NATIONALISATION

HC Deb 19 May 1976 vol 911 cc1453-684

Mr. Deputy Speaker (Mr. Oscar Murton)

Mr. Speaker has selected the amendment in the name of the Prime Minister and his right hon. Friends: to leave out from "House" to the end of the Question and to add instead thereof: believes that it is in the best interess of British Industry and the Nation that the Government should continue to develop its industrial strategy in accordance with the principles and objectives of the Industry Act; and welcomes the constructive contribution already made to this work by the National Enterprise Board and the discussions on the Industrial Strategy at the NEDC".

5.11 p.m.

Mr. Michael Heseltine (Henley)

I beg to move, That this House calls on Her Majesty's Government to dispel the damaging uncertainty about the future of banking, insurance and pharmaceutical manufacturing, by stating categorically that they have no intention of nationalising companies in these industries. This debate is about the threat of nationalisation to banks, insurance companies and the pharmaceutical industry in this country. [HON. MEMBERS: "Nonsense."] I am delighted that hon. Members at such an early stage in the debate should suggest that this is not a threat. If they had made that clear in the beginning and not put down an amendment, we could have been saved a debate in the first place. The Government have made it clear in their amendment that they are not prepared to make their decision on this vital matter totally clear. But we shall put the situation before the people of this country, however embarrassing it may be for hon. Members opposite to hear it. The fact of the matter is that everything I shall say arises from the firm manifesto pledges and policy research proposals of the Labour Party or speeches from senior Cabinet Ministers.

There is a familiar process which leads to State ownership of industry, and it is well under way within the Labour Party in respect of these industries. It is a process which causes continuing harm, creates uncertainty, and distorts investment. It is a process which has been embarked upon decade after decade by the Labour Party, under pressure from the Left wing.

Not only is it a familiar process to remove the private sector and to put it into State hands but it is part of a deliberate attempt to bring about what the Labour Party regards as a fundamental shift of power in society. That is what the debate is about today —the fundamental shift of power in society from private citizens to the hands of the State to be used as the Labour Party so decides. [HON. MEMBERS: "Nonsense."] It is very helpful to have the guidelines totally clarified at this early stage in the debate.

The three industries —banking, insurance and pharmaceuticals —can be divided into two categories. Banking and insurance are central to the debate about the level and quality of investment in British manufacturing industry. Pharmaceuticals is a manufacturing industry which can be judged against the standards of success or failure which should be applied to any sector of the economy.

The Labour Party policy documents which deal with banking and insurance rehearse the familiar Left-wing arguments, but before we come to the precise arguments contained in the various documents we should establish the common ground between the two sides. Both sides want to see an increase in the wealth-producing capability of British industry, but each side has different priorities on what should be done with the wealth and who should own it. But the language of politics is sterile if the resources cannot be earned to turn ambitions into action.

The unbridgeable difference between the two sides starts with the claim by certain sections of the Labour Party that these institutions have failed to produce the cash to enable the investment without which wealth creation is held back. If that were true, they would have a powerful case. But if one studies the research documents of the Labour Party one will not find a single example to show where this has happened. The theme is repeated on page after page. All that is missing is any evidence to substantiate that theme.

The facts are interesting to read because they are scientifically engineered to present British banks in the least favourable light possible. It is very interesting to read the draft policy paper published in October 1975, in which we have this statement: The proportion of bank loans which go to manufacturing industry in Germany is not very much higher than in the United Kingdom. By the time that policy document had been redrafted in February 1976, this damaging revelation in the attempt to show the superiority of the German system had been totally removed so that it was unable to reach the eyes of the Left.

Mr. Brian Sedgemore (Luton, West)

Would the hon. Gentleman seek to analyse the statistics in the two documents and relate them to the proportion of long-term bank loans and the purposes for which they are given in Germany, and the proportion of short-term bank loans and the purposes for which they are given in the United Kingdom?

Mr. Heseltine

This information is not available, because the method of revolving credit for reviewing and re-equipping does not provide the basis of this analysis which the hon. Gentleman wants. It is because they cannot get this simple fact on board that they are having the analysis. It is not surprising that they withdrew the suggestion about German banks because it is proved fallacious when one investigates the situation in detail.

The entire thesis of the paper concentrates on the provision of funds, but makes no attempts to prove that if there is insufficient investment, the fault is that of the investor. The new theology seems to emerge "Let there be money, and investment will look after itself".

Mr. Ian Mikardo (Bethnal Green and Bow)

Just the opposite is true.

Mr. Heseltine

The hon. Member is right. The opposite is true. But the analysis of the paper is as I have stated it. The more one reads the paper, the more one realises that the central question remains. Where are the British companies which, year after year have been sent away empty by British banks? Where are the investment projects which have been held back because the managers of British industry have refused the finance to carry them out even though they believe that the projects were viable and their companies had the asset backing to carry them through? No matter where one looks in the papers, one does not find even one example of one company or one project that has been so held back, and it is for that reason, if no other, that these arguments are wholly spurious and designed to prove a case that has no validity.

If one starts at that end of the argument one is bound to reach the wrong conclusion. If one starts at the other end one comes to a very different conclusion, and it is clear that the Labour Party researchers have conveniently ignored, because it does not suit their dogma, the underlying realities of the British industrial manufacturing crisis. Let us have no illusions about the fact that there is a crisis.

The crisis that they have failed to spell out is that, measured in terms of rate of return, investment in British industry earns less than comparable industry is able to earn abroad. The rates of interest that British manufacturing industry has to pay, and has no choice but to pay, have been consistently higher than the rates available to our competitors abroad, not because the investors were responsible, but because the economic management of the economy demanded that there should be high rates of interest in Britain, which meant that there was no way, short of subsidisation of industry, to invest at rates that were competitive with those enjoyed by our foreign competitors. That was a responsibility not of the investors but of the central management of the economy by varying Governments from time to time.

If Labour Members could begin to understand that, and begin to understand that it is the absence of profit that underlies our problems, they would begin to get somewhere close to realising why British industry has invested insufficiently for so long. They would begin to understand, as the Trades Union Congress Economic Review understood, that the situation resulted not from a shortage of funds but from the direction in which the funds went to seek more profitable avenues elsewhere, and that if the profits had been available in British manufacturing industry the funds that flowed to more profitable avenues outside manufacturing industry would have flowed into manufacturing industry precisely as they did throughout the rest of the Western world.

Mr. Ian Wrigglesworth (Thornaby)

Will the hon. Gentleman tell the House why the property sector during the era of competition and credit control was made so profitable, and by whom?

Mr. Heseltine

The hon. Gentleman is reinforcing my point. It was profitable, and therefore funds flowed into that sector. I should be the first to say —this is not an issue on which I disagree with the hon. Gentleman —that there would have been an argument for having more sophisticated techniques to ensure that British manufacturing industry was sufficiently profitable to attract the funds that were available.

Mr. Mikardo

How does the hon. Gentleman reconcile what he has been saying with the fact that between 1971 and 1973, when the profits of British industry were booming and it had the advantage of a considerable reduction in corporation taxation, there was a fall of one-third in investment?

Mr. Heseltine

The hon. Gentleman is a sophisticated economic and industrial consultant. He knows about the time lags involved —profits rise, and investment follows 18 months later. The charts are clear and historically valid for a longer period than the highly selective period chosen by the hon. Gentleman. If he studies the charts he will see that whenever profits have risen, after a period investment has followed, and if only we could have maintained that increase in profitability investment would have continued to rise. However, by a policy of stop-go, and latterly because of the Government's counter-inflation policies, we have cut into the cycle and profits have declined and investment has followed downwards. No other analysis is credible against the facts of Britain's economic performance over the past 30 years and the hon. Gentleman knows it as well as anyone else. Most of us have the integrity to admit that the analysis is true, but the hon. Gentleman is making narrow party points to support his dogma.

Consistently, it has been not the shortage of cash that has been the problem but the lack of confidence by industrialists generally that they had opportunities to invest in Britain in the circumstances of our economic situation or that their companies had sufficient strength to justify the additional borrowing. It is because, decade after decade, there has been a prevailing climate in which those circumstances have existed that we have now so seriously eroded our manufacturing base, and until we recognise and rectify this position the decline will continue.

By implication, the documents realise that truth but cannot admit it because it does not conform to the ideology of the extreme Left. Behind the argument for the nationalisation of the banks and insurance companies, the creation of a National Enterprise Board, and all the other paraphernalia with which we are familiar, there is the growing threat of the central direction of investment. That is the logical step in the argument, and many Labour Members would admit that and be proud of it. It is a logical step because they realise that the provision of cash alone will not lead to increased investment. They therefore realise that they would need compulsory powers to instruct that investment should take place where commercial management in its judgment would not carry it out unless the overriding conditions are fulfilled.

The Chequers statement recognised the need for profit but no one can fail to contrast the White Paper associated with Chequers with what has been said elsewhere. It is very interesting to listen to the jeering from Labour Members and then to read what their own Government in their recent White Paper said about the profits at which these hon. Members sneer. The Government said that it was necessary to have circumstances ensuring that industry, both public and private, is able to earn sufficient profits on its investment to spur managements to expand and innovate and to provide them with internal finance on which to base investment. That is true. That was said in the Government's White Paper, and it is fundamentally in conflict with all the arguments from the left wing of the Labour Party, inherent in the policy documents that we are debating.

No one can fail to contrast that statement of sanity, which 18 months of economic mismanagement forced the Government to publish 18 months after they came to power, with the incalculable harm that policy documents and manifesto pledges of the Labour Party have done to British investment projects over the past 30 years. The quotation that I have given from that White Paper is typical of other statements in it. But the other document, which is now the basis of the research into and objective analysis of the malaise of British manufacturing industry presents us with the problem that one can wade through 32 pages of verbiage and not once find the word "profits".

One or other of those documents has to be wrong, and nothing more clearly reveals the fundamental inability of the Government to create an economic policy that has credibility than this clear divide between the two wings of the Labour Party. It is because policy documents of this sort always anticipate the next leap forward, the next debilitating compromise between Social Democrat and Socialist, that Britain is left with the worst of both worlds —neither a free enterprise system fuelled by sufficient profit nor a State system backed by the central directing control which is the only, if wholly inadequate, substitute for profit.

It is extraordinary to read the criticisms of the banking system in Britain that are to be found throughout the papers and then to read the conclusion that nationalisation will put them right. They say that there is not enough consumer choice, and the solution is supposed to be to have a nationalised bank to improve the quality of consumer choice. That was the argument used by the Secretary of State for Energy when he launched the great Giro—the great people's bank to give all this choice to all those disgruntled citizens of the land. How many years was it before it cost those very citizens £30 million to pick up the tab of the Socialist extravaganza of yesteryear?

Next we are told that there is too much concentration in British banks. The State is to take over one of the banks. To achieve what? Neither more concentration nor less. It is a difference in ownership of one of the banks, so it will have no effect one way or the other on concentration.

Next there is the implication that nationalisation would increase the level of competition between banks. I suggest that the authors of this document should spend a day discussing with some of the citizens of this country the quality of service and the level of competition that State ownership has brought wherever it has been introduced into industry. We are told that nationalisation is commonplace in Europe but it works there because the Governments of those countries have set clear disciplines on themselves so that the banks are free to give every help to the development of free enterprise companies.

The architects of the policy we are discussing are not interested in trying to expand and develop the free enterprise system. They want to nationalise banking in order to get the people's resources to undercut and undermine the free enterprise system. They want the people's cash to do what the people would never voluntarily do themselves.

Mr. Eric S. Heller (Liverpool, Walton)

The hon. Gentleman refers to nationalised industries as if they were always incompetent and unable to carry out efficient programmes. Is he not aware of the vast conversion to North Sea gas throughout the country which, apart from certain teething troubles, was carried through with the greatest efficiency? Let him contrast that with the modernisation of council houses carried out by private enterprise companies which, as any hon. Member will know, has produced complaint after complaint about the inefficiency of the private enterprise firms and their skimpy work.

Mr. Heseltine

The hon. Member obviously has a welter of experience of such complaints in his constituency. There has never been a complaint in my constituency about the problem to which he referred. If there had been I would be better briefed on the subject.

Mr. Heffer

The hon. Gentleman does not represent a big city.

Mr. Heseltine

In many ways my postbag from big cities is as large as that of the hon. Member. People mention a whole range of problems. They complain about many things, but they have never brought to my attention the matter to which the hon. Gentleman referred. It is just conceivable that he is back on the bandwagon of dragging up irrelevant and unsubstantiated facts to prove something which suits his political case.

We can have no idea how the private sector would have done in the conversion to North Sea gas because the gas boards are a monopoly. We know what the programme cost, but we can have no idea whether private enterprise could have done it cheaper. My faith in the system is such that I should have liked it to try. Let me put a proposition to the hon. Member for Liverpool, Walton (Mr. Heffer) as a fair minded Member —let us allow competition in the gas industry and see, after a decade or so, whether my system is better than his. The reason I find the hon. Gentleman's views so unacceptable is that whenever a choice could be made, he never allows it. He always wishes to use the power of the State to eliminate the private sector and to put monopolies in the hands of the State.

These documents analyse the European banking situation in order to prove that nationalisation is the panacea for the problems of banking and virtually everything else. But it is interesting that this comprehensive survey of the European banking scene manages to trip ever so lightly over that paragon of all Socialist virtue —Sweden. Is it possible that the authors, after going through country after country in Europe, did not omit Sweden as an oversight? Is it possible that, on this rare occasion, they left Sweden out of the calculations because the big banks in Sweden are in free enterprise ownership? Could they have been left out because they did not suit the curious argument that nationalisation is necessary in order to sustain a Socialist economy? Yet this claims to be a serious research document into the methods of running a free enterprise system with banking in either public or private hands.

If there is one argument upon which we could all agree, it is that where the document attacks the profits of banks and argues that a nationalised bank would ensure that this profitability was ended. If that were the whole case, I would surrender —game, set and match. I know from every precedent that if there is one way to undermine the profitability of the banks it is to put the clammy hands of the Ministers opposite into one of them.

Mr. E. Fernyhough (Jarrow)

What about the investigations going on in the Bank of England?

Mr. Heseltine

If I were the right hon. Gentleman, I would not talk about investigations and the like. We have had enough of the moral sanctity from his side of the House.

There is one quotation in the document which has nothing to do with economic argument, but which shows a shrewd assessment of public and political attitudes. After pressing its arguments with the conviction of a man who says what he believes and then attacks his opponents in order to disguise the paucity of his own case, we find this comment on page 28 of the document: There is a political issue here since banking is perhaps the most difficult and emotive area in the whole public ownership debate. That is absolutely right. The customers do not want nationalisation. The arguments have no credibility. The employees have shown no interest in it and the principal unions involved have not asked for it.

The most constructive announcement the Government could make today —instead of their rather vague, diversionary amendment —would be to tell the 200,000 people who work for the free enterprise banks that there are no proposals by the Government, or intentions which could be converted into policies, for nationalising any of the British clearing banks.

Underlying the paper's criticism of the banks is the assumption that the investment of the State will lead to more and better investment. The most sinister long-term consequence of these attitudes is that they justify both the concentration in the hands of the State of the power to direct investment and the imposition of more and more selective controls to prevent the workings of the market from taking over the task which the Left is so determined should be carried out by the State.

Industrial success cannot be measured by profits when profits are tightly controlled. Investment cannot be rewarded by dividends when dividends are closely restricted. The practical implication of the theory is that if the State constrains profitability in the private sector, investment will dwindle and prove the case that only the State can make good the deficiency in investment. Price control, dividend restraint, excessive taxation —all, in their way, play a part which none of them plays in countries where investment is more successful than here.

Having shackled the free enterprise system, the scene is set for the State to claim the right to be the sole or main provider of investment. Having set the scene and created the restrictions which prevent the private sector from working, the State controls the provision of funds. The NEB has a budget of only £250 million a year for each of the next four years. That is supposed to be a substitute for the capital markets of the City of London which, in the last 17 months, have produced £2,000 million to a limited number of companies. That is supposed to be a substitute for the system which, one day last week, produced £200 million —nearly the entire annual budget of the NEB —for ICI, one of Britain's largest companies.

The continuing emphasis on centralised control enables the imposition of suffocating restraint on the successful companies. The prize claimed for all this is that it allows the Government to recycle company or personal taxes away from those with the skill to make profits and incomes which were taxed in the first place in favour of those who conform to bureaucratic standards must inevitably run down. That is not backing success, as the Government claim. It is restraining success in order to bolster up the less successful. What an extraordinary concept of economic allocation.

In the public sector, for decades, we have had examples of how it works out in practice. Stripped of all the rhetoric and all the promises, we have seen precisely how the system works in the hands of the nationalised industries. Every Minister who has been part of the process, from any Government, will understand the inability to control, to know or to ensure success in the way that every one of us has found. It has escaped us.

Let us analyse what happens. In fact, it always happens in this way. Every proposal from the public sector makes good returns in advance, in theory, on paper. Every proposal of any scale from a nationalised industry is submitted, through the departmental processes, to Ministers for their approval, and down comes the rubber stamp with loud acclaim because the profits are shown to be there on paper, in theory, in advance. When they have been approved by the sponsoring Department, they are

whisked off to the Treasury, where another rubber stamp comes down to put one more approval signature on the investment programme. And the task is done.

In that way the State has proved that it has controlled investment and authorised the investment to take place. Despite all those checks and scrutinies, and all the burrowing around by a two-tier or three-tier Civil Service process, when the harsh light of day gets near to these investments they all show devastating losses or completely inadequate returns.

There is nothing that we in the House have ever been able to devise to stop that from being the system, yet that is the system which the Labour Party is now seriously contemplating applying not only to the existing nationalised industries but taking and injecting into one of the great commercial centres of Britain's manufacturing capabilities.

Mr. Bob Cryer (Keighley)

Will the hon. Gentleman explain how his present comments relate to the rescue of Rolls-Royce by his own Government?

Mr. Heseltine

It is like Pavlov's dogs. Labour Members have only to find one example of a company which went wrong —

Mr. Cryer

One case?

Mr. Heseltine

—and which we, for public reasons, took into public ownership, to believe that that destroys the whole case. What the hon. Gentleman never mentions when he asks that question is the Minister who encouraged the private sector company to go ahead with the first contract. Who was the Minister who gave the impression to the private sector company that it would get the Government funds that were necessasry to carry through the contract, who told the House with great aplomb and glee "This is the way business is done. I pick up the telephone and another £10 million is transferred from the State to the private sector."? That was the Secretary of State for Industry. It was precisely the same effervescence and over-enthusiasm that carried itself through with the case of British Leyland. That was exactly the same situation.

Mr. Cryer

Why did you nationalise?

Mr. Heseltine

Because there was no practical alternative, bearing in mind the defence interests of the country. We took what was a wholly reasonable decision, which I would defend with total conviction. We took that decision not for dogmatic reasons but because the national interest was paramount, because there was no reasonable alternative. To believe that one can generalise, by using one important but isolated example, into extending the whole power of industry into the hands of the State is a totally "phoney"analysis.

We now have the Labour Party working away to bring its public sector investment appraisal to our banks. In defiance of all evidence and logic it is believed that the change of ownership of one or more of our clearers could change the climate of investment in Britain. That is wholly ill-conceived. The matter has been quite insufficiently researched. There is no evidence in the document to show that it should be done. Indeed, all the available evidence demonstrates that it would have totally predictable and unfortunate consequences.

The arguments about the insurance industry have the same intellectual validity. The motive is quite clear, namely, to control the investment funds. Once again, the arguments are based on exactly the same criticisms. About 250,000 people working in the insurance industry have now to wait and wonder, with all the uncertainties that that creates, whether one of their companies is to be selected as the reluctant bride of State husbandry.

I touch on one argument that applies to the control over investment funds that is in the hands of the insurance companies. It applies equally to the other institutional investors. The managerial revolution has divorced management and ownership in our large companies. The growing corporation has removed from management too much of the practical discipline of answerability from those who own the businesses.

The institutions, as the Diamond Commission on wealth clearly demonstrated, are the trustees of millions of working people. They are managing the savings not of a tiny privileged group, but, increasingly, the savings of the majority of people who live and work in this country. They are the trustees of the

savings, through the life insurance and pension funds, of the bulk of the British people.

There are about 2 million people who now own shares in their own rights. There are l3¼ million people with funded pensions, and 14 million life assurance policy holders. Increasingly at one remove the ownership of British industry is spreading throughout our society, yet the voice of those who act as trustees on behalf of the people is scarcely heard in the political debate.

It seems to be their naive view that the power-hungry Left can be diverted elsewhere if the profile is kept so low as to be virtually invisible. That is a total misreading of the position. Policy documents of the sort we are discussing would never see the light of day if the electorate associated its personal prosperity or assets with the suggestion that the State should take over the insurance industry or direct its savings through pension funds into unprofitable investment.

The British people are unaware that the Labour Party is proposing to get its hands on the assets upon which their personal savings and future are secured. It is that ignorance and the apathy that underlies it that allow the vacuum to which the Left so relentlessly march.

Not only should we expose these dangers; so should those who have power of which they have little dreamt. If only they will understand it and if only they will it, they have the power to argue in public for a democratic society. But if they will not, they can blame no one if their case goes by default.

Let us tell the lads on the shop floor that it is their savings that are destined for the Leylands, the Chryslers and other giants of State subsidy. Let them realise that it is their pensions that went down the drain along with their taxes. It is their savings that could be diverted into schemes of the sort with which the Secretary of State's name is so indelibly linked. That would bring about a total change in the attitude of those working in British industry towards the relative argument about ownership of that industry.

But it is not enough to expose the humiliating waste of national resources which I have just evidenced. If we want the workpeople to understand the direct personal interest that they have in the investment funds of the pension schemes,

why not elect them democratically to the management boards? I praise the free enterprise companies that have done that, but there are those companies that have held back. What are they waiting for? Are they waiting for a Labour Government to force them not to allow democratic elections to the various boards from the shop floor, to insist that they appoint representatives of politically motivated unions to do the same task with infinitely less good will.

Nothing would so focus the minds of those working in British industry who might hear whispers of impending State direction or control if they identified those threats with their own personal prosperity. In the context of the institutional investors, the issues have been rehearsed in the debate on the equity bank. If individual funds cannot and should not themselves try to involve themselves in too close a relationship with companies—and I know that they cannot—why is there not a representative organisation more attuned to a positive role than anything so far attempted? It is time that we genuinely applied the lesson of the German banks and the monitoring process over German management that they have carried out.

The moral of the story is that there should be a more positive rôle for the institutional trustees of Britain's savings. The way in which that should happen is evident to those who have considered the problem from a political point of view. Acting with the support, either pledged or in spirit, of the institutions, the equity bank could command the authority of a substantial part of the owners of a company and thus place alongside the negative control of share disposal an ongoing dialogue that could in some cases, and in some cases only, force questions to be answered before the ultimate collapse of declining companies provoked the all too familiar crisis.

I am not suggesting that such a dialogue would prevent some companies declining. I am not suggesting that there is an assumed obligation on the representatives of owners to bail out inefficiency or prevent long-term market changes. I suggest nothing more than that where companies are known to be indifferently managed, when the quoted value of the share price is its own warning about the future, it is not enough to turn one's back and let the inevitable happen without a conscious decision being taken that that should be the case.

Lastly, I turn to the pharmaceutical industry, in which I declare an indirect interest. On 30th April the Minister of State, Department of Health and Social Security, gave a Press conference to announce the view that a major British pharmaceutical company should be nationalised. The hon. Gentleman explained that he was speaking not as a Minister but as a member of the Labour Party, and he expressed the hope that his proposals would be seriously considered by the pharmaceutical industry and the Press. They were. From one end of the industry to the other and from one end of Fleet Street to the other they were condemned for the doctrinal twaddle that everybody recognised them to be.

What kind of credibility do the Government expect for their industrial policies if, within the same few weeks, they produce a White Paper urging industry to invest, to make profits and to export, and then produce research documents blaming the banks for failing to provide investment that Government policies had reduced to the lowest levels since the 1950s, and then finally, a Minister pops up and says that he is only a member of the Labour Party, but suggests that the Government should nationalise part of an industry which has three times the national average productivity, which increased exports last year by 25 per cent. to £400 million, which provided one-third of the trade surplus of the entire British chemical industry and which, according to the British Medical Journal, supplies drugs to the National Health Service cheaper than in almost any other technically advanced country this side of the Iron Curtain?

Mr. Max Madden (Sowerby)

What about La Roche?

Mr. Heseltine

La Roche paid its bills back to the State, which is more than can be said for a nationalised industry.

About 72,000 people in the pharmaceutical industry must now be in anguish over whether it is to be Boots, Fisons, Beechams, the Wellcome Foundation or ICI that waits for Lord Ryder to come a-knocking on the door. What an incentive for those companies to develop or for overseas companies to invest here. And the Government wonder why the flight of talent is escalating and the resources available for investment fail to flow.

The Labour Party should spend a fraction of the time that it spends lecturing industry actually listening to industry about the conditions that it needs to stimulate investment. If the Government would ask "Why has investment succeeded so much more in competing economies?" rather than "How do we make people do what their best judgment warns them not to do?", they might evolve an industrial strategy which would live up to the Chequers phrases.

But in the fundamental debate between the two sides, to the Government the facts and figures are just crutches used to prop up the argument. The argument is as it has always been. It is about power—power, on the one hand. widely spread throughout a capitalist economy, with all the checks and balances involved in such a system, or power increasingly enmeshed within the confines of the State and the determination that power has to eliminate any independent competition.

Hon. Gentlemen opposite proclaim "for public consumption" at election time to give them a clear divide between the public and private sectors. The words had no louder advocate than the right hon. Member for Huyton (Sir H. Wilson) who proclaimed that confidence demanded that a clear frontier must be defined between what is a public and what is a private industry.

It will surprise no one that those words were used by the man who at various times had led Labour to power committed to the nationalisation of steel, sections of the pharmaceutical industry, road haulage, construction, machine tools, North Sea, Celtic oil and gas, shipbuilding, ship repairing, marine engineering, ports, airframe manufacture, and the establishment of a National Enterprise Board which was to be given power to nationalise any free sector manufacturing company in the country.

The faster the State acquired, the louder the clamour for a clear divide. The words are soporifics, designed to lull the apathetic and the idle into false complacency.

I therefore urge the House to support our motion and the warning that it so clearly contains.

5.56 p.m.

The Chancellor of the Duchy of Lancaster (Mr. Harold Lever)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: believes that it is in the best interests of British Industry and the Nation that the Government should continue to develop its industrial strategy in accordance with the principles and objectives of the Industry Act; and welcomes the constructive contribution already. made to this work by the National Enterprise Board and the discussions on the Industrial Strategy at the NEDC". I cannot pretend to have been a continuous or over-zealous attender of the House throughout my 31 years in Parliament, but this must have been the most extraordinary occasion in those 31 years. I have never heard an Opposition party devote a whole day's debate to the churning out of standard platitudes and of generalised political argument on the basis of some policy documents—discussion documents—of the party in Government that have been published for public discussion but have not yet reached the national executive of that party for discussion and approval. It surely is an extraordinary rodomontade to which the House has been treated, of standard and futile platitudes with not embedded among them a single constructive suggestion as to how the Opposition would deal with the economy.

Mr. Michael Marshall (Arundel)

rose—

Mr. Lever

I shall give way, but I should like to finish this part of my speech. In his glib and excessive articulateness, the hon. Member for Henley (Mr. Heseltine) swiftly glossed over the difference between the Government and the Labour Party. The hon. Gentleman contrasted the Government's view and said "How can anybody believe the Govenrment's view if one day they issue a White Paper and the next day they issue a policy document?"

The Government did not issue a policy document. The Labour Party has not, as yet, issued it as a policy document. It is a discussion document yet to be approved.

Mr. Michael Marshall

If this document is of so little relative importance, will the right hon. Gentleman save the time of the House by repudiating it, so that we may move on to other business?

Mr. Lever

I shall call upon the hon. Gentleman for assistance in making my speech when I feel the urgent need for it. In the meantime, I shall struggle to deal with the Opposition case, if such it can be called.

Mr. Heseltine

The right hon. Gentleman said that these are not policy documents and have never seen the light of day as such. Will he comment on the speech by the Chancellor of the Exchequer, in which he said that the Government were working on an extension of public ownership into banking and insurance, and probably building societies as well?

Mr. Lever

I have not read my right hon. Friend's speech. I have an invariable rule never to be trapped into making comments upon partial, carefully selected quotations from the speeches that colleagues are supposed to have made. If the hon. Gentleman wants comments on that speech, he should put down a Question to the Chancellor of the Exchequer. I noticed that the hon. Gentleman, in the midst of a great deal of irrelevant trivia, did not make use of that quotation in the course of his extensive address to the House. It is clear, however—[interruption.] We shall see how much good use the hon. Gentleman made of it by the time I have finished addressing the House on Government policy. I am not here to comment on speeches, supposed speeches or selected quotations from speeches made by others. I have not read my hon. Friend's speech in detail.

The hon. Gentleman, when asked why he wasted the whole of the afternoon discussing discussion documents for inner argument within the Labour Party, as if they were Government policy, for the first time trundled out a snatch of what he claims the Chancellor of the Exchequer said at some particular time. If he would care to give me full notice of it, I should be happy to give him extensive comment on it. At present I am commenting on his own speech.

Mr. Michael Grylls (Surrey, North-West)

I have in my hand the document about the pharmaceutical industry. There is nothing on it about its being a dis- cussion document. It is headed "News Release". It refers to public control of the pharmaceutical industry, but says nothing whatsoever about its being a discussion document.

Mr. Lever

This was published quite openly by the Labour Party as a Press release for public discussion and discussion within the party, and decision. I am sorry if the hon. Gentleman—who is not, as far as I know, a member of the Labour Party, feels badly done by in the way in which it was released to him or the Press.

The important matter that the House should notice is that we have been treated to this tirade not on the basis of anything that the Government have said or done but on the basis of a lengthy policy document that has been published openly by the Labour Party for the information of its members and the public. One is forced to ask why this tirade was launched upon us. It is perfectly plain that the Tory Party, being entirely without any constructive policy, is anxious to interpose a smoke-screen of demagogy between its political nakedness and such support—diminishing support—as it is getting from the public.

The same extraordinary speech included an apparent unqualified hostility to every aspect of publicly-owned industry. That in itself gives me some indication of the distant date on which the Conservative Party has expectations of resuming Government, because no Government can organise the industries of this country without a proper regard for and interest in the publicly-owned sector as well as the privately-owned sector. The philistine, vulgar and unqualified hostility that was displayed to every aspect of public ownership is disgraceful, coming from the mouth of a man who has held public office and hopes to hold it again. He has threatened hon. Members on the Government side of the House in saying that there is a great emigration of talent. We, looking, as we are forced to do, at the Opposition Front Bench, do not need a great deal of persuasion on that point, if that is the kind of argument being advanced.

I have a certain respect for the old-fashioned view—the old Tory view—of generalised hostility to any form of public ownership—a sort of hangover from or misreading of Adam Smith. But I do not respect it when it comes from people such as the hon. Member for Henley, who have held office and operated publicly-owned industries and who have every hope—though not too much expectation—of holding public office again and having the same responsibility.

I now deal with the realities as opposed to the absurdities of inviting the House to pass judgment upon policy documents which have not even yet received complete discussion within the political party that has issued them.

Mr. Angus Maude (Stratford-on-Avon)

It might save the right hon. Gentleman a lot of time if he noticed that the Opposition's motion does not ask the House to pass judgment on a policy document but asks the Government to answer a few questions in order to remove uncertainty about the future of three industries.

Mr. Lever

I am coming to that. [Interruption.] Far from not noticing I shall point out that there is no such uncertainty in the minds of Opposition Members. This is a bogus provoking of uncertainty in the hope of gaining political advantage from it. The Government's policy on these issues is crystal clear. It is well known—even to the modestly literate members of the Opposition Front Bench.

First, let me deal with banking. I can give a complete, simple declaration that the Government have no intention of nationalising any company in the banking industry. [Interruption.] It is no good saying "Very good". All this has been said. I well understand the purpose of the motion. It is that a bankrupt political party hopes to gain some political advantage by stirring up a kind of bitterness between some of my hon. Friends and the Government where there is a very genuine and reputable difference of opinion between us. Where there is no difference of opinion between us is in a determination to make a success of our existing nationalised industries, and wherever it is advantageous to the public interest, to extend public ownership.

None of us regards public ownership as something evil—to be reviled, jeered at and sneered at in the way we have heard this afternoon from a former Minister. I do not deny that there are some Labour Members who would very enthusiastically welcome the nationalisation of one or two banks. However, that is not the Government's policy, and the hon. Member for Henley knows full well that that is so, because it has been said over and over again.

The former Paymaster-General, who is now a member of the Cabinet—which is hardly punishment for his sin—stated in the clearest terms on 2nd June 1975 that we had no plans to nationalise the banks. In fact, it is the Government's view that our banks are a very efficient sector of our private enterprise. They are competitive. Our branch banking system is unrivalled throughout the world, and our banks adjusted to Britain's changing position in the world with remarkable advantage to our country. They continue to make a major contribution to invisible earnings.

Mr. Fernyhough

I am sure that my right hon. Friend would readily agree that many investors in the fringe banks would have been very glad if the Government had nationalised those banks and, likewise, that many of those who invested during the last two or three years in insurance companies which have gone bankrupt would have been very happy if the Government had nationalised them. At least, I had many letters saying that the Government should do that.

Mr. Lever

I am sure that anyone who has invested in a private enterprise company that fails would be very happy if the Government relieved them of their losses by taking over the company concerned. However, I am sure that my right hon. Friend would not regard that as the purpose of nationalisation.

We are talking of the banking industry as a whole. It has been a great success and of great advantage to our country. Our insurance industry also has an enviable world position. In 1974 its export earnings were £370 million. It brings in other business—for example, ship broking and ship repairing. Much of its strength derives from the fact that foreigners know that it is independent of Government. Whether or not hon. Members like it, that is a fact. Many American States will not allow an insurer to be licensed if he is owned or controlled, wholly or in part, by a foreign Government. Here, too, the Government have no plans for nationalisation. Only the fraudulent eyebrows of the Opposition

Front Bench will be raised in astonishment at that. This is well known by those of my hon. Friends who wish that we had such plans, but they know perfectly well that we do not.

Mr. Heifer

My right hon. Friend is absolutely right in saying that the present Government have no plans to nationalise banks, insurance companies and financial institutions. However, he must be aware that in the last analysis it is the party that will decide for future Labour Governments. While it is accurate to say that it is not in our present manifesto and that we are not committed to it, it does not follow that we shall not be committed to it in the future. My right hon. Friend must also be aware that there are many of us within the Labour Party who, although Opposition Members are trying to stir up differences between us, are talking in terms of the future and not the present plans of this Government. I am sure that my right hon. Friend is aware that many of us in the Labour Party—I would say it is the majority in the party—do not believe that we can get that irreversible shift of power to working people and their families—not to the State—that is advocated in the Labour Party manifesto without ultimately controlling the banks and financial institutions in order to get the investment and the necessary planning of our society's resources where they are required.

Mr. Lever

I am extremely amused at the way in which the Opposition appear to pretend, and apparently are able to convince themselves, that it is a novelty that my hon. Friend has his view and I and the Government have a different position in relation to these matters. What my hon. Friend is saying is perfectly fair. He is saying that he has his hopes about the way in which political developments will go in the future. But other people have different hopes.

I am not going to be lured from policy to prophecy; I am talking about the Government's policy as it is. I am not talking about what my hon. Friend may hope or what I may hope. Although we have many hopes, both for our country and the party, our hopes are not in total coincidence on this point. However, that is not the question.

Mr. Hefter

That is well known, I think.

Mr. Lever

I gather from my hon. Friend's comment that this has not hit him with the shock of novelty. I do not need to spell out the virtues, on the positive side, of our banking and insurance system, although I might claim rather better qualifications to do so than some hon. Members opposite.

What the hon. Member for Henley has not dealt with, I propose to deal with. I hope that I shall give some satisfaction to the House, and my hon. Friends in particular, in relation to the serious question that has come up. My hon. Friends are not complaining that the young ladies at the counter of the branch banks are not up to scratch, or that bank managers are tipsy, or anything of that kind. They are asking whether our banking and insurance system meets the needs of our modern society which commits to it a greater part of its investible funds, and whether those investible funds are deployed, under this system, in a way which is satisfactory to the needs of our society.

The Government have no intention of abdicating responsibility for ensuring that the huge funds, within the banking and insurance system, are deployed in accordance with the needs of public policy. But the Government can, without difficulty, do this without any nationalisation of the banks or the insurance companies. The Government operate their monetary policy with complete freedom and effectiveness without owning the banks. They are able to have, in the most flexible manner possible, the monetary policy of their choosing. We do not need to own the banks to achieve this.

We have the most extraordinary example of the flexibility by which the Government operate their policy in a privately owned banking system—for example, the special deposits, by means of which hundreds of millions of pounds are given up voluntarily by the privately owned banks, in many cases without any interest at all, and in all cases at an interest below the market rate because the Government have said that this is the requirement of the Government's monetary policy and, rightly or wrongly, in the interests of the country. The banks have never had to have one piece of legislation to compel them to do this. Nowhere in the world can a parallel be found for this flexible, responsible control by private ownership of the banks which are responsive to Government policy in this way.

The problem is not how to control the banks with Government policies but rather to ensure that the Government policies they are asked to carry out are wise. The real danger is not that the banks remain in private ownership; the danger is one of the banks coming under a policy dictated by a Tory Government. The cure is not nationalisation, but the minimum of Tory Government, not least because I am not sure whether the Tories are worse when they are making mistakes or when they are trying to correct them. I am not sure whether the Barber mistakes or the overkill promised in the opposite direction by the right hon. Member for Leeds, North-East (Sir K. Joseph) and others is the more dangerous or whether the kind of remedies and attitudes displayed from the Opposition Front Bench today are the remedies for the kind of profligate behaviour to which we were treated by the previous Tory Government. It is a horrifying choice between Barber or the hon. Member for Henley. What an excruciating choice to offer to the people of this country—the disease or the doctor. It is difficult to know which is the more dangerous of the two.

But are our banks, insurance companies and pension funds so concerned with profit that because of this they fail to invest in industry as they should? In our society profitability is not a perfect yardstick for allocating resources although, in general, it is pretty good, as its results show whenever it has been applied. It is certainly better than the combination of whim, intuition and prejudice which will replace it unless one sets clear criteria for the control of funds. Where one wishes the funds to be allocated otherwise than because of profitability, then the obligation is upon us to give a clear alternative criteria.

For the private enterprise system there is no doubt in my mind that the best criterion we have is profitability. I shall deal with the necessary supplement to that in a moment. It is a pity, in some, ways, because it is harder to find people who can make profits than it is to find people who can make losses. I wish a simpler system for the allocation of resources could be found.

Where supplements are required to the market profitability test—there are many occasions where this Government feel that the market profitability test is not adequate to provide the country with the investment it requires—the correct way of approaching that is not to dragoon the funds within the banking or insurance system by Government direction. The correct way of dealing with this is by appropriate institutions like the National Enterprise Board, the Industry Act and Giro, which are disliked by hon. Gentlemen opposite. These are the methods which the Government must employ if they want to abandon the market profitability tests.

When they direct funds in this way the Government must, in doing so—as they have always done—apply strict financial criteria within which these institutions are to operate so that one has a mixed economy system, which this Government are developing, in which the private sector uses private sector funds at market criteria. However, we are not so complacent as to believe that this is the be-all and end-all of investment, and we have organised substantial additional funds, and no doubt will organise further funds, to supplement the market profitability tests. These further funds will themselves be subject to the appropriate strictly defined criteria for operation.

The hon. Member for Henley has said how inadequate these Government arrangements are. He will meet a warm response from some sectors of the Labour Party, who want larger sums allocated to the NEB. I am sure they will have noted his view that the sums we have so far allocated are quite inadequate. The basis on which he said that they were quite inadequate, was the entirely dishonest, untrue statement that the Government purport that these sums are in substitution for the private funds. That is absolutely untrue and the hon. Gentleman must know it. It is absolute rubbish. The hon. Gentleman must know that the Government are not deaf and blind. The Government are perfectly well aware that in the last 12 months, private enterprise has raised on the Stock Exchange alone about £1,500 million by capital issuȩs. The Government are perfectly well aware of this and have encouraged by all means in their power the raising of money by loan stock.

I wonder what the hon. Gentleman thinks the Government were about when they took stamp duty off loan stock, which his commercially-minded Government failed to do, to encourage capital to flow into industry. Either the hon. Member is seeking to mislead the House or he has a naivety in these matters which surprises even me if he believes that the Government have put forward the NEB as a substitute for the private arrangements for providing capital for industry. As the hon. Gentleman well knows, or should know, the Government put forward the NEB funds as a supplement to the market funds which are available through the banks, insurance companies and private investors.

Mr. Heseltine

Unlike the right hon. Gentleman, I have read and listened to the speeches of so many of his right hon. and hon. Friends, and I know that they see the techniques of State support as a substitute for the present methods of private funding. I appreciate that the right hon. Gentleman does not take this view, but he is an anachronism in his party, as everyone knows.

Mr. Lever

I may be an anachronism in my party or the House or elsewhere, but that is not the point that I was seeking to make. The point that I was seeking to make, which, with great facility, the hon. Gentleman seeks to avoid or evade, is that he did not say that Ministers have indicated in their speeches that they want this or that to happen. He said that these funds of the National Enterprise Board are supposed to be a substitute for private funds for industry. He must know that that is juvenile nonsense. Unless the Government are both deaf and blind, they have been well aware, and have rejoiced publicly at the fact, that we have this year been raising record funds for industry—under a Government who are supposed, incidentally, to be intimidating the private sector from any kind of investment activity because of the nasty overhanging threat of these policy documents.

The hon. Gentleman might have explained, incidentally, the potency of the threat of these policy documents—in view of the amount of new capital which has been raised in the last 12 months under this Government, thanks to their successful accord in the trade union movement, more than any single other factor—in restoring the confidence of private industry. He might try to explain why, under his competent Tory Government, who mouthed all the agreeable platitudes approved by maiden ladies in Cheltenham, we got no investment on this scale, while, under this horrific, destructive, negligent, incompetent and near-Bolshevik Government, the money is pouring in in rights issues at a record pace to finance the great industries of this country. Perhaps the hon. Member, who wants to raise minor points when I am correcting his distortions, will treat the House to an explanation of that in his next speech about Labour Party policy documents.

That does not mean, of course, that there are not mechanical defects in the banking and insurance system that have developed as society has changed and new problems have arisen. We are proud that the neglected problem of medium-term finance for industry was tackled by this Government, by the Chancellor of the Exchequer, when, with the full support of the Governor of the Bank of England and the clearing banks, we set up FFI as a pilot exercise and a stimulus to medium-term lending for industry.

In doing so we had in mind the fact that the supply of medium-term finance for industry had evaporated from its normal source—the private investor. With inflation, the private investor was not willing to commit his funds at fixed interest for long terms, and action was required by an intermediate institution to make good that evaporation. We got FFI going to encourage the commercial banks to extend their medium-term lending to industry, and we have had remarkable success, despite the "intimidation" of my hon. Friends and the hobgoblins who haunt these Benches and Transport House.

The London and Scottish clearing banks have now put out in medium-term sterling loans to manufacturing and other productive industry about £2¾ billion, compared with ¾1½ billion in the burgeoning confidence that existed, as we all know, under the Tory Government.

Mr. Heseltine

Pure inflation.

Mr. Lever

Pure inflation? The hon. Member's statistical information must be as bad as his other information if he really believes that the increase in the medium-term bank lending in those two years can be accounted for by inflation. If he will take the trouble to get the bank briefing that he appears to have had only partially, he will find that they will not agree with him. They will tell him what I am telling the House—that there has been a remarkable advance in the concept of medium-term lending, by the banks to productive industry. The Government have encouraged it.

Mr. Dennis Skinner (Bolsover)

Can my right hon. Friend get away from all these fancy figures and his Finance for Industry, which to a large extent has been a failure after all the promises when it was announced, and the £6 pay limit, which was supposed to increase investment and reduce unemployment? Taking into account everything that my right hon. Friend has said and the fact that the improvement supposedly exists on paper, why are we still struggling with the highest unemployment levels since the end of the war? What will these paper promises do about that? That is the question he has to answer.

Mr. Lever

I cannot intrude too long in this debate on this point, but I will say briefly that one cannot transform a world slump and its consequences, just in our country, overnight. My hon. Friend must know that the pay policy, the £6 limit and the latest advance on it, are fairly recent and that there is a time lag before all this investment and the assault upon inflation pays dividends in Government strategy. However, he may be absolutely sure that the Government are bent on mastering inflation and unemployment. The facts that I have given are clear indications that this process is succeeding. I want to say something now about directed investment from institutions—pension funds, insurance companies and the like. The hon. Member for Henley talks as if it is the established policy of the Government to conscript investment funds from institutions for investment in either public corporations or private enterprise. He seems to be such a keen student of ministerial speeches that he cannot have failed to have had brought to his notice, especially for this debate, my own speech at the opening of the Cooperative bank recently, where I made it expressly clear that this Government did not countenance in any way the direction of investment funds in the way which he says we are threatening the country with.

There are reasons for this, and I gave them in my speech. First, I said, there is no reason to coerce funds because they can be obtained voluntarily. This has proved to be the case. The second point is that, if one wishes to take funds out of the jurisdiction of market profitability and place them, for social reasons, elsewhere, as I have said on many occasions we must, one must not put at risk the savings of working people in the pension funds.

It is no good the hon. Member for Henley smiling. I did not wait for his absurd, juvenile and immature speech this afternoon to say that. I said it in public and it was reported in every newspaper in the country, as he knows.

Mr. Heseltine

Did they approve?

Mr. Lever

It does not matter whether every one of my hon. Friends approves. The hon. Member is treating the House with less than candour when, knowing that this is the Government's policy, he does not say so in this speech. He knows that, after I made that speech—whether some people liked it or not—the Prime Minister was asked whether it represented Government policy. The answer was an unqualified "Yes", by the former Prime Minister, my right hon. Friend the Member for Huyton (Sir H. Wilson). The hon. Gentleman knows that perfectly well and he has no business to pretend to the House that Government policy has any other flavour than that.

There is another reason, which I also gave during my public speech. We do not want a hybrid organisation that escapes the rigours of commercial profitability and yet lacks public sector accountability. We want private sector accountability of profits and public sector accountability where public funds are disposed of.

My hon. Friends have not concluded their thinking on this matter. If they think it over, they will not want to penalise working people's funds by subjecting them to an investment restraint that will not apply to the rich. Working people put their money in banks, building societies, pension funds and the like, and they expect their money to be accumulated with prudence and skill. There is no reason which I could support for giving working people unfair treatment in the use of their funds compared with the rich, who are able to invest them directly.

Mr. Sedgemore

Is my right hon. Friend saying that it is in the interests of working people that if capital goes abroad or into profitable non-manufacturing use in this country, provided that their savings are maximised it does not matter if economic growth is minimised?

Mr. Lever

I said nothing of the kind. My hon. Friend appears not to realise the defectiveness of finding a remedy either for excessive investment abroad or for inadequate or misdirected investment in penalising the workers' pension funds. The remedy lies elsewhere. If capital investment abroad is excessive, the remedy lies in proper exchange control. If it is not possible through the normal processes of profitability and market attraction to get funds for production in the places where it is needed, the remedy is in the Industry Act and the National Enterprise Board, which must have the necessary funds to enable it to operate. What is not a remedy, and what I could not possibly support—[Interruption.] If my hon. Friend wishes to make an intervention, perhaps he will do so in an audible form.

Mr. Skinner

My right hon. Friend keeps harping on about the virtues of the establishment of the NEB and the need that presumably goes with it to provide it with a great deal more money than the Government are prepared to grant. Will he tell us what kind of money he thinks the NEB should have to enable it to carry out the social programmes that he is telling the House it should be doing?

Mr. Lever

The NEB is at present endowed with all the funds it requires to meet the identifiable and justifiable purposes I have outlined. Should the Government be satisfied that more is needed, more will be provided as and when it is required. In our view, there is no shortage of funds for the NEB for all the purposes for which it can legiti- mately demand funds. Having disposed of the —

Mr. Skinner

—National Enterprise Board.

Mr. Lever

I have not disposed of the National Enterprise Board; I have allowed the Government to decide. My hon. Friend might find it difficult to swallow. We would all prefer to be the Government. I should like to be a one-man Government, although I do not like my colleagues to know that. In default of being a one-man Government, I work happily on the collective decisions that are made, which I accept, although not all of them are to my taste, any more than they are to my hon. Friend's taste. My hon. Friend must not think that it is disposing of the NEB to say that huge sums of money have been allocated to it with the promise that any further money that is required for the identifiable, justifiable and appropriate causes of the NEB will be provided when time shows it to be required. It may not be as much money as he would think right, but it is as much as the Government think right at present. There has always been a certain difference in emphasis between my hon. Friend's views and mine and even, dare I say, between my hon. Friend's views and the views of the Government, of which, in general, he is such a keen supporter, although not a supporter of the Government, so far as I have been able to ascertain, at any particular point.

We already dominate the commanding heights of the economy—the banks and the insurance companies. We do not need to occupy them as well to ensure that our policies are effective and our ideas are put into practice.

I shall deal briefly with the pharmaceutical industry. Here again, the Government have made plain that they have no plans to nationalise any pharmaceutical company. Here again, a very interesting document has been put out by the Labour Party. The Government recognise, as does the Labour Party, that in this field there are very anxious problems concerned with protecting the public interest from monopoly exploitation and the like. We also recognise the remarkable achievements of the pharmaceutical industry in export and research. One of the proposals contained in the Labour Party discussion document is to nationalise one major company. It is a proposal, but it has never been discussed and it has not become party policy, still less Government policy. That is a perfectly legitimate discussion document.

Mr. Heseltine

Perhaps I can help the right hon. Gentleman by reminding him that the proposal appeared in the February and the October Labour Party manifestos on which he was elected.

Mr. Lever

I am very happy to hear that that is so, but although I must confess that I read mainfestos, the commitment to nationalise a pharmaceutical company in unambiguous terms, to the best of my recollection, is not part of any manifesto. I shall certainly look into the matter and refresh my memory. If it is in the document I accept it as being manifesto policy, but I cannot trust the hon. Gentleman as an interpreter of a party document after the rash and ambiguous way in which he has dealt with party discussion documents. The latest document was the one to which he was referring, and it is the one to which I am referring.

The Government have no proposals to nationalise any pharmaceutical company. What they have, however, is a continued and anxious drive to achieve the purposes of this document, namely, to protect the public interest in this field from monopoly, exploitation and distortion of prices. I can say only this about the latest proposals in the discussion document—I thought that was the one to which the hon. Gentleman referred—

Mr. Heseltine

indicated dissent.

Mr. Lever

The hon. Gentleman said that the discussions were chaired by a Minister of State. That is the document to which I am referring. The Labour Party manifesto comments on this subject were not made in discussions chaired by the gentleman in question.

The purposes of public protection are very much in our mind. This document will prompt us to redouble our efforts in discussion with the industry to ensure that the powers we already have are sufficient to provide the necessary protection of the public interest.

I have, in effect, told the hon. Gentleman—I am sure not to his surprise—in categorical terms that the Government have no intention of nationalising com panies in banking, insurance and pharmaceutical manufacturing. Although the hon. Gentleman professes surprise, he might care to intervene yet again to tell us why he wishes to pursue the motion further in view of the statement I have made on behalf of the Government. While he is pondering that, I shall briefly move to the Government amendment. I am sorry that the neat amendment tabled by some of my hon. Friends was not called. It is terse and effective for their purposes, and would have given a much more interesting basis for debate than the Opposition motion.

Mr. Heseltine

As the right hon. Gentleman has not read the Labour Party manifesto, perhaps I may put it on the record. The February manifesto is quite clear. It says: We shall also take over profitable sections or individual firms of those industries where a public holding is essential to enable the Government to … protect workers and consumers". All that sort of stuff. Then the sections are listed and the list includes "sections of pharmaceuticals ". The October manifesto, referring to the February proposals, said: We stand firmly by those proposals.

Mr. Lever

That shows how right I was to be cautious and not to rely on the hon. Gentleman's interpretation of the Labour Party manifestos. I do not think that the hon. Gentleman is being deliberately dishonest, but what he said a moment ago does not tally with what he has just read. He said a moment ago that the commitment to take over a major firm in the pharmaceutical industry was a commitment of both Labour Party manifestos. That is absolutely untrue, on the basis of the piece that he has read to me. The hon. Gentleman must read it again, carefully. I did not come here to listen to repetitive readings of the Labour Party manifestos of February and October 1974. The hon. Gentleman has misread the manifesto. I have not misread it in the way he seeks to suggest.

I now turn to the Government amendment, in the light of the absurdity of the Opposition's position today. They claim that there is a great nightmare hanging over the country's industries. The motion implies that a reassurance, by way of a declaration from the Government, will remove that supposed threat and anxiety. The hon. Member for Henley has had that assurance, so why does he not ask leave to withdraw his motion? He has not done that. He is more preoccupied with attempting to put a dishonest gloss on previous Labour Party manifestos. I read the manifesto, and I do not attach the same meaning to it as the hon. Gentleman does, but I am not going to engage in a dialectical dispute on the interpretation of the document, sacred as it may be to the hon. Gentleman and to many of my hon. Friends.

On behalf of the Government I declare that our true and real position is stated in our amendment. The Government position is that we believe in a mixed economy. When I say that, I mean that we also believe in the achievements of our publicly-owned enterprises. We greatly resent the slur upon their management, the cheap jeers directed at them, and the fraudulent arguments used for their disparagement by the hon Member for Henley. The hon. Gentleman should bear in mind his own statement that efficiency cannot be tested when profits are restrained. He spoke of nationalised industry as an incompetent, profligate, wasteful and unwholesome piece of the body politic because it does not make profits. His Government, and every Government, have constrained the profits of nationalised industries. But when they are allowed to operate commercially they have a great record of success and achievement, of which the country should be proud.

It is an extraordinary posture for one who claims to speak for the Shadow Government to disparage massive publicly-owned enterprises in an unqualified, unjustified and unsupported way. We believe in our public enterprise, in a successful and alert private enterprise, and in a mixed economy. We see the way forward by an industrial strategy based on co-operation between Government, workers and employers, with give and take on all sides and self-discipline in the exercise of freedom and power. Our problems can be solved only by an approach that enlists the consent and support of the majority. Under our policy no one gets total satisfaction, in the sense that accommodation must be reached. I am not ashamed that there are no victors to crow, because there will be no vanquished to plan a return match and damage our economy. We organise not confrontations but constructive accommodation, which will result in restoring prosperity to our country.

No doubt we shall make mistakes, but we shall get nothing constructive from the Opposition. Their attitude is irrelevant. They are the party of the public relations try-on, without a policy of their own and with a rather shameful attitude towards the achievements of the Government and the people of this country. Their worst attitude is shown in their reaction to the achievements of the Chancellor of the Exchequer, and others in the Government, on incomes policies. They are critical of the achievements of our trade union leadership in recognising the needs of the country and in being willing to sacrifice their cherished freedoms to help in a policy to bring an end to the inflation which is perplexing and injuring our prospects.

Mr. Sydney Bidwell (Ealing, Southall)

It has never been part of the trade union case to oppose high profit in the private sector of industry, but it will continue to be a major aim of the trade union movement to challenge the distribution of such profits. It will always be part of the movement's policy to extend the sphere of public ownership.

Mr. Lever

Those are legitimate objectives. All I was saying about the trade union movement in connection with recent policy was that it involved a considerable sacrifice of the unions' cherished freedoms. That has produced a characteristic response from the Opposition. They have sought to say that this is proof of trade union diktat and part of the Government's surrender to the dictation of trade union bosses. When that argument fails, we shall hear little more about it. We do not intend to be deterred; we intend to go on with our concept of a mixed economy, ever-increasing the prospects of social justice, and the hopes of our people for a better life and society.

I therefore invite the House to reject with contempt the absurd demagogic motion and to support the Government's policy as urged in the amendment.

Mr. Speaker

Before I call hon. Members to speak I must remind the House that we have only two hours and 12 minutes for Back Benchers to take part in the debate.

6.48 p.m.

Mr. David Steel (Roxburgh, Selkirk and Peebles)

This is an immensely enjoyable but at the same time irritating debate. It has taken a long time to get through the two Front Bench speeches, which I admit to have enjoyed. But I wonder what I am doing here. It has been a perfectly acceptable debate for the Oxford or Cambridge Union, for radio or television, for a party conference or a General Election, but I was not sent to the House of Commons to debate the internal discussion documents of the Labour Party, the Conservative Party or even the Liberal Party.

My hon. Friends and I regard this day as a waste of good parliamentary time. We cannot understand why the Opposition have chosen to use the day in this way. I am here because my colleagues felt that something should be said about nationalisation on behalf of the Liberal Party. They decided that I should say it, and in the current situation I did not dissent from that. It is great fun to expose the defects in the Labour Party, but there are other opportunities for doing that. This should not be one of them.

Since the end of the last war, the public has become rather bored by the long debate about the merits of public versus private enterprise. The blunt fact is that the dog-fight on nationalisation, the arguments for and against, and the different policies of succeeding Governments since the war, have played absolute havoc with the long-term management of our economy. Perhaps one of the best examples among many is the most recent one of civil aviation. But the most clearly established is the example of the steel industry, nationalised by a Labour Government in 1950–51, denationalised by a Conservative Government in 1953, and renationalised by a Labour Government in 1966. After all that, we throw up our hands in horror as a nation and wonder why our steel industry is less competitive in real terms than those of other countries. The answer is that if we mess around with the top management and long-term planning of an industry we cannot be surprised if we end up with one in which output per man is very much lower than in other countries and one which is less well organised.

Therefore, I would say on behalf of my colleagues that the most important way to move forward this public debate is to seek a consensus on what we define as the mixed economy and what are the boundaries of the public sector and the private sector. We should then produce policies conducive to the optimum management of both. I believe that both have their part to play.

It is no good the hon. Member for Henley (Mr. Heseltine) pretending that the Conservative Party approaches these matters in a totally dogmatic and purist way against nationalisation. Every Government may have occasion to take a particular industry or firm into public ownership for very good current, pragmatic, economic, defence or other reasons. But that is a different matter from messing about with the basic boundary between what should be in the public sector and what is more efficiently organised by the private sector.

It does not make sense for the present Government to go on talking about a new policy for reinvigorating industry if there is a threat hanging over investment policies in the form of a possible future policy that might be adopted by the Labour Party in government. The Government have extensive legislative and taxation powers to control the private sector. That is particularly true of banking. Under the Bank of England Act 1946, both Governments have had powers to direct the lending and investment of the banks into particular industrial schemes—powers that have not been used or have not been used to the full. Therefore, to discuss the merits of taking into public ownership the banking and main financial institutions is an interesting academic exercise but no more. It is not a political reality.

Today's debate would have served a useful purpose if it had been devoted to considering what we might have done with the public industries, to considering the lack of experiment in the industries under direct Government control in terms of industrial partnership. There has been a sad failure of public enterprise in that direction. It could have been used for more fruitful experiment in democratic control, employee representation on boards and co-operative management at plant level. I hope that one day we shall debate that sort of topic. To go on with the old party dog-fight, exchanging slogans of past General Elections across the Floor, is not a constructive use of parliamentary time.

6.54 p.m.

Mr. Max Madden (Sowerby)

When I heard that the Opposition were to offer Supply time to discuss nationalisation and public ownership I believed in my innocence that it would be an opportunity to discuss such matters seriously. I was distressed when I saw the terms of the Opposition motion, which merely draws attention to the possible public ownership of a limited number of industries and does not examine the wider issues, which are extremely important, and which include some of the matters referred to briefly by the hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel), the Liberal spokesman.

I realised this with even more disappointment after reading a report in The Guardian on 15th May by a very reliable Scottish journalist of the speech by the hon. Member for Henley (Mr. Heseltine) to the Scottish Conservative Conference in Perth. It seems to have been an extremely lively and interesting conference. The journalist, Mr. Kerr, reported that in a debate on nationalisation and public ownership the hon. Gentleman In a neat manoeuvre to accommodate the spirit of the motion, which some thought too weak, and the amendment, which others thought too strong,…urged the conference to vote for both. The purpose of the conference, he said, was to reflect the gut reaction and grass roots feelings of the party, not to be concerned with the problems their views might create for a future Conservative Government. He said: 'When the amendment calls for a long-term programme of denationalisation, you vote for it because that is what in your hearts you want to see. Let me worry about the political and practical difficulties.' Warming to the response from the floor, he went on: 'You fight for what you want and you will be surprised at how much more of what you want you get. The hon. Gentleman is fast acquiring the reputation of the Tarzan of the Conservative Central Office, swinging from compromise to compromise. He obviously set the Scottish Conservative Conference, which I expect until then was a rather tame and timid affair, alight with such fighting talk. One formerly tired and unhappy party worker was forced to tell Mr. Kerr after the conference. I came to Perth this year depressed and pessimistic about the state of the party, but I feel a whole lot better now. With young men like that, we cannot lose. Therefore, Mr. Deputy Speaker, you will understand my disappointment that the hon. Gentleman has let those people down today. Only five days after that conference, his motion is a mild and limp affair, which asks the Government to resolve uncertainty about the possible nationalisation of a limited number of firms. There is not a word or even a hint about what the Conservatives would denationalise if they had the opportunity. There is not a word about what they would return to the freedom of the market and to the people. I am sure that Scottish Conservatives will be extremely disappointed by the motion.

Mr. Alan Lee Williams (Hornchurch)

They may even be relieved.

Mr. Madden

My hon. Friend may well be right.

If the Conservatives do not have much confidence in future denationalisation, let us look at the past. Let us see what previous Conservative Governments have denationalised, what they have taken out of public ownership to return to private enterprise. I am glad to see the right hon. Member for Bournemouth, West (Sir J. Eden) here, because he was accompanied in a previous Conservative Government by the hon. Members for Cirencester and Tewkesbury (Mr. Ridley) and Honiton (Mr. Emery), who were hellbent on denationalisation, on hiving off the profitable sections of certain nationalised industries and returning them to private enterprise. For those who, like me, worked in publicly-owned industry then, it was an extremely disquieting episode.

I believe that as a result of that extremely unhappy saga the Tories have learned their lesson. They have not mentioned denationalisation so far today. Perhaps their Front Bench spokesman will tell us later whether they are to denationalise, as the Conservative Party was told at the weekend. What will the Conservatives denationalise? What will they return to private enterprise?

We have begun to face reality and to recognise that there is a private and a public sector. The public sector is large, but represents only 20 per cent. of the economy, with the remaining 80 per cent. forming the private sector. The mixed economy is heavily mixed in favour of private enterprise. We must accept that the public sector is here to stay. I hope that in replying tonight the Secretary of State for Energy will address himself to some of the serious issues that concern me as someone who supports public ownership and wishes to see it extended. The issues on which I hope we shall concentrate in what remains of this debate are the important ones concerning the relationship of the public sector with government. We have to resolve what that relationship is. We must reconcile the responsibilities that lie with Government and those that lie with the public sector.

Is there to be direction by Government over the public sector? What opportunities are there for interference by Ministers in the affairs of the public sector? Do we want the heads and senior managers in our public sector to be obedient functionaries, who will observe Government directives to the letter, or do we want aggressive entrepreneurs who will vigorously pursue commercial policies? The most important question is how can we reconcile the commercial objectives which have been set for the public sector with the social responsibilities which traditionally and historically it has to observe. I worked in a publicly-owned industry and I can appreciate the great difficulties which the reconciliation of commercial objectives and social responsibilities impose upon organisations within the public sector. These issues cannot be burked.

The second important issue which has to be faced—and I hope that we shall hear something from my right hon. Friend about this—concerns the relationship which should exist between managers and employees within the public sector. It is difficult to discern that that relationship in many of our public sector industries is substantially better than that in the private sector. I am forced to say that in many cases the relationship is far worse in the public sector. Most of the major, large public sector industries were brought into public ownership in the early and middle 1950s. It is a Morrisonian structure which has not changed substantially in the years since.

We must now begin to review the structures and arrangements within the public sector. We should be looking at appointments and at the possibilities for elective positions at all levels within the public sector. We should also look at opportunities for enhancing industrial democracy within that sector. It is this sector which should be the spearhead of progress. It should be leading the way. What is happening in the public sector to this end?

The other important issue what we ought to be discussing in debates on the public sector is the relationship between industry and consumers. The number of consumers and the complexity of the operation which dominates the public sector is enormous. I hope that no one will attempt to dismiss the level of efficiency which is reached by most public sector industries. It is extremely high. Because of the enormous numbers of consumers and the high percentage level of performance, when things go wrong they go wrong in impressive numerical terms, affecting large numbers of people.

We must also remember that the Press is extremely keen to highlight problems which occur within the public sector affecting consumers. It is not so keen—and I speak as a former journalist—about highlighting problems which arise in the private sector. How many of us have suffered enormous difficulties with garages, TV repairs, electrical services of all sorts—all in private hands? It is difficult to get attention and it is still more difficult to get redress, or any support from the Press in dealing with those problems.

Consumer councils which were originally set up to represent the consumer interest in the public sector are largely ineffective. They occupy a shadowy role which is becoming a matter of increasing concern. They should be wholly independent. They should be adequately staffed and financed and separate from the industry over which they are supposedly watching. They should certainly be more available in each of the localities in which they operate. Their officers and supporting staff should carry much more weight than they do when attempting to repre- sent consumer interests to management within the public sector.

The Select Committee on Nationalised Industries should take a much greater interest in the consumer affairs of the public sector. The Committee could do much to highlight these matters and to secure effective action. It is no longer a matter of dispute that we are experiencing enormous difficulties. For anyone to pretend that these difficulties have arisen merely since 1974 when a Labour Government assumed office is a naive assumption that is becoming less and less tenable for anyone to hold.

There is an enormous cross-section of agreement within industry, between management and employees, in seeking to tackle the problems we face. These people believe that the only commonsense and rational way of tackling our problems is by planning. The planning exercise currently under way within the National Economic Development Council—whereby there are 30 or 40 working groups, each made up of representatives of all interests in a particular section of industry, which are to report at a one-day meeting of the Council in July—is the beginning of a planning exercise which holds promise. If we do not attempt to build and develop a proper planning instrument to deal with the bottlenecks, the investment and the product development problems, the design difficulties and all the other things which affect us, we shall have no hope of combating these serious issues.

There has been a decline in manufacturing industry of massive proportions in the past 15 to 20 years. We are losing markets in many parts of the world. Imports are building up year by year. We have a battle on our hands which can be won only by belief in and support of the principle of planning. I appeal for an abandonment of the doctrinaire approach on these issues. We have to face our problems in a commonsense manner. If we are to survive we must plan. These principles have been pursued by many of our competitors. They have left the planning argument way behind. They have pursued public ownership and are vigorously pursuing planning in a much more detailed and energetic way than we are. In other countries this subject is no longer an issue of partisan conflict. We must leave behind this doctrinaire battle and accept that planning is the only way ahead.

I apologise for speaking at length, but it is essential that in what remains of this debate we should concentrate on the real issues which an increasing number of people inside and outside the House believe to be of great importance.

7.10 p.m.

Mr. Michael Grylls (Surrey, North-West)

I was interested to hear what the hon. Member for Sowerby (Mr. Madden) said about the speech of my hon. Friend the Member for Henley (Mr. Heseltine) in opening the debate. The hon. Member for Sowerby asked what it was all about. The object of the debate is to remove the uncertainty hanging over these industtries. I am sorry that he did not take it in when the speech was made.

We had a curious speech from the Chancellor of the Duchy of Lancaster, with his usual charm, which we all acknowledge. He is a sort of Dr. Jekyll to the Secretary of State for Energy's Mr. Hyde. At the end of his speech the right hon. Gentleman agreed with the motion, and one began to wonder why he did not accept it in toto. But in listening closely one noticed that, although he said that each of the three industries would not be nationalised by the Government, he also in the same breath—presumably for the benefit of his hon. Friends below the Gangway—said that he was still in favour of further nationalisation. Therefore, while he seems to believe that he has removed the uncertainty from three industries—I doubt whether that is true—he has thrown the whole of British industry into further uncertainty.

Mr. Lever

I said that I would support nationalisation in the future in any case where it proved appropriate. I did not say that I would support it as a general proposition.

Mr. Grylls

The right hon. Gentleman, with the most honest, straightforward and sincere motives, appears to misunderstand the situation. He is concerned, as we all are on every side, about investment in industry and about jobs. What he does not seem to realise is that with almost every word he utters he makes the situation worse. This is why the motion is on the Order Paper today—to try to clarify the position. I regret that the Government have not done this.

I should like to concentrate my remarks on the Labour Party document on the pharmaceutical industry. It is not headed as a discussion paper and it was presented at a Press conference which was not only attended by the chiarman of the committee, the present Minister of State. Department of Health and Social Security but chaired by the right hon. Lady the Member for Blackburn (Mrs. Castle), who until a few days before had been Secretary of State for Social Services.

It is a little more than a vague discussion document of the Labour Party. If the Chancellor of the Duchy of Lancaster is inclined to discard the document, I understand his view, but the Government must understand that that is not the view of industry. All industries—particularly the pharmaceutical industry—read what the Labour Party and the Government have to say. The document was presented to a party conference on the 29th April as a very deep and careful study. When the right hon. Lady was challenged about the paper, two rather obvious questions were put to her. She was asked, "If you intend taking over a pharmaceutical company, which is it to be?" Secondly, she was asked, "How much will it cost?" To these questions, after two years of deep and careful study. the right hon. Lady had no answer at all. Those who had studied the matter had not even thought which company it would be. They certainly had not thought of the cost.

The truth is that this was a heavily weighted committee made up of Left-wing academics and Left-wing politicians, under the general control of the Home Affairs Committee of the Labour Party, presided over by the Secretary of State for Energy.

The dangerous situation for the pharmaceutical industry, in which investment is important, is that it is and has been the political butt of certain sectors of the Labour Party for many years. It has appeared in manifestos and in party conference decisions, and the industry has not known where it stood.

In 1974, when the White Paper on the regeneration of British industry was produced, the pharmaceutical industry was somewhat relieved to find that it was not included as an industry to be taken over. It breathed a sigh of relief and thought that all was well. Then, when the Chequers policy came out in 1975, the industry quite rightly assumed that, apart from the nationalisation of the shipbuilding and aircraft industries—

Mr. Lever

How could the hon. Gentleman sit silent when the hon. Member for Henley (Mr. Heseltine) said that it had been included in both the manifestos in 1974? Can the hon. Gentleman say whether the supposed threats have disrupted the export achievement or the capital investment of the pharmaceutical industry in the last two years?

Mr. Grylls

On that point, despite what the Labour Party has said and done, the industry has achieved record export sales. Perhaps it would have achieved even more if it had not been for this cloud of uncertainty.

After the White Paper on the regeneration of British industry was produced the pharmaceutical industry assumed that the threat had been removed and that it could get on with its business. But then there was the bombshell of the Press conference of 29th April, presided over by the right hon. Lady, and suddenly the industry found itself back in the party political melting-pot again. As a result, it still does not know where it stands.

What the Chancellor of the Duchy of Lancaster and the Government must understand is that no single action of either the Labour Party or the Government could have done more damage to investment and also to jobs in the chemical and pharmaceutical industries. It is not just a matter of saying that this is only a policy document.

The people who work in these industries should be warned that a large sector of the Parliamentary Labour Party, represented by the hon. Gentlemen opposite in the House today, wants to take over part of these industries. This is why we want to have a clear and unequivocal statement by the Government, not only that they will not take over these industries but also that they will have nothing to do with any such idiotic policy and will not extend the frontier of nationalisa- tion. This is what the debate today is all about.

The right hon. Gentleman, the Ministers in the Department of Health and Social Security and the Government should know that two-thirds of the pharmaceutical industry is controlled by foreign companies and subsidiaries of foreign multinationals. Many people do not like this, but, whether we like it or not, it is a fact of life.

Mr. John Mendelson (Penistone)

Does the hon. Gentleman like it?

Mr. Grylls

It produces the exports and the jobs and the innovations to cure disease and illness. If it does that, I do not care who owns it. If it is doing this job, it is doing what it is meant to do.

As for the British multinational companies, ICI, Beecham, Fison and so on, 80 per cent. of their business is overseas. We can forget about the foreign multinationals. What will happen to the British multinationals'? The British multinationals, if this sort of threat continues to hang over them, will invest overseas, instead of investing here in Britain and creating more jobs.

The foreign-owned multinationals do not have to invest in Britain, for in fact Britain represents only 4 per cent. of the whole world market for pharmaceutical products. These companies can do without Britain. If the uncertainty continues, they will go to countries which are more hospitable to their investments. That is where they will extend their manufacture and their research.

The Government know the facts but they do not have the guts to speak out. It is the free enterprise system throughout the whole world that is producing the new drugs and the new medicines which are curing disease. No less than £1,000 million a year is spent on research by Britain, the United States, France, Germany and Switzerland together. That is a massive sum of money, produced not by the taxpayer but by these companies through their own efforts.

Hon. Gentlemen opposite should recognise that British research scientists are reckoned to be two and a half times as efficient in cost-effectiveness terms as American research scientists. Is not this a matter of which we in this country should be proud? As the right hon. Gentleman said, it is because of its innovations that we are getting high export figures and managing to cure disease. I hope that Government supporters sitting below the Gangway, who always tell us to copy what is going on in Eastern Europe—[Laughter]—will remember that, curiously enough, out of 138 major new innovations, none was made behind the Iron Curtain. No laughter on their part can hide that.

Here we have a successful industry. It is one which should be left alone. It is one which is exporting and meeting the Government's challenge to export more each year. But what is the accolade of success? It is to discover that a policy document says that one of these industries will be nationalised. That is what the Government have done—

Mr. Lever

It is not.

Mr. Grylls

It has been done by the party which supports the Government, and the right hon. Gentleman has not firmly rebutted the possibility of further nationalisation.

We are here tonight to ask for a firm assurance from Ministers of the Crown, and it will be interesting to see whether the Secretary of State for Energy echoes precisely the words uttered by the right hon. Gentleman. It is very unlikely that he will. But at least we give the Chancellor of the Duchy his due credit for saying what he said. To all intents and purposes, in an aside way, he has accepted the Opposition's motion. The sad feature is that he has not been prepared to go further and to say that he sees the frontiers between the free enterprise system and the nationalised sector as being quite distinct. On the contrary, he has cast more clouds of doubt not over three industries but over the whole of British industry because, when he said that he would be prepared to see further nationalisation, he did not say which industries he had in mind.

However, the right hon. Gentleman has accepted that the paper produced by the Labour Party in the form of a news release is wrong-headed, and we are grateful for that on behalf of the pharmaceutical industry. He has accepted that any proposal to nationalise banking and insurance is also wrong-headed, and we are grateful for that. But I hope that he can use his influence as a Minister on his colleagues in the Labour Party to persuade them not to throw around documents of this sort. If he can, I am sure that he will see higher investment in British industry.

7.23 p.m.

Mr. Brian Sedgemore (Luton, West)

The hon. Member for Surrey, North-West (Mr. Grylls) concentrated on pharmaceuticals. I can tell him that I have seen much earlier and better drafts of the document to which he referred.

I wish to make a few brief remarks about banking. You will remember, Mr. Deputy Speaker, that in Dante's "Inferno" the usurers were taken into Circle 7 and made to stand on hot sands beneath burning rains alongside the Sodomites. In these more civilised times, all that we ask is that the usurers should be taken into public ownership.

It is not a question whether we shall nationalise the banks, but when, and who will do it first: will the Conservative Party beat us to it? If the party opposite eventually becomes the party of Government, I suspect that in the 1980s we shall find a Conservative Government bullying the City in much the same way that we have bullied the unions. Their form of bullying will be, first, the control of the banks and then the public ownership of the banking system. They will find themselves able to manage capitalism that much more easily by taking the banks into public ownership.

In the Labour Party the aims are different. If we are to plan the economy, control the size and direction of investment, make a success of our policies on public ownership and planning agreements, and set them against a background of price controls and a limitation on profits, the public ownership of the financial institutions is not merely desirable but an essential condition of the success of our policies.

There is no doubt what Labour policies are because the annual conference last year accepted without dissent a document called "Labour in Industry: the Next Step". The threefold thesis behind the document is simple. It is that we see public enterprise and planning agreements as the instruments through which we shall generate in manufacturing industry investment which it needs des- perately and which the flagging free enterprise system cannot provide. Having generated the demand for investment through those instruments, we can then meet the demand through public ownership of the financial institutions.

Secondly, the document rightly assumes that the level and quality of industrial investment is obviously in part affected by the way in which that investment is financed. It is affected by the alternative sources open to that investment as well as by the performance of manufacturing industry.

It is obvious that the behaviour of the banks is in part responsible for the low level and poor quality of the investment that we have had since the war, but only in part. It would be absurd to say, however, that it is irrelevant to the problem. The annual conference, therefore, accepted four basic proposals. The first of them was: We should create a substantial, publicly-owned sector in banking—whilst, as in France, retaining choice for the consumer. The second was: A specialist publicly-owned institution should be set up which could direct savings into investment—on a scale similar to the Caisse des Depots in France. The third was: A large proportion of institutional funds should be channelled into industrial investment through planning agreements and public enterprise. The fourth was: Britain should adopt a system of investment funds, similar to that in Sweden, but operated largely through the Planning Agreement system. If we pause for a moment to consider whether those four proposals are sensible or nonsensical it is useful to begin by comparing the way in which British firms finance their investment with the way in which firms in the rest of the Western world do it.

Traditionally, there are three basic differences. Traditionally, firms in the United Kingdom are more dependent on funds which are raised internally from retained profits than is the case abroad. Secondly, when companies in the United Kingdom raise funds externally they tend to be short-term rather than long-term funds. Thirdly, United Kingdom banks demand much greater security for loans, whether short-term or long-term, from industrial companies than is the case abroad.

No one can deny that it is more difficult for industrial firms in the United Kingdom to raise funds from banks than it is for most of our competitors abroad. We should contrast the caution which banks in the United Kingdom have when lending money to industrial companies and the ease with which they lent money to secondary banks and property companies after Barber's competition and credit control policies were introduced.

It is fair to say that that traditional pattern has changed a little in the last five years, and the basic change has been that United Kingdom industrial companies have switched more from internal to external financing, but they have not switched from short-term to long-term financing. Looking at the figures from 1970 to 1974 we see that the proportion of capital funds accounted for by retained profits has fallen from 60 per cent. to 45 per cent. We also see that the share of capital funds raised from banks has risen from 10 per cent. to 40 per cent. We see from the 1975 figures that both those trends have continued. Looking at bank loans to industry we see, first, that almost all of them have been for short-term working capital. Certainly they have not been related to long-term capital for industry. I believe that 90 per cent. of bank loans in this country are short-term in the sense that they are for less than one year. What is more, most of the remainder are medium-term in the sense that they are not for more than five years.

Mr. Lever

There has been a striking change in the trend. My hon. Friend will find that the latest figures show that medium-term lending by the banks has now moved up to 25 per cent. compared with the much lower figure of the past.

Mr. Sedgemore

My right hon. Friend has just quoted a figure which I was about to quote. He has picked on the same figure, so he is not giving me anything new.

That proportion of short-term loans is in fact the highest proportion of loans by the banks to industrial companies in the Western world. The banks now tell us—their published figures are very difficult to get hold of—that 25 per cent. of loans to companies in manufacturing industries are medium-term. Even assuming that this is right, it is still a low figure compared with the rest of the Western world. It compares with 66 per cent. of long-term banking loans in Germany.

Mr. Wrigglesworth

Would my hon. Friend not accept that the reason for that is that firms have preferred to borrow short-term rather than medium or longterm because it is less expensive? The difficulty is in establishing how much short-term credit is rolling long-term credit.

Mr. Sedgemore

I accept that to some extent, but it does not deflect from the basic premise that we have to generate a demand for capital funds and then see how best to meet that demand.

Over the past five years there has been a shift from retained profits to external financing by companies in this country, and we must accept that this has come not because the firms wanted it but because of the reduction of profit margins in British manufacturing industry. I believe that with proper planning the shift from retained profits to external financing is a desirable activity. It is desirable also that we, as a Government, should limit profit margins in this country.

Most hon. Members accept that the process of companies financing more and more investment externally should continue. That process is more likely to be carried out under publicly-owned financial institutions than under privately-owned ones. There is no other way in which one can move to massive external financing, if the Labour Party is, at the same time, to have a coherent policy on prices and profits. Price control and profit limitation entail external financing by companies, and that in turn entails publicly-owned institutions.

There may be hon. Members who do not want price control and limitation of profits, but there are powerful social and economic arguments for long-term policies on these matters. If hon. Members believe that this is undesirable they should ask the housewives of this country and the workers on the shop floor. Manifestly, housewives would like price control, and, manifestly, workers on the shop floor will not agree to wages cuts or restraints, either statutory or voluntary, if there is no control on dividends and profits. Those who argue from the Government Front Bench that we are moving to a system of no controls on profits or prices destroy the whole concept of any incomes policy, whether it be voluntary or statutory.

The Labour Party's policy towards industry should work on the assumption that retained profits will never again be a major source of financing investment. We should urge industry to find most of its investment through long-term loans and equity loans through publicly-owned institutions.

What hon. Members on both sides fail to realise is that the history of the past 30 years has shown that it is not just a question of making profits and reinvesting in manufacturing industry in this country. That is not what happens. It is living in an unreal world to assume that, somehow, because one stands up at the Dispatch Box and decrees that it should happen, it will happen automatically. One cannot, by standing up at the Dispatch Box and saying "Today's profits are tomorrow's jobs", automatically revive the doctrines of Adam Smith, either in relation to industry or private finance.

Basically we must ensure that voluntary savings play a much bigger rôle in industrial investment through publicly-owned institutions. What we have got to do on this side of the House is get these simple relationships home to the Cabinet. As I came up to the House this morning in my car I was wondering how we could get over this crisis of misunderstanding. When the Mothers' Union or the Rotary Club do not understand something they ask an expert to come to give them a lecture on it. It could be a useful constitutional innovation to arrange for members of the Tribune Group to go to Cabinet meetings and give a talk. Then they could put questions to the relevant departmental Ministers, and if those Ministers did not take the facts on board they could be sacked instead of being shifted—as at present—to other Departments. Since sacking people who are incompetent is the basis of free enterprise I am sure that both Front Benches would support that idea in its entirety.

I listened carefully to the speech of the hon. Member for Henley (Mr. Heseltine). If in any major debating chamber in Europe he made that speech he would be laughed out of court. He talks about the evils of public ownership in the financial sector, but when we look at Gaullist Right-wing France we see that the major banks were nationalised in 1945. They have a much closer relationship with industry, and 85 per cent. of all banking deposits in France arc deposited in publicly owned, semipublicly owned or co-operative banks.

The largest banking institution in France is the Caisse des Depots, which lends money to the public sector. The hon. Member for Henley misled the House when he said the difference was that publicly-owned banks in France lend to the private and not the public sector. I have been looking at the firms to which this bank has lent money, and they include the following companies in the public sector, the totally publicly owned Renault, the mines, the railways, the gas and electricity industries, the matches and tobacco industries. It also lends money to industries in which there is a controlling State interest—the ports, aerospace, petroleum, shipping, aviation, electrical and mechanical engineering, and minerals. It also lends to industries with a minority public interest—household goods, building and civil engineering, and organic chemicals.

Why should something which is good for Gaullist France be so evil for Socialist Britain? Is it because in one of these two countries there is a Left-wing civil service, and in the other—and I will not say which—there is a Right-wing civil service?

I have read that the Prime Minister likes the German model. In my German model there are 750 publicly owned savings banks and they control 39 per cent. of banking deposits. They are owned by local authorities, and they help the public enterprise of local authorities, and the small and medium-sized firms which hon. Members opposite always claim are the backbone of this country. Why, then, do we not create 750 savings banks to help our small and medium-sized firms?

In Japan there are 12 major financial institutions which are publicly owned, and in 1975 those institutions put more into net investment in industry than the whole of the private banking sector in that country. There is a development bank which gets funds from the Government, and generates them into private industry, according to a Government plan—the very thing that seems to upset Conservative Members.

I could go through the banking systems of the world and talk about public and co-operative ownership, but it is basically in the United Kingdom and the United States that one finds this laissez-faire, freewheeling, free enterprise banking system. People on the Continent laugh at us because we have this decadent island mentality towards our publicly-owned financial institutions.

There are other reasons why we should take the financial institutions into public ownership. All Government fiscal and monetary policy is designed to act as though banks and other financial institutions were publicly owned. The present system merely creates an intermediate mechanism with which the Government have to deal, and it would be far more sensible, from the point of view of monetary and fiscal policy, if the financial system were itself publicly owned.

More than that, the financial institutions here are centres of immense power and wealth. That power and wealth has been abused, and it has been particularly bitterly abused during the past five years. On 30th November 1973 London and County Securities went bust, and subsequently 30 secondary banks here got into difficulties that were more or less serious. When somebody tells me that public ownership of the banking system in this country would not be popular, I ask him to consider what the depositors of Moorgate Mercantile Co. Ltd., London and County Securities, Western Credit, Keyser Ullman Ltd., and Cannon Street Investments Ltd. would say to that. I ask him to tell me what would be the attitude of people towards the nationalisation of insurance companies, bearing in mind Vehicle and General, Fire Auto Marine and Nation Life.

I have met strenuous public opposition to the public ownership of British manufacturing industry, but none to the public ownership of the financial institutions. The public now know that the term "bankable insurance "is not a term one can sensibly give, and if one wants to control these centres of wealth and power, public ownership is the answer.

My right hon. Friend the Secretary of State for Energy, who is to wind up the debate, spoke last Saturday in a church at Burford. He was talking about one line of Socialism, that which links Christianity to Socialism, about the godless, and about the evil policies of modern Conservatism, and he asked himself what the Levellers would have said about the society in which we live today. The answer that he gave himself is relevant to this debate, because he said: The Levellers would surely concentrate their attention on the huge accumulation of financial power in our society and the continued exclusion of working people from effective democratic power over it, and link the present maldistribution of wealth, here and world wide, to the maldistribution of power. If the Labour Party is on our side, if we have the Secretary of State for Energy on our side, and if, too, we have God on our side, we shall overcome, some day.

6.43 p.m.

Mr. Charles Fletcher-Cooke (Darwen)

The right hon. Gentleman the Chancellor of the Duchy of Lancaster thought that this was a totally unnecessary motion, since it was obvious that there was no intention of nationalising banking insurance and pharmaceuticals. I thought it was rather a convincing remark, and I thought, too, that there was something in the comment of the Liberal spokesman that that should be the end of the debate, but to judge from the speech that we have just heard from the hon. Member for Luton, West (Mr. Sedgemore) it is not the end of the debate at all

Not merely is there some document—the exact status of which none of us understands—that has been circulating about the pharmaceutical industry, but there is a resolution of the highest structure in the Labour Party—the annual conference last year—saying that certain financial institutions are to be taken in to public control.

Mr. Lever

It was said in 1935 as well as in 1971.

Mr. Fletcher-Cooke

Yes, and apparently there are some words in the manifesto that are unknown to the Chancellor of the Duchy of Lancaster. Quite what they mean is a different matter. They have all the ambiguity of a sacred text. A foreigner who is thinking of putting his money into this country could be forgiven if, on reading both the manifestos of 1974 and finding a reference to taking into public ownership sections of the pharmaceutical industry, he had doubts about whether to do that, because he did not understand—as indeed many people in this country and in this House do not understand—the precise relationship between the various organs and agencies of the Government and the Labour Party. Foreigners are not to be blamed for not understanding it, because the Labour Party itself does not always understand it.

Mr. Cryer

Why is it that Conservative Members are always talking about foreign investors buying their way into this country? Why are they always talking in encouraging terms to foreigners, without ever encouraging the British people to invest in this country through public ownership?

Mr. Fletcher-Cooke

I do not know that I have always been talking about either or those things, but I want to see as much investment from abroad as from domestic savings in industry, commerce, and the financial institutions in this country. Until fairly recently both sources of supply have been doing fairly well. That is the only way in which we can get investment if we have the money to invest. We shall not get investment—indeed, we shall get deinvestment or disinvestment—if those with money to invest hear the threats to people's savings and to foreign investment that are constantly flung between the corridors of No. 10, the Departments of Energy and Industry, Transport House, and various conferences and study groups.

From time to time this kind of debate, academic perhaps as the Liberals say it is, is necessary, and it is necesary to get in reply the categoric assurance that we did receive. The difficulty about accepting it is that the doctrine of collective ministerial responsibility has become so eroded under this Government that one does not really know whether such a state- ment is binding on all Ministers of the Crown, and for how long.

I remember a statement—on the other side of the fence—by the Home Secretary recently. He said that the public sector had got to such a high degree of percentage that it threatened the very existence of the plural society, whatever that may mean. Within 24 hours than statement was disowned by the Chief Secretary to the Treasury.

Mr. John Mendelson

I know that the hon. and learned Gentleman does not want to misrepresent the Home Secretary, who is not present. My right hon. Friend was talking about the level of public expenditure and taxation, not about public ownership.

Mr. Fletcher-Cooke

I am sure that the hon. Gentleman is right. When the right hon. Gentleman was talking about the threat to the plural society he was talking about the level of taxation. It was that which the Chief Secretary to the Treasury almost instantly contradicted. Therefore, it is not true to say that categoric asurances from the Dispatch Box can be taken with quite that fortitude that used to be the case.

I think it was the hon. Member for Sowerby (Mr. Madden) who thought—and I accept this—that this would have been a much more interesting debate, though perhaps not quite so immediately necessary in view of the publication of this document, if we could have debated the future of the nationalised industries, what is to be done with them, whether some are to be denationalised and how the rest are to be reformed.

I notice that Sir William Ryland, who has had his troubles—I put it no higher—in a nationalised industry, said on Monday that his organisation should be split in two. That might be one way of dealing with this large and failing organisation. We could split it into two or perhaps even more parts. Sir William said that the telecommunications part of the Post Office should be a partnership between private industry and the public. That could not but be an improvement on the present situation in that great monolith.

I am waiting for Sir Monty Finniston's speech the day after he ceases to be head of the British Steel Corporation. No doubt he will then be less inhibited about what should happen at the BSC.

I fear that my party has not taken its courage in its hands about what should be done with nationalised industries and to what extent it might be possible to denationalise some.

We have a startling contrast before us in two of our great motor companies, which are now enjoying large sums of public money. Leyland is 95 per cent. owned by the State. We know that however many dire warnings are issued by Mr. Park or Mr. Whittaker, the work force does not believe that the Government will allow the company to collapse. The State has too great a stake in it. The promised, much anticipated improvement in labour relations in Leyland is coming imperceptibly slowly.

Let hon. Members contrast that with the situation at Chrysler, where the Govenment investment is a minority and where ownership remains in capitalist hands in Detroit. There has been a magical transformation in labour relations at Ryton, Linwood and elsewhere since the dramas of last year. Why is that? It is not because public money has been put in, but because of the fear that Detroit will pull out. It is that sanction which causes the difference in behaviour of people who are the same in nature. The marked difference can only be accounted for by the fact that there is the Detroit sanction in Chrysler and no such sanction at Leyland.

I do not expect hon. Members opposite to agree with me but this is the sort of point which I had hoped that today—or certainly sooner rather than later—the Front Bench spokesmen of my party would tackle publicly, perhaps in the sort of document that has been the subject of so much debate and scrutiny today.

Mr. John Lee (Birmingham, Hands-worth)

Are we to understand that the hon. and learned Gentleman wants an increasing amount of British industry to be invested abroad, so that there will be a sanction over the work force, in that the foreign owners can close down a firm if the conduct of the workers displeases them?

Mr. Fletcher-Cooke

No. I do not want any such thing. I do not want any more nationalisation, because there is then no sanction. I want less nationalisation and more denationalisation, and I want to be told by my Front Bench spokemen how soon it can be done.

7.55 p.m.

Mr. Ian Wrigglesworth (Thornaby)

I begin by declaring an interest as a former employee of the only nationalised current account banking organisation in this country—National Giro, the Post Office banking service that my right hon. Friend the Secretary of State for Energy set up when he was Postmaster-General. I am still able to go back to the Post Office should I be unfortunate to be defeated in a General Election, and working again in public sector banking would of course be a great pleasure.

Just to balance that, I also worked previously for the Midland Bank, so I have had a little experience of both sides. For that reason, it gives me pleasure to follow the comments of some, though not all, hon. Members.

It is not surprising that politicians are held in contempt by some members of the public when they hear the sort of partisan claptrap that we heard from the hon. Member for Henley (Mr. Heseltine) at the beginning of the debate. His speech was full of half-truths and a selective choice of facts to support his own dogmatic and doctrinaire view. His strident speech on one of the most serious subjects that the House could be considering did nothing to enhance the reputation of Parliament or politicians.

If the Opposition wanted to know the Government's policy, they had only to look at our manifesto. We said, when we faced the electorate in October 1974, that we would bring forward early proposals to ensure that banking and insurance made a better contribution to our national economy. That is what the Government have been doing—though not as urgently or strenuously as some on this side would have wished. It does not need a restatement of that part of the manifesto for the Opposition to know our policy.

The Opposition are simply trying today to make cheap political capital out of an internal document being discussed in the Labour Party. I only wish we could see such documents emanating from the Conservative Party research department, so that there was some public discussion of the Opposition's policies. At least we are not frightened to have debates on policy within our party. The Opposition are making a "phoney "attempt to confuse the electorate into thinking that the Government and Labour Party policies are not as they have been stated.

I wish to speak particularly about banking, because of my involvement in it. A case can be made for public ownership in the banking sector, though I do not agree with my hon. Friend the Member for Luton, West (Mr. Sedgemore), who in his incisive speech, said that the major case for public ownership was that the financial institutions had not been channelling funds into manufacturing industry and other enterprises in the economy which would be beneficial to us all.

I take the view that the problem of investment is a problem not of supply but of demand. I believe that there has been a lack of investment over the decades because of a lack of investment opportunity arising from poor and wrongheaded Government policies, and from very poor management in industry. I think that is the principal cause. We should direct our attention towards that more than to a consideration of institutional methods of trying to direct funds into industry.

The fixed capital expenditure per man in engineering in this country is less than half of that in Germany, France, Sweden, Japan and the United States. There is such a disparity that it must be something more than the question of institutions that is involved. In my view it is principally the responsibility of management that that deplorable situation should exist.

If we go further and consider the funds available, and how they have been taken up in the recent past, again we see that it is not the availability of funds that is the problem but the fact that managements and industries have not said "We want the funds to invest for the development of our concerns." Let us consider, for instance, Finance for Industry, which has recently been established as a result of Government pressure. That institution was going to lend £1 billion over two years. In fact, in the first 15 months only £100 million has been loaned, while £200 million has been committed. That is a tiny proportion of the total that was anticipated.

The National Westminster and Barclays have recently said that they have massive loans committed but that they have not been taken up by industry.

Mr. Sedgemore

I accept what my hon. Friend says—namely, that funds offered by the banks have not been taken up during the past five years—but is this not a question of the terms and conditions on which funds are offered to industry? Is my hon. Friend saying that it makes no difference whether the banks are publicly owned?

Mr. Wrigglesworth

I accept that point, to some extent. Therefore, I welcome the setting up of the FFI. I welcome the establishment of the Equity Bank, although the impact it will make is extremely doubtful. Certainly I applaud the establishment of the National Enterprise Board.

Why is it that over the past few decades large, medium and small industries with successful managements and good industrial relations have been able to get funds when they wanted them, whereas other industries have not? For example, in the Teesside area, in my constituency, ICI has had no difficulty in finding funds. As we know, it has just had another rights issue. Over the decades it has had no difficulty in getting millions of pounds for investment. It has very good labour relations. But I put all this down to good management. There is no magic about that. It has had very good investment and management policies of the decades.

In the public sector, some parts of which I know very well, there have been similarly good management and labour relations in many areas, and consistently good investment policy over a long period. The crucial matter is the quality of the management in the enterprise rather than the institutions providing the funds for investment.

What we can make out as a case for public ownership first and perhaps foremost, although the banks would vigorously deny this, is that profits in the deposit banking system depend to a major extent on Government monetary and interest rate policies. The banks that benefit from a so-called free deposit base—that is to say, a large current account base—can lend out funds at rates closely linked to the minimum lending rate of the Bank of England. This endowment factor comes into effect in periods of high short-term lending rates, above 10 per cent., and at higher rates the gearing becomes quite large because the cost of maintaining accounts is fairly stable in relation to the income.

In order to maintain the attraction of sterling as a currency in which the oil producers and other non-residents should retain their holdings, interest rates in the United Kingdom are bound to be anything between two full points to four full points above the Eurodollar rates over the next few years to compensate the sterling holder for the exchange risk he is running against the dollar.

Mr. John Moore (Croydon, Central)

I am following with great interest and considerable approval many of the hon. Gentleman's comments. On his point about the relatively high interest rates that we have been forced to maintain because of the need to attract funds, will he comment on the article in today's Guardian by his hon. Friend the Member for Dudley, West (Dr. Phipps), who is arguing the case for a two-tier interest structure that might make industrial investment more profitable?

Mr. Wrigglesworth

I intend to come to that. In effect, the Government are already doing that in their discussions with the Bank of England and the clearing banks about giving guarantees on medium-term loans. That is a similar proposal. The London inter-bank rate for sterling deposits has historically reflected the higher United Kingdom margin, and may be expected to stay in a range which would put lending rates above the administrative costs of running current accounts. Where this is not the case, the banks will reintroduce charges in response to external policy, in which case there will be little justification for passing on to private shareholders the benefits of what is, in effect, a Government decision, Government policies and international policies which bear no relation or relevance to them or their business.

The banking sector, as the secondary bank crisis has shown, benefits in practice from a quasi-guarantee from the central authorities for its deposits. In the discussions which were held at the Bank of England at the time of the London and County failure, it was decided that the deposits which unconnected companies and individuals had been unwise enough to make with the secondary banks should not be allowed to disappear through default. For that reason the support operation that was known as the "lifeboat" was launched by the Bank of England and the clearing banks.

Furthermore, the Bank of England took the view at a later stage that there might well be a case for supporting some major property companies. It took that view because if property companies such as the Stern and Lyon groups went into bankruptcy, the assets of the clearing banks would be substantially reduced in value and those banks might come under suspicion. At that stage the Bank was preparing to use essential Government funds for the support of the private property sector. Nothing could illustrate more closely that, in its proper concern for the health of the financial system, the Bank of England in practice extends what is virtually a guarantee not only to the members of the clearing banks and the accepting houses committees, but to banks outside that magic circle, some of which have pursued policies that have been shown to be very dangerous, and in some cases fatal.

The argument is not that the Bank should not have come to the rescue, although in practice it had to, and managed to do so in a way that ensured that in the worst cases the defaulting banks went out of business. The point is that the Bank should never have found itself in that position in the first place.

Mr. Lee

I am following what my hon. Friend is saying with great interest. He is making an extremely interesting contribution. Does he agree that one of the faults of the rescue operation was that the secondary banks which were rescued, some of which were far from reputable in their conduct, were allowed to go on in their own sweet way, sometimes conducting secondary mortgage businesses of an extremely usurious character? Does my hon. Friend agree that the Bank of England, having helped to rescue them, has done nothing to bring about any improvement in their standards of conduct?

Mr. Wrigglesworth

I have only limited time. I could go on at length on this subject. I hope that the new regulations that will be brought in to control banking and the Consumer Credit Act, through the office of the Director General of Fair Trading, will get over that problem.

There are two separate issues. First if institutions enjoy an effective guarantee from the taxpayer, the taxpayer should reap some of the benefit. In the USA that is achieved partly through the Federal Deposit Insurance Corporation, a public institution, which, for a fee, insures deposits at insured banks up to a maximum of $40,000 per depositor.

It is sometimes argued that the cost to the banks of complying with monetary and credit controls constitutes a compensating tax on banks. In the United Kingdom the cost to banks of complying with the present reserve asset requirements, to which the Chancellor of the Duchy of Lancaster referred earlier, is remarkably low by international standards.

To some extent an extension of public ownership into banking could meet the purposes which I have outlined.

At present, for two particular reasons —one a political reason and the other a straightforward practical reason—the Government obviously cannot and should not take action on this front.

The practical reasons why immediate steps to achieve public ownership in banking would create more problems are simply that, in present circumstances, foreign and domestic confidence in the British financial system should be reinforced and in no way undermined. Whether we like it or not, it only needs non-resident holders of sterling to become worried about the solidity of the system—there have been signs of that happening recently—for them to start withdrawing their sterling balances and switching them out across the exchanges. As this is their money, we cannot condemn them out of hand if they do that. In this instance, I am talking not about speculators wanting to make a quick buck but about nations that invest their money in this country because they think that it is a good credit risk.

The problem of confidence may be temporary. It could be that in future, if the policy was announced well in advance—I come to my second reason now —and was well debated, any action to bring the clearing banks or the insurance companies into public ownership would not provoke, even with the opposition of the banks, a flight of confidence from the British financial system. But it goes without saying that such a policy should be debated well in advance of a General Election and be included in an election manifesto.

My view is that the case for embarking upon such a scheme is marginal. The benefits that might accrue as a result of taking banks into public ownership can be greatly exaggerated and in many ways hardly worth the upset that would be caused. The controls that I have outlined and the additional controls that the Bank of England has over the clearing banks constitute massive Government control if the Chancellor is prepared to exercise that control and direction.

I want to see the Labour Party and Government doing two things. I want them to encourage existing institutions in the public sector banking service to grow and to prosper. The Government have already put two Bills through the House with the object of doing just that. They have taken the shackles off the trustee savings banks and extended the range of facilities that the National Giro and the Post Office can provide.

I should like the Paymaster-General's office, which is virtually a bank within the Government, to be brought into the National Giro operation instead of working almost in competition with it. I should also like the National Savings Bank brought in as the deposit side of the personal banking service under the National Giro.

With those two developments—a large, straightforward publicly-owned Giro-cum-Paymaster - General - cum - National Savings Bank—we would have a major public banking institution. I believe that we could achieve that without very much difficulty. With the Trustee Savings Bank, with its 10 million customers—it has an enormous number of customers and outlets—we would have yet another public sector force in banking, which would provide the public with a much broader range of banking facilities and options than they have now.

Secondly, I want the Government to introduce much stricter control over the banking system. That should be done with much greater accountability than is done at the moment. We need only to look at the report by the inspector on the London and County Securities collapse to see the need for such control. In that report the inspector said: Up to the time of the collapse of London and County the Bank"— the Bank of England— did not much concern itself with secondary banks. That was a remarkable comment. But since the collapse the Bank of England has taken action, in particular by calling for detailed returns. I have some doubts about the effectiveness of those detailed returns. The report goes on: The Department of Trade is responsible for monitoring the accounts of those which are deposit-taking institutions under the Protection of Depositors Act 1963 … It appears that this lesson still needs to be learned and that greater control over the names and descriptions of secondary banks is necessary. At present there are at least 10 important and overlapping types of official banking recognition in the United Kingdom granted by bodies ranging from the Bank of England to the Registrar of Friendly Societies. The system of supervision, even for banks at the highest point on this ladder of recognition, and despite some recent tightening up, remains totally disorganised. What is needed is a clear system of bank licensing for private sector banks so that everyone, including the general public, is aware of the institutions which can expect to benefit from official support and a complementary system of continuing controls on the prudential behaviour of licensed banks, ranging from balance sheet constraints to checks on the quality of banking. Banks must have the right capital structures and liquidity ratios to protect people who place deposits with them. Whatever official body is charged with the task of carrying out the supervision of the banking system, it should ultimately be accountable to this House.

It is wrong that, when I go to the Table Office to put down Questions about the Bank of England and its work, or about the banking system, I cannot put them down to the Chancellor of the Exchequer. I suggest that any system of licensing of banks or of supervision should be accountable to this House, so that Members may ask the Chancellor about the work of the supervisory body, whether it be the Bank of England or any other.

I am a Co-operative sponsored Member of Parliament. Therefore, it would be remiss of me not to mention the work done by the Co-operative Insurance Society and the Co-operative Bank. The Co-operative Bank is developing at an enormous rate. It is opening new banks. Indeed, one of my hon. Friends has been opening one of its new Handy banks in Manchester today. That development and expansion will go on. Clearly, such banks have an important rôle to play within the banking structure. The Cooperative Bank can play an important rôle in the development of the non-private sector. It has no fears about the continuation of the clearing banks, because it will be able to compete adequately against them.

Similarly with the Co-operative Insurance Society. We on the Government Benches tend to talk about public ownership as though it can take only the form of nationalisation, but, of course, the Co-operative Insurance Society is a mutually-owned society, owned by its policyholders, and that is a form of ownership that I hope will commend itself to my hon. Friends. I hope that my hon. Friends would not want to propose, as the Labour Party did at one time, that the Co-operative Insurance Society should be lumped in with the others and turned into a nationalised organisation, because it is providing a service for many working people which we can all applaud.

I hope that the Government will proceed along the hard-headed, relevant and practical lines that I have suggested this evening and will not be tempted by the hon. Member for Henley or other Opposition Members into the irrelevant, doctrinaire avenues down which they have sought to lead the House this evening.

8.21 p.m.

Mr. Michael Marshall (Arundel)

It is always a pleasure to speak after the hon. Member for Thornaby (Mr. Wriggles-worth). Indeed, I have a feeling that this is where we came in on the Post Office (Banking Services) Act. However, the hon. Gentleman made a number of comments with which I agree. Although I do not feel able in the time available to follow all the paths that he trod, he was absolutely right in bringing out the inbuilt structural problems that we face in our society and in the whole basis upon which confidence has been a critical element in the way in which we have conducted our economic affairs—or rather, the lack of that confidence.

When the hon. Gentleman discussed the problem that we faced in relation to sterling balances—above all, we have to export to live, to cover the cost of our raw materials and food—I found myself in a great deal of sympathy with what he said. He will not be surprised when I say that I still feel unhappy about the further extension of what is popularly known as Benn's Bank, the Post Office Giro banking service, because that itself was another example of the kind of ad hoc-ery that we have had under successive Labour Governments, where the idea of State ownership was clearly preeminent in the minds of the people who brought that measure to the statute book instead of the necessary planning and justification that should have gone into that proposal.

The question of planning brings me to some of the comments of the hon. Member for Luton, West (Mr. Sedgemore). He, too, made a speech that was full of interest to us, and if any justification were needed for the Opposition's motion, certainly it came in speeches such as that which we heard from him. I do not think that the examples that he gave are particularly well founded. I think that he is somewhat of a sucker for international comparisons and has perhaps unwisely fallen for a French system, which in my view has very few parallels with our own. For example, he spoke of the French civil servants. Although he did not specify the political label as between French civil servants and our own, he seemed to imply that such labels might be the critical element. I suggest that French civil servants may be the more business-oriented. They are able to be directors of companies while acting as civil servants. Their system is different from ours. I tend to agree with what was said by the hon. Member for Thornaby—that it is not in the reform of our systems that the answer lies but in looking towards more effective use of what we have. It is a pity that the debate has not had the opportunity of developing as fully as we might have wished.

The hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) tried to ride the old Liberal hobby-horse of a plague on both houses. I think that we well understand that over the next few weeks any Liberal spokesman is likely to make what is essentially a "primary" speech, but that is not a sufficient justification for the brief intervention that he made before leaving us, because the issues on which he fleetingly touched have been prominent in the debate.

The Opposition should not in any sense apologise for putting down the motion. On the contrary, it has brought out a sharp difference of opinion within the Labour Party, and the assurances that the Chancellor of the Duchy gave us are assurances that the House and the country are fully entitled to consider. It is on that score that I want to try to weigh up what credence we can give to those assurances.

The Secretary of State for Energy, who will be replying to the debate, will be on trial in many ways. He must appreciate that he carries a very considerable personal rôle in this argument within the Labour Party. That is well known. I shall be most interested to see whether tonight he is able to reflect what I concede is an honest difference of opinion within the Labour Party, or whether, as I suspect, he will fall back on the tired old tactic of attacking the Opposition. I hope to hear constructive thinking from him, because this is an argument that the country is entitled to consider. It has been posed between those who feel that there is a case for further nationalisation in these industries and those, apparently in Government circles, who are at present willing to give assurances that they have no intention of bringing forward proposals to nationalise insurance or banking or the pharmaceutical industry.

However, those assurances are hard to accept because they follow so many twists and turns in recent changes of Cabinet collective responsibility. We remember the abandonment of that doctrine in the EEC argument. We have seen it abandoned, in effect, in arguments about the British Leyland and Chrysler situations. Moreover, if we look at the history of the Labour Party since the war, we find that its record in regard to nationalised industries is one of no clear, coherent and balanced view, and, in my opinion, one of ad hoc-ery of the very worst kind.

It is perhaps sad that if one looks at the effect of nationalisation one finds that the three elements that come out so strongly are the unplanned, unprofitable and unpopular aspects of the Labour Party's work in Britain since the war. I say "sad" because whatever I might wish to see in terms of which party is in office, I do not think that anyone would wish to see our country suffer as it has done, unnecessarily, through this argument. Therefore, to some extent I welcome the kind of constructive view that has been put forward by the hon. Member for Thornaby—reflecting, as he does, our background in both private and public banking—in looking for some breakaway from some of the very sterile aspects of this argument.

However, we cannot gloss over Labour's failures in nationalisation, because they are the failures from which we must learn lessons if we are to try to see our way ahead on the unplanned aspect of nationalisation. The events of the years when the coal mining industry was being nationalised must be common knowledge. We all know the saga of the then Mr. Shinwell looking for the blueprint which did not exist. Anyone with experience in the steel industry will know that no one in any part of the steel industry in the world would support the motion that the 14 largest steel companies was a sensible basis upon which the industry should have been nationalised. If I were a nationaliser, which I am not, I could put forward a far better approach to that industry, which would take account of regional balances and product specialisation—which might have given the Labour Party some chance of chalking up a success.

It is this consistent lack of success, this £1,000 million cumulative loss in the post-war period through nationalised industries, that makes the Labour Party so diffident when it comes to putting forward proposals—and rightly so. They have not got the planning aspect right and they have not, in my view, come to terms with the genuine mixed economy view which one half of the party puts forward and which the other half disputes. Therefore they fall between both stools.

We have seen this not only in the unprofitability of nationalised industries, but also in the unpopularity of nationalised industries. I speak from both the consumer's point of view and from the employee's point of view. It must be clear to anyone who looks at the steel industry today that the employees of the industry feel that they are nobody's friends. They are subject to criticism from all sides and much of this criticism is unfairly levelled at them because the problems they face are inflicted upon them by the Labour Government of the day.

If we turn to the banking situation. again I would argue that the proposal to extend the State banking service of Post Office Giro is a wedge in the door. It is the beginning of what the Chairman of the Post Office Giro banking service described as the possibility of a massive State bank. I do not think that, on the basis of a £30 million loss, or on the basis of a concern which is technically insolvent, or on the basis of writing oft half the losses and putting the balance into public dividend capital, this augurs well for the Government's serious thinking in these matters.

Therefore, my hon. Friend the Member for Henley was right to call for assurances over these three industries. I would not apologise, if we can today remove uncertainty from at least three items on the shopping list. If this debate has done nothing else, it has given us the opportunity for a moment for pause before the battle is joined once again.

I cannot feel too sanguine, because the speech of the Chancellor of the Duchy was in so many ways the kind of "Whig and Tory measures" approach to life which we are getting from that Front Bench as a fairly consistent theme. The people of this country are right to ask themselves whether this kind of "follow the Wilson, fix it era" or "the Sunny Jim take-off of Stanley Baldwin" approach is something in which they can believe.

Hon. Members opposite have shown that on the question of public ownership there is a deep divide in their party But to suggest that this argument is clearly recognised, or to suggest that the assurances which we had today were crystal clear, is by no means the case. Nevertheless, if the House or the country had wished to have some indication of Government policy, this debate has certainly served its purpose.

Two aspects worry me most about the present state of our nationalised industries. Considering the opportunities they have for making change, the Government seem hemmed in by the kind of dogmatic arguments still being heard in the House. I should like to see whether we could find more encouragement for the sort of joint venture approach to life which has not been fully explored throughout our debates on these subjects. It is significant that, in a company such as Round Oak in the steel industry, fifty-fifty public and private concern, no one talks about industrial relations or operating problems. It seems to me that the divorcing of that kind of company from political arguments is a significant way ahead and that we should try to remove many of our nationalised industries from this pure State ownership—pure denationalisation, type of argument.

We have a good opportunity now, through our membership of the EEC, to seek more joint ventures across European lines which would assure our market within Europe. We have good opportunities to consider the making of primary steel in this country when the cold-rolling plants in Germany have problems with their finishing works along the Rhine. These are some of the more imaginative approaches that one would hope to hear from Government spokesmen on this matter.

In my experience it has been from the Back Benches on the other side of the House that some constructive thoughts have been coming forward in this debate. Although I do not agree with a great deal of the comments from below the Gangway, at least they showed some willingness to put their thoughts before us, whereas the Government stick to this outworn and outdated shopping list and seem to be carrying out a tidying-up operation in which they do not consider arguments but simply press on with the list.

We should be grateful to the Chancellor of the Duchy. He accepted almost at the outset that our motion was not only valid but one on which he could give us an absolute assurance. The divide which has occurred since then is honest, and I urge hon. Members opposite to take advantage of this opportunity to express their views freely and to let the House and the country know where they stand.

If the Government want to support the Opposition motion, we shall know where the Government supporters stand on the matter of banking, insurance and pharmaceuticals. If hon. Members opposite who do not take the same view wish then to vote against that motion, the numerical picture of the Labour Party will be clear to the country and helpful to all concerned. I make that suggestion in a constructive spirit, knowing that Labour Members will want to put their votes where their convictions lie. I am happy that we have had this debate and I look forward to a good response from Labour Members.

8.35 p.m.

Mr. Bob Cryer (Keighley)

It was clear from the speech of the hon. Member for Arundel (Mr. Marshall) that there are deep divides in the Conservative Party. His moderate approach contrasted sharply with the savage attack by the hon. Member for Henley (Mr. Heseltine), who betrayed a startling lack of concern and consideration for any of the publicly-owned industries. I do not want to repeat what the Chancellor of the Duchy said, but if the hon. Member for Henley became a Minister, which is extremely unlikely, for a variety of reasons—not least the shifting sands of policy from time to time in the Tory Party—he would presumably have the job of looking after those industries in a general sense.

We see this attitude also in the extreme chagrin among Conservative Members at the turn-found in the 95 per cent. publicly-owned company of British Leyland. They cannot say too much, of course, because it was they who would have allowed Leyland and Chrysler to go to the wall. When there are very slow signs in British Leyland—we are at the beginning of the road but the signs are undeniable—of a turn-round, they must keep a low profile because they cannot be seen to be too vicious in their attacks. But that is what they feel.

Mr. Geoffrey Dodsworth (Hertfordshire, South-West)

When talking about a turn-round in British Leyland, will the hon. Gentleman bear in mind that £14 million of that represents exchange profits, and that that is exactly the same as the profit disclosed for the period?

Mr. Cryer

I do not deny that. There was a loss of over £20 million last year. To eradicate that loss and to break even, I should think, is a considerable achievement. But the attitude of the hon. Member is that of the Opposition generally—no credit to British Leyland, none to the Government for rescuing it, and none to the workpeople for achieving that turn-round. That is the attitude with which they start—total, doctrinaire, dogged opposition to any support for the nationalised industries—and it is not surprising that the people in those industries are getting tired of their attitude.

The Conservatives talk about accumulated losses by publicly-owned industries, but none of them made any attempt to hive off those industries to private enterprise. They did not hand over the railways, which make losses because they are a social service, to their private enterprise chums. Of course not. They handed over the profitable sections of public industry so that their chums could line their pockets from the profits of those sectors that were making surpluses. We know what their attitude is.

When the Conservatives talk of losses, they conveniently forget that the last Conservative Government held down gas, electricity and postal charges and thereby helped to produce losses. I argue that subsidies to the gas and electricity industries should have been continued for much longer, but the Tories cannot have it both ways. They cannot argue that they are making a loss and at the same time ignore the fact that their Government held down prices and helped to create these losses.

It is recognised that some public industries provide social services, that they are paid for by the community, and are valuable as such. But some make a profit. The mines are an example. Under a Labour Government that industry achieved a turn-round from a considerable loss to a profit, last year, of £11 million. Hopefully, that will be increased this year.

Only yesterday, we had the degrading spectacle of a tawdry conspiracy by the Opposition to delay the passage of a Private Bill because of their dogged and doctrinaire commitment to private enterprise. They were opposing a successful and profitable section of public industry. The British Transport Docks Board report and accounts for 1975, which were available in the Vote Office for a week before yesterday—a fact which very few of them tried to find out and consequently raised innumerable points of order yesterday—contains, in the chairman's statement, the following passage: Despite the fall in available traffics, by effecting economies, the Board achieved a surplus, after historic cost depreciation before interest of £12.5m. This was an improvement. disregarding inflation of £0.4 million. That is something of an achievement which I noticed in the balanced statement of the hon. Member for Arundel was not given recognition. There is a success side, and it ought to be recognised. The Opposition make political capital out of not doing so. There are faults and we want to see them eradicated. We wish to eradicate the lack of democracy, which perhaps makes nationalised industries bureaucratic and corporate in their general appearance and effect. The Government are doing something about it—perhaps not at a fast enough pace, but they are starting.

We have heard a good deal about the mixed economy. Opposition Members claim that public ownership will not rescue anything or get the nation out of the mess, but they chose not to ignore that solution when Rolls-Royce was in a mess and 35,000 jobs were at stake. They chose public ownership. We cannot take an isolated example and say that it represents the whole of Conservative philosophy. The Tories have nationalised before. Before the war they brought BOAC into public ownership. When it suits their book they will undertake public ownership if circumstances force them to do so.

The notion that the Conservatives advocate, that the mixed economy is fixed by some sort of magic and handed down on tablets of stone, is ludicrous. Of course we accept the mixed economy, but that it not to say that 20 per cent. public ownership and 80 per cent. private enterprise is fixed for all time. The majority of the means, distribution and ownership of production is in private hands. If there is a crisis, as the Conservatives say, it is a crisis not of the public sector but of the private sector. It is a crisis of capitalism. Capitalism dominates this country. It is not a tiny, withering bloom somewhere in the corner of the economy. If the economy is sick, we should look at the basis of the sickness and at the capitalist system that has engendered the crisis.

Mr. Nicholas Winterton (Macclesfield)

Have a look at the high taxation.

Mr. Cryer

Of course, have a look at high taxation. I recommend the eleventh edition of the CBI volume "Comparative Taxation in Western Europe", in which are a few revelations, one of which is that we have the most generous provision in Europe for depreciation. If the depreciation allowances, tax allowances and grants given to firms are taken into account, the taxation position in this country is by no means as onerous as some hon. Members suggest.

One of the failures of capitalism is that, in spite of these inducements, in spite of the bribes to the capitalist system, in spite of the offer of tax allowances to firms which go to the North-East—local authorities are competing with each other to sell their towns without any plan in an absurd competitive struggle—there are still high rates of unemployment in the North-East, Wales and Scotland. That is not due to a failure of public ownership, it is because private industry seeks profits and places profits before people. We want to be able to ask the private banking sector to take industry into account when it makes investment decisions. When those investment decisions are taken in private we cannot do that.

Mr. Nicholas Fairbairn (Kinross and West Perthshire)

Unemployment in Scotland has got steadily worse the larger the public sector. Will the hon. Gentleman tell us what the public sector has done to improve the unemployment situation?

Mr. Cryer

I am interested that the hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn) should intervene, because he was one of the Opposition Members who voted against Chrysler. It was startling that he should have done that, because no one would deny that Government, action using public money to support Chrysler in this country, saved about 50,000 jobs. Does the hon. and learned Gentleman deny that jobs were saved in Scotland, at Linwood? We have a crisis, but it is caused by the system that the hon. and learned Gentleman supports. It is caused by individual capitalists who are not prepared to make investment decisions.

The House will recall the golden words of a former Conservative Prime Minister —the right hon. Member for Sidcup (Mr. Heath)—who told the Institute of Directors in 1973 "You asked us to devalue, so we floated the pound. You asked for tax concessions and we gave them to you, but still you did not invest." That is on the record. A Conservative Prime Minister begged industrialists to make investment decisions, but they would not. They were shovelling money abroad because they could make a faster buck there than by investing in the people of this country. That, too, is on record.

My criticism applies to the generality of companies, but not to all. There have been good investment decisions. There have been good companies, which have invested in their own men and machines—but, sad to say, that is not the general picture of British industry.

In our manifesto we are committed to make power in industry genuinely accountable to the workers and the community at large. That cannot be done unless there is control over investment decisions, because in British industry those decisions represent an important source of power. Therefore, although this Government are not committed to the public ownership of banks and insurance companies, the Labour Party and the trade union movement are involved in discussing and policy making so that a future Labour Government can implement that policy. I do not suppose that anyone would deny that the secondary banking system needs a greater degree of control. Decisions made by it represent some of the ugly faces of capitalism.

Are we to build up a whole bureaucracy to control a section of capitalism to make it behave well, when we know that capitalism is not for the community's benefit, or are we to look at the whole question of control? Can we separate control from ownership?

Mr. Nicholas Winterton

Will the hon. Member for Keighley (Mr. Cryer) pay attention to the excellent records of some companies, in particular ICI? That company's investment record is fantastic. Its worker-management relationships are outstanding. Its profitability and its export record are outstanding. Will the hon. Gentleman comment on that?

Mr. Cryer

We are committed to a number of decisions, and this is an area where the National Enterprise Board could certainly review the position.

The February 1974 manifesto says: We shall also take over profitable sections or individual firms in those industries where a public holding is essential to enable the Government to control prices

Mr. Nicholas Winterton

They can now.

Mr. Cryer

The hon. Gentleman believes that the Price Code is totally effective and overwhelmingly supported by the people.

We also have the right to stimulate investment, encourage exports, create employment, protect workers and consumers from the activities of irresponsible multi-national companies, and to plan the national economy in the national interest. Can we do all those things simply by building up legislation and bureaucracy to watch private enterprise to ensure that it does those things? One cannot ensure that all those decisions are made without some element of ownership. One of our key methods of ensuring that the investment goes to the areas in which it is needed is the National Enterprise Board, which does not have enough money. This has been mentioned in relation to the public expenditure White Paper. Criticism of Finance for Industry can be advanced. That device has not been very successful. Its decisions to advance money have tended to undermine the position of the National Enterprise Board.

In his speech, my right Friend the Chancellor of the Duchy of Lancaster depended a great deal on the board. but he did not mention planning agreements. We are not getting ahead with them very quickly. If we are to control the economy and stage a recovery we need to imple- ment them as well as provide the Board with more money. We must ensure that organisations such as the NEB are not throttled by other bodies, like the FFI.

The Labour Government have done much that is good, but one of the acid tests must be employment. We still have 1,300,000 people unemployed.

Mr. Nicholas Winterton

Under Labour.

Mr. Cryer

It is a serious indictment of private enterprise capitalism, which is in some form of crisis in the whole of Western Europe. It is the Labour Government's duty to reverse that crisis. They can do it only by implementing Socialist measures, by planning. That is the sort of thing that will bring down the level of unemployment, which is a crucial test for the Government.

8.53 p.m.

Mr. John Moore (Croydon, Central)

I must thank the hon. Member for Keighley (Mr. Cryer), because he totally destroyed the red herring drawn across the debate earlier by the rather delicate language of the Chancellor of the Duchy of Lancaster. I respect the hon. Gentleman's honesty, despite the total irrelevance of his words. He reminded us of the essence of the debate, which is about to what is and is not a public enterprise or public ownership.

I am delighted that the Secretary of State for Energy is to wind up the debate. In a committee that he chaired, some of us were involved in the beginnings of interesting discussions on some of the mechanisms we might wish to examine, rather than the constantly sterile approach to what is and is not a public enterprise system.

I was particularly pleased to listen to the hon. Members for Thornaby (Mr. Wrigglesworth), Sowerby (Mr. Madden) and Luton, West (Mr. Sedgemore), who drew the debate towards some more basic and fundamental points. I should like; to try to argue on those points. After all, in this debate we are seeking to argue about whether industries that are not now nationalised should be nationalised.

It seems a little distressing to be reminded by the Government Front Bench that Government policies presumably are not based upon the Labour Party's 1918

constitution. I do not know whether Clause 4 of the Labour Party constitution has been totally disavowed by the Government Front Bench tonight, but it seemed very much like it.

The hon. Member for Keighley reminded us that we were debating a past filled with failure, though not necessarily because of the men and women who serve in the nationalised industries. The hon. Member for Thornaby made some valuable observations about the demand problem of funds as opposed to the supply problem, which had a direct relevance to the attempt to nationalise the banking and insurance sector. He stressed that this was the key area. I emphasise his words. He talked about the degree to which the current structure of interest rates in Britain, designed to attract overseas investment, has in many ways acted as a prime impediment to domestic industrial investment. This is an area in which we should be much more interested rather than holding a ragbag political debate.

The hon. Member for Keighley should remember that we are arguing about the need to take over supplies of funds. In that context we should ask ourselves what has already happened in the best of our nationalised industries in terms of their use of funds and the supply of those funds. This is the political crux. I have been doing some comparative work in which I have sought to answer some of these fundamental questions by taking overseas industries and comparing them if I can—it is difficult—with like industries in this country.

For example, the electricity supply industry, which is one of the best managed in this country, is roughly comparable in terms of size of the population it seeks to serve with the electricity supply industry in the States of Pennsylvania, California and New York. There is a consuming population in this country of 50 million people if we exclude Scotland. [HON. MEMBERS: "Oh."] I am sorry but hon. Members will know that Scotland is excluded by virtue of the way in which the electricity supply industry is organised. The electricity supply industry in this country has had the ability to draw funds from Government sources since it was nationalised. If we examine its published accounts for the past five years it will be seen that it has spent about £541 million per annum of new capital.

The hon. Member for Luton, West referred to source of funds. He was right in his facts but wrong in his analysis. He drew attention to the fact that the industry's source of supply was internal as opposed to external and that, as there was a switch going on in this respect, there might be a need for governmental institutions.

The three States in America have attracted £1,372 million per annum over those same five years. That compares with a figure of £541 million for this country. Of that figure for the three States, 75 per cent. was provided by the public market, by private investors. They were willing to subscribe to private enterprise companies. This denies the argument used by Labour Members below the Gangway. Why is this? I accept that the blame should not be laid at the door of the men and women who seek to try to run our nationalised industries. It should be laid squarely at the door of this House.

There is no doubt that anyone who seeks to analyse the nationalised industries must quickly develop a sense of total despair for those who seek intelligently to manage them. It is impossible, when they operate in a political society such as ours, when Governments of both parties over the past 30 years have consistently failed to allow those industries to be independent. They have been seeking commercial viability as well as fulfilling certain social obligations. Both parties have manifestly failed.

I cannot, in the minute left to me, itemise the obvious areas in which Governments seek to intervene. There is the redistribution of income, the attempt to force investment, the direction of prices and the decisions about which projects should be pushed forward in the national interest. There are many areas where Governments of both parties have consistently failed to allow these industries to be properly managed. To that extent it is not unreal for Members on this side to suggest new forms of organisation and to deny the possibility of further nationalisation until new and better forms are created, because the record is quite staggering.

In the last 30 years the nationalised industries have consistently lost money for this country. According to parliamentary Answers, this has happened in 21 out of the last 30 years. They have lost a total of £1,096 million. But those are just the declared losses. The capital debt and Revenue write-off has been £3,750 million, and the subsidies, compensation and other payments amount to £4,181 million.

It is apparent that they are financial failures. Therefore, surely it behoves the House of Commons to go beyond a simple static analysis, and a proposal to increase the size of nationalised sector.

All the Opposition have sought to do in the debate is to reduce what is already an outdated programme. I welcome the commitment of the Government Front Bench, therefore, to a denial of Clause 4 in their programme.

9.2 p.m.

Mrs. Audrey Wise (Coventry, South West)

It is obvious that a debate such as this was bound to range considerably around the question of investment. I was grateful to my hon. Friend the Member for Thornaby (Mr. Wrigglesworth), who pointed out that in his view the trouble has been not in the supply of funds for investment but rather in the demand. I am now hoping that my hon. Friend will lead a deputation to our friends at the Treasury who drew up the White Paper on Public Expenditure, which foreshadowed cuts precisely to release funds for investment—funds which I now understand have been available all the time.

Although the debate is centred on banking, insurance and pharmaceuticals, I was very interested in the stark honesty and clarity of the hon. and learned Member for Darwen (Mr. Fletcher-Cooke), who introduced the motor industry into the debate. I am sure that my constituents, many of whom work for Chrysler and British Leyland, will be fascinated by his analysis. He very kindly told us that the Chrysler workers are working very well now because, despite the Government's rescue of Chrysler, power lies still in Detroit, and Chrysler can be closed and the workers sacked. Industrial relations at Chrysler, he suggested, have therefore been transformed.

My constituents who work at Chrysler will be very pleased to know that they are full of fear and that it is good for them. My constituents at British Leyland will equally be pleased to know that they are relying on the Government keeping them in idleness and sloth, because they are telling me of their interest in having British Leyland effectively and efficiently managed. They are bringing forward many suggestions for this. But the hon. and learned Member for Darwen does not know this. I hope that the Conservative spokesman who winds up the debate will tell us whether he shares the view of his hon. and learned Friend the Member for Darwen about the way to treat workers.

I contrast that attitude with the solicitude of the hon. Member for Henley (Mr. Hesetine) about people with money to invest. He says that it is wrong to make people do what their best judgment tells them not to do. I wish that he would extend that principle to workers and try to support us in our efforts to find channels and mechanisms whereby workers can influence the decisions affecting their work.

I was sorry that the Chancellor of the Duchy of Lancaster appeared to agree with the hon. Member for Henley and said that we must not dragoon the funds of banking and insurance into investment. I was also interested in his reason, which was that we must protect the savings of people. I should have thought that, if their savings could be used to protect their jobs, that would give them the opportunity to have more savings. Therefore, would it not be beneficial to take the view that, if investment is good for the country and if it helps to create wealth, it would not be against the interests of working people if their savings were channelled into productive industry instead of, as so often happens, into property and other non-real-wealth-producing activities.

The Chancellor of the Duchy of Lancaster said that profitability was not a perfect yardstick for determining the allocation of resources but that it was pretty good. I am glad that he recognised that it was not perfect. I suggest that he looks round the word to see the situation which has been produced largely by the yardstick of profitability, with its obscene contrasts of cruelty and wastefulness which exist. If he does that, I think he will agree that he made a slight understatement when he said that it was not perfect.

I suggest, too, that my right hon. Friend looks at the domestic situation which has been produced, in which industry has been starved of investment and such investment as has been made has often been misused. I suggest that the magic yardstick of profitability has not even satisfied the criteria and requirements of the market, since, in the motor industry, for example, we do not appear able even to produce models such as Land Rovers which can be sold and we are told constantly that there is overcapacity and the misuse of capacity, all achieved by this less than perfect yardstick.

By the time that my right hon. Friend makes his next speech to the House, I hope that he will have decided to be a little more firm and realistic—that is a good, popular word on both Front Benches—in his definition of the function of profitability as a yardstick for the allocation of resources.

9.7 p.m.

Mr. Angus Maude (Stratford-on-Avon)

I said that I was prepared to give up five minutes to the hon. Member for Coventry, South-West (Mrs. Wise) if she wished to address the House, and I am glad that I did, because it was worth a guinea a minute. I hope that the Chancellor of the Duchy of Lancaster noted her injunctions.

The right hon. Gentleman and the hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) both said that they could not quite understand why the Opposition, on a Supply Day, tabled a motion dealing with the Government's intentions about the nationalisation of the banking, insurance and pharmaceutical industries because, as the right hon. Gentleman said, this was only some policy document which had been produced within the Labour Party. As I think the Government will recognise, this is a matter about which some quite threatening noises have issued from the Labour Party, both in and out of election manifestos, for some years, and the production of a new policy document was clearly liable to increase the uncertainty.

The one fact that is quite certain is that this debate has been valuable, and that tabling this motion was not an error. In fact—although I wish to study the right hon. Gentleman's words with some care to decide exactly how far his commitment goes—contrary to what Government supporters below the Gangway were hoping, his speech went a long way to remove for at least a period the uncertainty under which these industries were labouring.

I deal with the three industries which are named in the Opposition motion. The right hon. Gentleman said that the Government "had no intention of nationalising any company within the banking industry". We are entitled to take that as a clear pledge by the Government for the period of this Parliament. I cannot see that it can mean anything else. It certainly does not stop hon. Members on the Government Benches from trying to change the Government's mind, and it is perfectly clear that many of them want to do so. But it must be considered as a pledge for the lifetime of this Parliament.

When the Chancellor of the Duchy came to the insurance and pharmaceutical industries, his wording was a little different. Whereas with banking he said that the Government had no "intention of" nationalising any company, with the others he said the Government had "no plans to" nationalise companies in the insurance or pharmaceutical industries. There may be a subtle difference in intention between "no intention" and "no plans". I take it that "no intention" means that they will not even consider it within the lifetime of this Parliament. However "having no plans" can mean that they have not yet worked out anything, but are not committed not to produce something later in the lifetime of this Parliament, which could eventually find it ways into legislation.

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

In 1970 when the Conservatives came into office did they have any plans or any intention to nationalise Rolls-Royce?

Mr. Maude

That is a singularly inept intervention even by the Secretary of State's standards. It had never been part of the doctrine, dogma or constitution of the Conservative Party to nationalise companies. We had no intention to nationalise Rolls-Royce, and no plans to do so. As the right hon. Member knows perfectly well—as well as anyone on his Front Bench or the Front Bench below the Gangway—the nationalisation of the aero-engines division of Rolls-Royce took place simply because our defence commitments to allied and friendly Governments were such that to allow the company to fold up completely would have been a breach of our international obligations and would have had a serious effect on the Alliance. The crisis having arisen, it is too futile for the Secretary of State to try to put Rolls-Royce—when the situation had not even been envisaged at the time of the election—on a par with the banking, insurance and pharmaceutical industries, about which the Labour Party has been issuing documents and threats for many years, clearly with the intention of trying, one day, to get a party conference or a Government to nationalise these industries, or sections of them.

The point surely is that if the Labour Party is still bound by Clause 4 of its constitution and is devoted to the nationalisation of the means of production, distribution, and exchange, and since, under Clause 5 of its constitution, the machinery exists by which this can happen, whatever the Government of the day might think about it, we are entitled to suppose that there is at least a risk to these industries.

The Chancellor of the Exchequer was saying in 1973 that they were doing work to see how they could bring sections of the banking industry under public control. Let us take it that the Chancellor of the Duchy of Lancaster has authority to say that under no circumstances during this Parliament will the Government nationalise the whole, or any section of, or any firm in, any of these three industries.

Mr. Cryer

I take it that the hon. Gentleman would not deny the right of the Labour Government to take the sort of action that his Conservative Government took over Rolls-Royce. He is not seeking to deny that kind of right, is he?

Mr. Maude

If one of the major clearing banks were to collapse totally—which, frankly, I do not envisage happening even under this Government—the Government might find themselves in a crisis situation, when they would have to ask the House for special powers. The Rolls-Royce situation has no relation whatsoever to a doctrinal commitment to try to nationalise these industries.

The Chancellor of the Duchy of Lancaster went on to say that the Government were doing pretty well in medium-term lending to industry and that the commanding heights of the economy were already controlled by the Government, and they had no need to own them.

Mr. Lever

These commanding heights.

Mr. Maude

The commanding heights represented by banking, insurance and the investment machinery of the country. He said that these commanding heights were already controlled by the Government and they had no need to own them. That provoked an immediate eruption from the hon. Members for Luton, West (Mr. Sedgemore) and Bolsover (Mr. Skinner). There had already been an intervention from the hon. Member for Liverpool, Walton (Mr. Heifer), who said that whatever the Chancellor of the Duchy of Lancaster said and the Government might decide, the party might have other ideas and might decide that this was necessary.

Nobody on this side of the House succeeded in denting the conviction of the Chancellor of the Duchy of Lancaster or, indeed, of the hon. Member for Thornaby (Mr. Wrigglesworth) that the banking industry of this country was doing pretty well in the circumstances and that the Government had all the means necessary for controlling the money supply and investment. The hon. Member for Luton, West said that it was not a question whether the banks should be nationalised, but who will do it, and when, and he even suggested that a Conservative Government might find it necessary to do it.

The hon. Member for Luton, West went on to give a fairly detailed analysis of the investment mechanism in this country and said—and I was interested in his argument—that the fact that, owing to the narrowing of profit margins, there had been a massive shift from internal financing from retained profits to external financing was a desirable trend and that it should be retained as a deliberate matter of Government policy. He said that profit margins should be kept low with that in view.

What the hon. Gentleman did not recognise, but what the Chancellor of the Duchy of Lancaster does recognise, is that if profit margins are deliberately kept low and there is little chance for companies to build up reserves, workers' jobs are made that much less secure when business falls off or world trade declines. It is clear, and I am glad to see it from all the evidence of opinion poll surveys, that workers in most industries recognise that their jobs are safer in a company that is making profits than in one that is not. I think that the hon. Member for Luton, West has misunderstood not only the function of profits in financing industry but also the wishes of the workers in those industries.

Getting back to the question why the Opposition tabled this motion, we are entitled to look at the risks under which these industries have been living, the chance that the Chancellor of the Duchy of Lancaster's assurances will hold and the machinery by which a reversal of his assurances may take place.

It is not easy to understand the process by which the Labour Party goes through these things, but I understand that research departments produce a series of proposals for policy committees—just as happens in the Conservative Party and probably most other parties.

The proposals can then be sent to the National Executive Committee, although at that stage it is possible for the Prime Minister to say, as has the present Prime Minister, that he does not think a certain proposal looks like a runner. He has to admit, however, that the decision may be up to the party conference.

The NEC may approve or reject a proposal, according to how many Ministers attend the meeting or the balance between Left and Right on any occasion. If the NEC passes the proposal, it goes to the party conference, where a two-thirds majority will virtually ensure its inclusion in the manifesto, though this is subject to a joint meeting of the NEC and the parliamentary committee of the Parliamentary Labour Party.

It is interesting to see how often despite warnings from Ministers that it would not be a good idea to include a particular proposal in the manifesto, in the national interest, or for other reasons, the proposals get into the manifesto anyway, and, when the Labour Party next scrapes an overall majority, into legislation and passed into law.

It is clear that there is risk and uncertainty. It is no good the Chancellor of the Duchy saying there is no risk just because the Government have no present plans for nationalisation.

The process by which the Labour Party gets policy proposals into its manifestos and into legislation sounds a little like Russian roulette, the only difference being that while the chamber is spinning, the revolver is pointed at someone else and not at the person who is to pull the trigger. When the Chancellor gives us his assurances, we are entitled to say that the voice is the voice of Jacob, but the finger on the trigger is a little hairy.

There has been no serious attempt tonight to argue that there is a case for nationalising the whole or even sectors of the banking, insurance or pharmaceutical industries.

The Chancellor of the Duchy of Lancaster is correct in saying that the Government have all the powers they need to control the money supply, and so on.

If it is argued that the clearing banks are in a monopolistic or semi-monopolistic situation, we disagree. They do not represent the majority of the lending capacity in this country. Anyway, under the monopolies and restrictive practices legislation the Government have powers to deal with this matter. They obviously do not think it is necessary that they should.

It is interesting that no one from the Labour Benches has attempted to argue that there is a case for nationalising the insurance industry, or even sectors of it. It is strange that it should so frequently figure in Labour Party policy documents but that no one should have argued the case today. Indeed, even the distant threat of it has appeared in Labour Party manifestos.

We know that the Chancellor of the Duchy of Lancaster has not actually read the Labour Party manifestos—he made this clear—on the pharmaceutical industry. The position in respect of that industry is perhaps the most interesting of the lot. There is no doubt what the February 1974 Labour Party manifesto stated. I am delighted to be able to inform the Chancellor of the Duchy about it. It stated: We shall"— it is not "we may" or "we are thinking of"— also take over profitable sections or individual firms in those industries where a public holding is essential to enable the Government to control prices, stimulate investment, encourage exports, create employment, protect workers and … plan the national economy in the national interest. We shall therefore include in this operation sections of pharmaceuticals, road haulage, construction, machine tool industry…". There could not be anything much clearer than that. The right hon. Gentleman has admitted that he has not read it.

A more interesting point about the most recent proposals for the pharmaceutical industry comes in a document entitled "Public Control of the Pharmaceutical Industry", which was produced under the chairmanship of the Minister of State, Department of Health and Social Security. It says that as a matter of urgency the National Enterprise Board should acquire at least one British research-based pharmaceutical company.

The report continues—I hope that the Chancellor of the Duchy will note this, because it bears out his determination not to have any nationalisation in this industry: from our examination of the industry we believe that it would be impracticable to nationalise the whole of the pharmaceutical industry". It justifies that determination on the grounds that it would: merely ensure a higher drug bill for the National Health Service". One could not want a more dogmatic assertion that nationalisation in the pharmaceutical industry would be wrong, and that the result of nationalising the whole industry would be to ensure a higher drug bill.

However, the whole argument that Labour Members on the left of their party produced for nationalising the pharmaceutical industry was that pharmaceutical companies had been making excessive profits. They insisted that promotional expenditure was far too high, including samples given to doctors and advertising, and that the patient was not getting his drugs at a reasonable price. But the report says that to nationalise the whole industry would merely ensure a higher drug bill for the National Health Service. We hope that the Secretary of State will explain how nationalising one firm in the industry would make things markedly better. The fact is that our National Health Service patients and other patients get their drugs, as is well known, cheaper than in almost any other advanced industrial country in the world, and that the research effort is better than in almost any other advanced industrial country in the world.

In the case of banking, it is quite clear that customers, by and large, are extremely satisfied with the handling of their accounts. A recent survey in Money Which?—showed that 87 per cent. of customers had expressed themselves as satisfied with the handling of their accounts.

The Prime Minister, who I am glad to see has now honoured us with his presence, was called upon to make some comment on the policy document which we are discussing. He felt it necessary to say with some force that he disagreed with quite a lot of it. He also said—I thought that this was interesting—that he was told that over 700 voluntary experts in various sectors had contributed to the document.

The right hon. Gentleman, according to the news release from the Labour Party Information Department, said: In some ways this shows up in the nature of the document because it is in essence the total sum of all their hopes in all the fields of social expenditure and elsewhere. That may be the total sum of all the hopes of those below the Gangway, but not, it would appear, of the Government Front Bench if the speech by the Chancellor of the Duchy is anything to go by.

But what interests us, particularly when right hon. Gentlemen opposite say that we were wrong to try to dispel uncertainty from these industries by having a debate this evening, even after the Chancellor of the Duchy has given what is very nearly a categorical pledge that the Government will not nationalise any firm in the banking, insurance and pharmaceutical industries, is what the Government have done. They do not accept our motion, which would be the obvious thing to do. If they had read our motion, they would have seen that it simply calls on the Government to dispel uncertainty in these industries by giving a categorical assurance that they do not propose to nationalise any firm in the banking, insurance and pharmaceutical industries.

The Chancellor of the Duchy purported to give that categorical assurance. Why, then, did the Government not accept our motion? Instead, they have attempted to substitute for it an amendment that has no relation to the motion.

You, Mr. Speaker, must be convinced that the amendment is relevant; otherwise, it would not have been called. But I must point out that it mentions nothing about the banking, insurance, or pharmaceutical industries, and nothing about the restoration of confidence in them. The amendment is designed to get all mention of the banking, insurance and pharmaceutical industries off the record and to allow the Secretary of State for Energy to have a little run around the houses with his speech about the past successes of the NEB and its anticipated future triumphs.

We do not grudge the right hon. Gentleman his little speech. We recognise that he has been feeling a little lost and lonely out in the North Sea over the last few months. We shall be delighted to listen to his speech. If he can possibly relate it to the subject of the motion and confirm that he—the white hope of the left wing of the Labour Party—also categorically assures us that the Government, and preferably the whole Labour Party, have no intention of nationalising any firm in these industries, the operation will have been worth while. But I do not think this is the total sum of all their hopes. It is the total sum of a great deal of nonsense and a great many betrayals by a lot of hon. Gentlemen on the Government Benches.

9.33 p.m.

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

The House will be grateful to the hon. Member for Stratford-on-Avon (Mr. Maude) for having discovered and explained to the House the provisions of the Labour Party constitution, which has been available since 1918. The detailed and meticulous way in which he described what we have been doing since the party was founded will be much appreciated. I want to put that on the record.

I confess that, listening to the hon. Member for Henley (Mr. Heseltine), after a year, I had a slightly wistful feeling. I have missed him a great deal with his James Bond act of producing documents which we published months ago as if he had got them by some secret agent method and was warning us about them. I see him using the instrument of fear as it has been used over the years. It was Attlee, once, Laski, Lloyd George and no doubt his predecessors. It goes back to Gladstone. I believe that if the hon. Gentleman had lived when Christ turned the money changers out of the temple, he would have moved a censure motion that their activities were damaging the viability of the temple. The hon. Gentleman is a royal warrant holder, by appointment, as purveyor of damaging uncertainty to the United Kingdom.

He has done it time and time again. His most vigorous activities were between February 1974 and October 1974—which led to a larger Labour majority. He is the fund-raiser of the Conservative Party. Once one gets clear in one's mind that when the funds are low the hon. Gentleman is put on to move a motion of censure about public ownership, one understands what it is all about.

I do not recommend the House to pass the motion. What we have invited the House to do, by our amendment, is to endorse the developing strategy and the rôle of the National Enterprise Board and the importance of the tripartite discussions at the NEDC, which have given the trade unions a very much larger part in industrial policy-making, and to endorse again the principles and objectives of the Industry Act 1975.

The history of public ownership in the United Kingdom is very long. If I exclude what Henry VIII did in respect of the Church of England and move on to the Post Office, from then right on until today successive Governments of different parties have regularly brought essential industries into public ownership. Indeed, it was Mr. Winston Churchill —I shall quote from him shortly—who brought the Anglo-Persian Company into public ownership, and the Conservative Party has many companies to its credit. I think it was the Conservative Party which brought in electricity, the BBC and Imperial Airways before the war. The pressure for public ownership has usually come from the workers in the industries concerned. Certainly the coal miners campaigned from before the First World War to bring their industry into public ownership.

But more recently, the reason why, in our manifesto and in the industrial policy of the Government, we have returned with added interest to the rôle of public ownership is that we believe it to be relevant to the twin questions that concern this country. One is the chronic lack of investment that we have suffered since the war. The other is the poor industrial relations associated with that period.

Even in the period when the Conservatives were in power they tried everything they knew—and I do not blame them for it—including speeches up and down the country, to urge business men to invest, but there was a fall in investment when the Conservatives were in office. The poor industrial relations, which have been a part of our post-war history, culminating in the confrontation of February 1974, and the three-day working week, I suppose, must have been —[Interruption.]. It was the electorate that threw the right hon. Member for Sidcup (Mr. Heath) out of office. It was not the Conservative Party. It was the electors who rejected his policy.

This has been associated with a long period of relative decline and de-industrialisation. Any hon. Member, in his constituency capacity, who has had anything to do with manufacturing industry, knows that in sector after sector, lack of investment and poor industrial relations have gravely affected Britain's capacity to compete world wide.

Mr. Nicholas Winterton

Will the right hon. Gentleman give way?

Mr. Benn

The hon. Gentleman did not take part in the debate. He has attended only the last few moments of it.

Mr. Nicholas Winterton

That is not true.

Mr. Benn

Perhaps the hon. Gentleman will allow me to develop my case.

In West-Central Scotland, in Merseyside, in the North-East, in parts of Wales and now in the Midlands, more and more communities—not just workers and their families, but communities—are paying the price for a failure to deal with these two problems. There is no doubt that in the post-war years, the post-war boom in world trade coupled with the fact that British industry had not been destroyed as industry had been in many of our competitor countries, concealed the fact of our failure to invest adequately. When the oil price increase came in 1973, and we were struck by the world slump, that weakness was revealed.

It is not part of my argument to seek to blame managers, shareholders, workers, Ministers or Members of Parliament. We believe that what was wrong was a basic incapacity to deal with these problems. Successive Governments, including Conservative Governments have sought to deal with this problem by massive intervention in industry. There is no argument about that. They sought to deal with it by massive subsidies, regulations, incentives, inducements, grants, loans and controls. Indeed, both parties, if we are fair, have adopted methods of public ownership—admittedly mostly by the party of which I am a member—of coal, gas, railways, steel and the Bank of England, the last of which was not mentioned today. One would think that in a debate on banking we would have had a denunciation of the rôle of the Bank of England under public ownership, but not at all, although it was much argued about at the time that Hugh Dalton brought the legislation forward.

Whenever public ownership has come into industry, damaging uncertainty has been removed and massive investment programmes have taken place. If any hon. Member has ever bothered to speak to those who work in the public sector, he would recognise the pride which they have in their work. They would all say that there has been a higher level of technology, a higher level of public responsibility and a sense of service under which those in the nationalised industries work.

Mr. William Clark (Croydon, South)

rose—

Mr. Benn

The hon. Gentleman has not found it possible to attend the debate and I should like to be allowed to develop my argument. Public ownership was accepted, however grudgingly, by the Conservatives when in power. Apart from the halfhearted attempt to denationalise steel, the only thing they screwed up their courage to do was to give the Carlisle pubs back to the brewers in discharge of an old debt the Tory Party has always owed to that business. But, in general, the Conservatives have greeted and accepted public ownership and, as best they might, tried to work with it.

Of course they preferred to nationalise industries that lost money. That is why Rolls-Royce was brought in by them in 1972. Whenever they got industries nationalised they liked to force them to lose even more money, as they did by driving them into the red in the period from 1970 to 1974. They found that very convenient because forcing the nationalised industries to lose money served the twin purposes of subsidising the private sector with loss-making public services and of enabling them to use that as an argument against public ownership.

Of course, they added to that the most generous subsidies to the private sector direct. In the period during which the previous Conservative Government were in power, more than £700 million a year —£2 million a day—was being provided for the private sector. May I make this quite clear? The Labour Party and the Labour Government do not accept a public sector made unprofitable by Government action and a private sector made profitable by Government subsidy. That is not the basis on which we think these matters should be considered.

Mr. Ian Lloyd (Havant and Waterloo)

rose—

Mr. Benn

The hon. Gentleman also, unfortunately, missed the debate but Hansard will be available for him tomorrow.

Mr. Lloyd

On a point of order, Mr. Speaker. The right hon. Gentleman knows full well he is misleading the House by giving the impression that the private sector—

Mr. Speaker

Order. That is not a point of order.

Mr. Benn

The Opposition spokesmen today were a little too modest about their role in respect of public ownership and investment. The Conservatives brought Rolls-Royce into public ownership and they maintained the Giro which my right hon. Friend the Prime Minister as Chancellor of the Exchequer and I as Postmaster-General introduced in the previous Government. I am advised that Giro now has a turnover of about £25 million a year and meets a very real public need.

Mr. Hugh Dykes (Harrow, East)

roseߞ

Mr. Benn

The hon. Member for Harrow, East (Mr. Dykes), too, was detained elsewhere. Perhaps he will allow me to finish my speech.

Mr. Dykes

On a point of order, Mr. Speaker. I appreciate that any Minister has a right not to accept an intervention, but is it in order for a Minister to choose as his exclusive reason for not giving way the fact that an hon. Member was unable to be in the House?

Mr. Speaker

I never decide the reasons that Ministers give.

Mr. Benn

I was listing—

Mr. Dykes

roseߞ

Mr. Speaker

Order. The hon. Member for Stratford-on-Avon (Mr. Maude) who spoke from the Opposition Front Bench was heard in reasonable silence, at least when I was here. I hope that in the quarter of an hour that is left the House will listen to the Minister.

Mr. Benn

I was listing the achievements of the Conservative Party in terms of its relationship with the public sector. In the drugs sector, the Research and Development Corporation set up by my right hon. Friend the Member for Huyton (Sir H. Wilson) has made £32 million on the sale of cephalosporium, which is a public sector drug. The Conservatives forget that the right hon. and learned Member for Surrey, East (Sir G. Howe) came to the House and denounced the excessive profits of Hoffman La Roche. Everyone remembers the criticism by the Conservatives. It was the Prime Minister of the day who attacked the "unacceptable face of capitalism". It was the Conservatives who put £3,061 million during their four years in grants and subventions into the private sector. They passed the Industry Act 1972 which estab- lished a sort of public bank—that is what it was about—with the statutory power to take equity.

I pay tribute to the previous Conservative Government. In the period when I was Secertary of State I brought into public ownership by their legislation 62 companies, including subsidiary companies—Court Line, British Leyland, Ferranti, Alfred Herbert. I must pay one final tribute. The most successful cooperatives at Meriden and Kirkby were made possible by legislation introduced by the Department of Trade and Industry when the hon. Member for Henley was a Minister.

Mr. Michael Marshall

I am grateful to the right hon. Gentleman. I have been here thoughout the debate, as he knows During my speech I asked him to get away from the party political angle. Before he sits down will he speak to the motion on the Order Paper?

Mr. Benn

Not only was I not being party political, I was paying tribute to the legislation which we inherited that allowed us to extend public ownership so successfully before we were able to introduce our own Act.

Unfortunately, during the period of the previous Government investment slumped heavily and confidence drained away. I have referred to February 1974. It was against this background that the Labour Party worked on the industrial strategy that we are asking the House to endorse. It was based on two simple principles which I wish to put before the House. First, where money goes in on public account there should be public accountability of the appropriate public ownership. That was spelled out most clearly by my right hon. Friend the then Leader of the Opposition in his speech to the conference introducing the policy.

If that is found to be too controversial, let me choose the words of Mr. Churchill in his introduction of the Anglo-Persian Oil Bill in 1914, so that I do not offend against any of the rules. He said: We knew that by our contract we should confer upon the Anglo-Persian Company an immense advantage which, added to their concession, would enormously strengthen the company and increase the value of their property. If this consequence arose from the necessary action of the State, why should not the State share in the advantage which we created? If, in any case, we had to go so far, why should we not go a step further? Was it not wiser, was it not more profitable on every count, naval, financial and indeed equitable, to acquire control of an enterprise which we were bound to help and bound to enrich, which we alone could sustain, and on which, to a large extent, we must rely?"—[Official Report, 17th June 1914; Vol. 58, c. 1140.]

Mr. David Steel

roseߞ

Mr. Benn

I will certainly give way. It was for the hon. Gentleman's party that Mr. Churchill was then leading. I see that he does not wish to intervene after all. I do not know whether he was hoping that, were he not to succeed to the leadership of his party, he might follow Churchill to the leadership of another, but that would be entirely a matter for him.

The second principle upon which we fought the election was that those who invest their lives in industry have at least as much right to say how it is run as those who invest their money in it. That is another very old principle which is absolutely compatible with the earning of a surplus for investment, but—this is the point—if people are to tighten their belts to earn a surplus, they have a right to a say in how that surplus is spent.

It is on that basis that the TUC discussions with the Chancellor about the Budget, that the TUC rߞle at NEDC, that industrial strategy, that the planning agreements, that industrial democracy, that the rߞle of the unions in the development of industrial strategy in every industry in which they have a part—it is on that basis—

Mr. John Moore

roseߞ

Mr. Benn

Yes, I will give way. The hon. Gentleman spoke in the debate.

Mr. Moore

I not only spoke but have sat here throughout the debate. I appreciate the right hon. Gentleman's giving way. To the extent that I am not in a church at Oxford and not listening to a lecture and to the extent that he is not going to answer my detailed questions, would the right hon. Gentleman answer one simple question? Would he also commit on behalf of his Front Bench not to nationalise in the pharmaceutical, banking or insurance industries?

Mr. Benn

The hon. Gentleman is helping me along with my speech, but would he allow me to develop it in the way I think best?

Mr. Heseltine

roseߞ

Mr. Speaker

Order. I do not think that the Secretary of State was giving way.

Mr. Heseltine

roseߞ

Mr. Benn

roseߞ

Mr. Speaker

Order. It is no use proceeding like this. If the Secretary of State does not give way, the hon. Member for Henley (Mr. Heseltine) knows that the Minister still has the Floor.

Mr. Benn

roseߞ

Hon. Members

Give way.

Mr. Benn

It is somewhat discourteous of the hon. Member for Henley to seek to intervene before I am able to answer the question put to me by one of his hon. Friends. That answer would be that, as the Chancellor of the Duchy made quite clear, and as my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) consented and agreed in his comment, the Government have no plans in that direction.

Mr. Peter Rost (Derbyshire, South-East)

What about you?

Mr. Benn

At the same time, the hon. Member for Stratford-on-Avon, in his skilful presentation of the Labour Party constitution, made it clear that the role of the Labour Party in the outline and development of industrial policy is an important rôle and that, indeed, it would not be the first time that the party, in preparing for the work of a future Government, would contribute effectively—I mean effectively in the sense that it would happen—by proposals for the future.

Therefore I am confirming what the hon. Member said, if he wants to interrupt me, in saying that I would not go so far as to confirm what he said. He is right in saying that our constitution provides that, in the development of future policy, if the conference takes a view and a manifesto is drawn up and presented and the party wins the election and the House assents to the legislation, it would not be the first time that the Labour movement had contributed its policy to the future work of a future Labour Government.

Mr. Maude

We are, as the lawyers say, absolutely ad idem on this. Would the right hon. Gentleman just confirm this? It appeared that what he is now saying is that the Labour Party might decide in a future manifesto to introduce proposals in this respect. That is perfectly possible. But did I understand him to confirm what the Chancellor of the Duchy said—that it is not the present [...]5Governments intention to do anything of that kind in this Parliament?

Mr. Benn

I have answered the question. The speech by my right hon. Friend the Chancellor of the Duchy of Lancaster on public ownership requires to be examined overnight by the House. [HON. MEMBERS: "Oh."] I have confirmed what he said. I adopt exactly the words that he used when he was asked to comment on the words of my right hon. Friend the Chancellor of the Exchequer when the same question was put to him. I have answered the question and I have confirmed, as my hon. Friend the Member for Liverpool, Walton has confirmed, that the Government have no plans in that direction.

I am sorry that the debate has prevented us from discussing some of the problems of the existing nationalised industries which employ 1,750,000 people and are responsible for 20 per cent. of our gross domestic product.

I conclude by saying that the way in which the argument is presented by the Opposition in all these debates is as if the whole threat to British industry lay in Reds under the bed or trade unionists dominating the House of Commons, the Labour Party or country. The reality is very different, and the Opposition cannot accept the truth. The truth is that their analysis of how the British economy should work does not conform to the experience of our people. That is where their real weakness lies.

The Opposition have had to make so many adjustments to their commitment to the ideas of Adam Smith that they are, in effect, trying to amend the Ptolemaic theory of astronomy when there is a Copernican theory now emerging. It is no use the Opposition believing that they can go on kidding the British people, believing that by patching and an ideological commitment to a system which they do not even use when in power they will be able to drive back from our people the desire for greater public accountability, greater public responsibility and higher qualities of public service, and the desire to use the public sector—be it the National Enterprise Board or the Welsh or Scottish Development Agencies—to try to harness public investment to deal with the problems of unemployment.

The debate has wholly failed in the sense that the Opposition have sought in some way to raise a fear for their

own purposes. The Labour Party won the last two elections on an open programme of public ownership. We have never concealed from the public our views on the desirability of public responsibility and the extension of public ownership. When today's debate is carefully studied by those who follow these matters, it will confirm the wisdom of our work and analysis and give greater encouragement to its progress.

Question put, That the amendment be made:—

The House divided: Ayes 284. Noes 274.

Division No. 148.	AYES	10.00 p.m.
Abse, Leo	Dean, Joseph (Leeds West)	Hughes, Roy (Newport)
Allaun, Frank	Dell, Rt Hon Edmund	Hunter Adam
Anderson, Donald	Dempsey, James	Irvine, Rt Hon Sir A. (Edge H[...]ll)
Archer, Peter	Doig, Peter	Irving, Rt Hon S. (Dartford)
Armstrong, Ernest	Dormand, J. D.	Jackson, Colin (Brighouse)
Ashley, Jack	Douglas-Mann, Bruce	Jackson, Miss Margaret (Lincoln)
Atkins, Ronald (Preston N)	Duffy, A. E. P	Janner, Greville
Bagier, Gordon A. T.	Dunn, James A.	Jay, Rt Hon Douglas
Barnett, Guy (Greenwich)	Dunnett, Jack	Jeger, Mrs Lena
Barnett, Rt Hon Joel (Heywood)	Eadie, Alex	Jenkins, Hugh (Putney)
Bates, Alf	Edge, Geoff	Jenkins, Rt Hon Roy (Stechford)
Bean, R. E.	Edwards, Robert (Wolv SE)	John, Brynmor
Benn, Rt Hon Anthony Wedgwood	Ellis, John (Brigg & Scun)	Johnson, James (Hull West)
Bennett, Andrew (Stockport N)	English, Michael	Johnson, Walter (Derby S)
Bishop, E. S.	Ennals, David	Jones, Barry (East Flint)
Blenkinsop, Arthur	Evans, Fred (Caerphilly)	Jones, Dan (Burnley)
Boardman, H.	Evans, Ioan (Aberdare)	Judd, Frank
Booth, Rt Hon Albert	Ewing Harry (Stirling)	Kaufman, Gerald
Bottomley, Rt Hon Arthur	Faulds, Andrew	Kelley, Richard
Boyden, James (Bish Auck)	Fernyhough, Rt Hon E.	Kilroy-Silk, Robert
Bradley, Tom	Fitt, Gerard (Belfast W)	Kinnock, Neil
Bray, Dr Jeremy	Flannery, Martin	Lamond, James
Broughton, Sir Alfred	Fletcher, Raymond (Ilkeston)	Latham, Arthur (Paddington)
Brown, Hugh D. (Provan)	Fletcher, Ted (Darlington)	Leadbitter, Ted
Brown, Robert C. (Newcastle W)	Foot, Rt Hon Michael	Lee, John
Brown, Ronald (Hackney S)	Ford, Ben	Lestor, Miss Joan (Eton & Slough)
Buchan, Norman	Forrester, John	Lever, Rt Hon Harold
Buchanan, Richard	Fowler, Gerald (The Wrekin)	Lewis, Arthur (Newham N)
Butler, Mrs Joyce (Wood Green)	Fraser, John (Lambeth, N'w'd)	Lewis, Ron (Carlisle)
Callaghan, Rt Hon J. (Cardiff SE)	Freeson, Reginald	Lipton, Marcus
Callaghan, Jim (Middleton & P)	Garrett, John (Norwich S)	Litterick, Tom
Campbell, Ian	Garrett, W. E. (Wallsend)	Lomas, Kenneth
Canavan, Dennis	George, Bruce	Loyden, Eddie
Cant, R. B.	Gilbert, Dr John	Luard, Evan
Carmichael, Neil	Ginsburg, David	Lyon, Alexander (York)
Carter, Ray	Golding, John	Lyons, Edward (Bradford W)
Carter-Jones, Lewis	Gould, Bryan	Mabon, Dr J. Dickson
Cartwright, John	Gourlay, Harry	McCartney, Hugh
Castle, Rt Hon Barbara	Graham, Ted	McElhone, Frank
Clemitson, Ivor	Grant, George (Morpeth)	MacFarquhar, Roderick
Cocks, Michael (Bristol S)	Grant, John (Islington C)	McGuire, Michael (Ince)
Cohen, Stanley	Grocott, Bruce	Mackenzie, Gregor
Colquhoun, Ms Maureen	Hamilton, James (Bothwell)	Mackintosh, John P.
Cook, Robin F. (Edin C)	Harper, Joseph	Maclennan, Robert
Corbett, Robin	Harrison, Walter (Wakefield)	McMillan, Tom (Glasgow C)
Cox, Thomas (Tooting)	Hart, Rt Hon Judith	McNamara, Kevin
Craigen, J. M. (Maryhill)	Hattersley, Rt Hon Roy	Madden, Max
Crawshaw, Richard	Hatton, Frank	Magee, Bryan
Cronin, John	Hayman, Mrs Helene	Maguire, Frank (Fermanagh)
Cryer, Bob	Healey, Rt Hon Denis	Mahon, Simon
Cunningham, G. (Islington S)	Heffer, Eric S.	Mallalieu, J. P. W.
Cunningham, Dr J. (Whiteh)	Hooley, Frank	Marks, Kenneth
Davidson, Arthur	Horam, John	Marquand, David
Davies, Bryan (Enfield N)	Howell, Rt Hon Denis	Marshall, Dr Edmund (Goole)
Davies, Denzil (Llanelli)	Hoyle, Doug (Nelson)	Marshall, Jim (Leicester S)
Davies, Ifor (Gower)	Huckfield, Les	Mason, Rt Hon Roy
Davis, Clinton (Hackney C)	Hughes, Rt Hon C. (Anglesey)	Maynard, Miss Joan
Deakins, Eric	Hughes, Robert (Aberdeen N)	Meacher, Michael
Mellish, Rt Hon Robert	Roberts, Gwilym (Cannock)	Thorne, Stan (Preston South)
Mendelson, John	Robinson, Geoffrey	Tierney, Sydney
Mikardo, Ian	Roderick, Caerwyn	Tinn, James
Millan, Bruce	Rodgers, George (Chorley)	Tomlinson, John
Miller, Mrs Millie (Ilford N)	Rodgers, William (Stockton)	Tomney, Frank
Mitchell, R. C. (Soton, Itchen)	Rooker, J. W.	Torney, Tom
Molloy, William	Roper, John	Urwin, T. W.
Moonman, Eric	Rose, Paul B.	Varley, Rt Hon Eric G.
Morris, Alfred (Wythenshawe)	Ross, Rt Hon W. (Kilmarnock)	Wainwright, Edwin (Dearne V)
Morris, Charles R. (Openshaw)	Rowlands, Ted	Walden, Brian (B'ham, L'dyw'd)
Morris, Rt lion J. (Aberavon)	Sandelson, Neville	Walker, Harold (Doncaster)
Moyle, Roland	Sedgemore, Brian	Walker, Terry (Kingswood)
Mulley, Rt Hon Frederick	Selby, Harry	Ward, Michael
Murray, Rt Hon Ronald King	Shaw, Arnold (Ilford South)	Watkins, David
Newens, Stanley	Sheldon, Robert (Ashton-u-Lyne)	Weetch, Ken
Noble, Mike	Shore, Rt Hon Peter	Weitzman, David
Oakes, Gordon	Short, Rt Hon E. (Newcastle C)	Wellbeloved, James
Ogden, Eric	Silkin, Rt Hon John (Deptford)	White, Frank R. (Bury)
O'Halloran, Michael	Silkin, Rt Hon S. C. (Dulwich)	White, James (Pollok)
Orbach, Maurice	Sillars, James	Whitlock, William
Orme, Rt Hon Stanley	Silverman, Julius	Willey, Rt Hon Frederick
Ovenden, John	Skinner, Dennis	Williams, Alan (Swansea W)
Owen, Dr David	Small, William	Williams, Alan Lee (Hornch'ch)
Padley, Walter	Smith, John (N Lanarkshire)	Williams, Rt Hon Shirley (Hertford)
Palmer, Arthur	Snape, Peter	Williams, Sir Thomas
Park, George	Spearing, Nigel	Wilson, Alexander (Hamilton)
Parker, John	Spriggs, Leslie	Wilson, Rt Hon H. (Huyton)
Parry, Robert	Stallard, A. W.	Wilson, William (Coventry SE)
Pavitt, Laurie	Stewart, Rt Hon M. (Fulham)	Wise, Mrs Audrey
Peart, Rt Hon Fred	Stoddart, David	Woodall, Alec
Perry, Ernest	Stott, Roger	Woof, Robert
Phipps, Dr Colin	Strang, Gavin	Wrigglesworth, Ian
Prentice, Rt Hon Reg	Strauss, Rt Hn G. R.	Young, David (Bolton E)
Price, William (Rugby)	Summerskill, Hon Dr Shirley
Radice, Giles	Taylor, Mrs Ann (Bolton W)	TELLERS FOR THE AYES:
Rees, Rt Hon Merlyn (Leeds S)	Thomas, Jeffrey (Abertillery)	Mr. Donald Coleman and
Richardson, Miss Jo	Thomas, Mike (Newcastle E)	Mr. Tom Pendry.
Roberts, Albert (Normanton)	Thomas, Ron (Bristol NW)
NOES
Adley, Robert	Cooke, Robert (Bristol W)	Goodhart, Philip
Aitken, Jonathan	Cope, John	Goodhew, Victor
Alison, Michael	Cormack, Patrick	Goodlad, Alastair
Amery, Rt Hon Julian	Corrie, John	Gorst, John
Arnold, Tom	Costain, A. P.	Gower, Sir Raymond (Barry)
Atkins, Rt Hon H. (Spelthorne)	Crouch, David	Grant, Anthony (Harrow C)
Awdry, Daniel	Crowder, F. P.	Gray, Hamish
Bain, Mrs Margaret	Davies, Rt Hon J. (Knutsford)	Griffiths, Eldon
Baker, Kenneth	Dean, Paul (N Somerset)	Grimond, Rt Hon J.
Banks, Robert	Dodsworth, Geoffrey	Grist, Ian
Beith, A. J.	Douglas-Hamilton, Lord James	Grylls, Michael
Bell, Ronald	Drayson, Burnaby	Hall, Sir John
Bennett, Dr Reginald (Fareharn)	du Cann, Rt Hon Edward	Hall-Davis, A. G. F.
Benyon, W.	Dunlop, John	Hamilton, Michael (Salisbury)
Berry, Hon Anthony	Durant, Tony	Hampson, Dr Keith
Biffen, John	Dykes, Hugh	Harvie Anderson, Rt Hon Miss
Biggs-Davison, John	Eden, Rt Hon Sir John	Hastings, Stephen
Blaker, Peter	Edwards, Nicholas (Pembroke)	Havers, Sir Michael
Body, Richard	Elliott, Sir William	Hawkins, Paul
Boscawen, Hon Robert	Emery, Peter	Hayhoe, Barney
Bottomley, Peter	Evans, Gwynfor (Carmarthen)	Heath, Rt Hon Edward
Bowden, A. (Brighton, Kemptown)	Ewing, Mrs Winifred (Moray)	Heseltine, Michael
Boyson, Dr Rhodes (Brent)	Eyre, Reginald	Hicks, Robert
Bradford, Rev Robert	Fairbairn, Nicholas	Higgins, Terence L.
Braine, Sir Bernard	Fairgrieve, Russell	Holland, Philip
Britten, Leon	Farr, John	Hooson, Emlyn
Brocklebank-Fowler, C.	Fell, Anthony	Hordern, Peter
Brotherton, Michael	Finsberg, Geoffrey	Howe, Rt Hon Sir Geoffrey
Brown, Sir Edward (Bath)	Fisher, Sir Nigel	Howell, David (Guildford)
Bryan, Sir Paul	Fletcher-Cooke, Charles	Howells, Geraint (Cardigan)
Buchanan-Smith. Alick	Fookes, Miss Janet	Hunt, David (Wirral)
Budgen, Nick	Forman, Nigel	Hunt, John
Bulmer, Esmond	Fowler, Norman (Sutton C'f'd)	Hurd, Douglas
Burden, F. A.	Fox, Marcus	Hutchison, Michael Clark
Butler, Adam (Bosworth)	Fraser, Rt Hon H. (Stafford & St)	Irving, Charles (Cheltenham)
Carlisle, Mark	Freud, Clement	Jenkin, Rt Hon P.(Wanst'd & W'df'd)
Carson, John	Fry, Peter	Jessel, Toby
Chalker, Mrs Lynda	Galbraith, Hon. T. G. D.	Johnson Smith, G. (E Grinstead)
Churchill, W. S.	Gardiner, George (Reigate)	Johnston, Russell (Inverness)
Clark, Alan (Plymouth, Sutton)	Gardner, Edward (S Fylde)	Jones, Arthur (Daventry)
Clark, William (Croydon S)	Gilmour, Rt Hon Ian (Chesham)	Jopling, Michael
Clarke, Kenneth (Rushcliffe)	Gilmour, Sir John (East Fife)	Joseph, Rt Hon Sir Keith
Clegg, Walter	Glyn, Dr Alan	Kershaw, Anthony
Cockcroft, John	Godber, Rt Hon Joseph	Kimball, Marcus

King, Evelyn (South Dorset)	Morrison, Hon Peter (Chester)	Spicer, Jim (W Dorset)
King, Tom (Bridgwater)	Mudd, David	Spicer, Michael (S Worcester)
Kitson, Sir Timothy	Neave, Airey	Sproat, lain
Knight, Mrs Jill	Nelson, Anthony	Stainton, Keith
Knox, David	Newton, Tony	Stanbrook, Ivor
Lamont, Norman	Nott, John	Stanley, John
Lane, David	Onslow, Cranley	Steel, David(Roxburgh)
Langford-Holt, Sir John	Oppenheim, Mrs Sally	Steen, Anthony(Wavertree)
Latham, Michael (Melton)	Page, John (Harrow West)	Stewart, Donald (Western Isles)
Lawrence, Ivan	Page, Rt Hon R. Graham (Crosby)	Stewart, Ian (Hitchin)
Lawrence, Ivan	Page, Rt Hon R. Graham (Crosby)	Stewart, Ian (Hitchin)
Lawson, Nigel	Pardoe, John	stokes, John
Lester, Jim (Beeston)	Pattie, Geoffrey	stonenouse, Rt Hon John
Lewis, Kenneth (Rutland)	Penhaligon, David	Stradling Thomas, J.
Lloyd, Ian	Percival, Ian	Tapsell, Peter
Loveridge, John	Peyton, Rt Hon John	Taylor, R. (Croydon NW)
Luce, Richard	Pink, R. Bonner	Taylor, Teddy (Cathcart)
McAdden, Sir Stephen	Price, Rt Hon J. Enoch	Tebbit, Norman
McAdden, sir Stephen	Powell, Rt Hon J. Enoch	Tebbit, Norman
MacCormick, lain	Price, David (Eastleigh)	Temple-Morris, Peter
McCrindle, Robert	Prior, Rt Hon James	Thatcher, Rt Hon Margaret
McCusker, H.	Raison, Timothy	Thomas, Rt Hon P. (Hendon S)
Macfarlane, Neil	Rathbone, Tim	Thompson, George
MacGregor, John	Rawlinson, Rt Hon Sir Peter	Townsend, Cyril D.
Macmillan, Rt Hon M. (Farnham)	Rees, Peter (Dover & Deal)	Trotter, Neville
McNair-Wilson, M. (Newbury)	Reid, George	Tugendhat, Christopher
McNair-Wilson, P. (New Forest)	Renton, Rt Hon Sir D. (Hunts)	van Straubenzee, W. R.
Madel, David	Renton, Tim (Mid-Sussex)	Vaughan, Dr Gerard
Marshall, Michael (Arundel)	Ridley, Hon Nicholas	Wakeham, John
Marten, Neil	Ridsdale, Julian	Walder, David (Clitheroe)
Mates, Michael	Rifkind, Malcolm	Walker, Rt Hon P.(Worcestor)
Mather, Carol	Rippon, Rt Hon Geoffrey	Walker-Smith, Rt Hon Sir Derek
Maude, Angus	Roberts, Michael (Cardiff NW)	Wall, Patrick
Maudling, Rt Hon Reginald	Roberts, Wyn (Conway)	Walters, Dennis
Mawby, Ray	Rodgers, Sir John (Sevenoaks)	Watt, Hamish
Maxwell-Hyslop, Robin	Ross, William (Londonderry)	Weatherill, Bernard
Mayhew, Patrick	Rossi, Hugh (Hornsey)	Wells, John
Meyer, Sir Anthony	Rost, Peter (SE Derbyshire)	Welsh, Andrew
Miller, Hal (Bromsgrove)	Royle, Sir Anthony	Whitelaw, Rt Hon William
Mills, Peter	Sainsbury, Tim	Wiggin, Jerry
Miscampbell, Norman	St. John-Stevas, Norman	Wigley, Dafydd
Mitchell, David (Basingstoke)	Scott, Nicholas	Wilson, Gordon (Dundee E)
Moate, Rogger	Shelton, William (Streatham)	Winterton, Nicholas
Molyneaux, James	Shepherd, Colin	Wood, Rt Hon Richard
Monro, Hector	Shersby, Michael	Young, Sir G. (Ealing, Acton)
Montgomery, Fergus	Silvester, Fred	Younger, Hon George
Moore, John (Croydon C)	Sims, Roger
More, Jasper (Ludlow)	Sinclair, Sir George,	TELLERS FOR THE NOES:
Morgan, Geraint	Skeet, T.H.H.	Mr. Spencer Le Marchant and
Morris, Michael (Northampton S)	Smith, Dudley (Warwick)	Mr. Cecil Parkinson.
Morrison, Charles (Devizes)	Speed, Keith

Question accordingly agreed to.

Main Question, as amended, put and agreed to.

Resolved, That this House believes that it is in the best interests of British Industry and the Nation that the Government should continue to develop its industrial strategy in accordance with the principles and objectives of the Industry Act; and welcomes the constructive contribution already made to this work by the National Enterprise Board and the discussions on the Industrial Strategy at the NEDC.

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1. BUSINESS OF THE HOUSE 45 words
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2. EEC DOCUMENTS (PROCEDURE) 22,802 words
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3. HOUSING (EDINBURGH) 3,934 words
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4. Second Reading Committee 133 words
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5. COMPANIES (No. 2) BILL [Lords] 19,197 words