|
|Mates, Michael||Rossi, Hugh (Hornsey)||Young, Sir G. (Ealing, Acton)|
|Mather, Carol||Rost, Peter (SE Derbyshire)||Younger, Hon George|
|Maude, Angus||Royle, Sir Anthony|
|Maudling, Rt Hon Reginald||Sainsbury, Tim||TELLERS FOR THE NOES:|
|Mawby, Ray||St. John-Stevas, Norman||Mr. Spencer Le Marchant|
|Maxwell-Hyslop, Robin||Scott, Nicholas||Mr. John Corrie.|
|Mayhew, Patrick||Shaw, Giles (Pudsey)|
§ Question accordingly agreed to.
§ Bill read a Second time.
§ Bill committed to a Committee of the whole House.—[Mr. Stoddart.]
§ Committee tomorrow.