§ Mr. SpeakerOrder. Will hon. Members please leave the Chamber quietly. I suggest that the hon. Member for Nelson and Colne (Mr. Hoyle) waits a moment before speaking.
§ 3.31 p.m.
§ Mr. Doug Hoyle (Nelson and Colne)I beg to move,
That leave be given to bring in a Bill to make provision for an Inward Investment Board.
1096 The reason for bringing this Bill forward is that inward investment into the United Kingdom has become massive. In 1974 it amounted to £2.28 billion, in 1975 it was £1.80 billion and in 1976 it increased again to £2.12 billion. There seems to be an idea in this country that all investment is good and that there is no difference between domestic investment and that from overseas. Other countries do not have such a rosy picture of investment, particularly inward investment. If we followed the example of other countries, such as Australia, New Zealand, Canada and the United States, we should be setting up an inward investment board. All those countries have such a body which monitors investment coming in from outside to discover whether it is good or bad.
We need such a board even more than most countries because of the number of multinational companies that operate in this country. It is quite obvious to anyone who examines the matter that investment by multinational companies is quite different from domestic investment. We must ask ourselves why such investment is made. There is no rule applied about why a multinational company may decide to invest in this country rather than any other. We should ask ourselves why the investment is made. Is it to make a profit, to establish a staging post as a loss operation, for transfer pricing or do such companies come to this country to take advantage of any regional aids or incentives? The problem can be summed up by saying that multinaional companies are global optimisers. They are like the atoms in a molecule. They come in and change the molecule slightly and then go away again. We should put a stop to such operations.
If we examine the investment that is coming into this country, we discover that much is being put into property and gambling, that some goes into manufacturing, and that a lot of it—and one must admit that the same can be said of domestic investment—is candyfloss investment. No examination is made to discover whether the inward investment is good for the nation as a whole. But we should do that because in the past—and I expect that it will continue in the future—companies have entered the country to act as Trojan horses. A company can set up a factory in this country and take over the 1097 market by selling at a loss. Once it has captured the market—often with Government help—it can then withdraw and import all that it requires into the market because it has destroyed the home industry. That can no longer be tolerated.
Before I came to the House today I looked up the ways in which we examine new investment. The existing mechanisms for examining such investment are diffuse, weak and basically financial rather than resource orientated. There are 10 bodies involved in such examination, but only one of them, the Foreign Exchange Control Committee, has any power over virgin investment, and that body is generally concerned about takeovers. The criteria that it uses are not generally known because they are not published. I suggest that they are financial criteria, because this is one of the quickest acting of all the Government bodies. However, I am as much in the dark as other hon. Members about the criteria—as indeed are the companies that wish to invest in this country.
Whenever any control is attempted over inward investment it is unenforceable. We need only to cast our minds back to what happened about Chrysler and Rootes and about Philips and Pye to realise that not much notice is taken of whatever is said. The Stener Report commented on this four years ago:
The major conclusion which emerges is that the existing institutional arrangements in the United Kingdom are not adequate for properly monitoring the activities of foreign-owned firms.That was four years ago, yet no steps have been taken. The only thing that has happened is that the Labour Party Programme 1976—and I know that the Labour Party Treasurer, my hon. Friend the Member for Tottenham (Mr. Atkinson) is listening—argued for a board to perform this and other such functions. I and some of my hon. Friends, including my hon. Friend the Member for Burnley (Mr. Jones), attacked the Hitachi case where a company wishes to come into this country to manufacture television sets. We do not know the criteria that are being applied. Is the company's proposal being examined from the point of view of job creation and loss, because such things should be looked at? Will such a company create a few hundred 1098 jobs in this country at the expense of the loss of many thousands of jobs in the domestic industry? That is the sort of case that an inward investment board should examine, and with those criteria in mind.We have already seen examples of such a case with Litton Industries and Imperial Typewriters. The factory eventually closed and many people were thrown out of work. The philosophy of the board in examining such matters should be the same as that of the Canadian board. It should consider what would be the significant benefit to the economy of the country and whether any damage to existing industry would be caused. Some of my hon. Friends are saying that the social benefit should also be considered, and it is indeed absolutely imperative that we should look at the social benefit.
At present, no criteria are applied except financial criteria and the belief that all investment must be good for the economy of this country. That is wrong, and I hope that the House will agree to set up an inward investment board and will bear in mind that it is no use having new investment that will create 50 jobs in our economy today, only for us to find a few months later that we are losing 500 or more jobs.
Any Government that terms itself Socialist must plan inward investment, and that is why it is urgent that we should follow the example of other countries and set up this board without further delay.
§ 3.41 p.m.
§ Mr. John MacGregor (Norfolk, South) rose——
§ Mr. SpeakerIs the hon. Gentleman seeking to oppose the Bill?
§ Mr. MacGregorYes, Mr. Speaker. Because of the heavy business ahead of us, I shall do so briefly. I shall give three reasons, in ascending order of importance, why it would be wrong to allow the Bill to be brought in.
First, we all agree that we need as much new investment as we can get. This is one of our major problems. The use made of existing investment is an even more serious problem, but there is general agreement that we want much greater investment. The speech of the hon. Member for Nelson and Colne (Mr. 1099 Hoyle) was so unbalanced that he drew attention to a few cases, some of which could be much disputed, but gave no indication of the enormous benefits that foreign investment has brought here in the past 30 years. We should be grateful for that investment.
It is strange that, in their paranoia about multinational companies, hon. Members opposite of the persuasion of the hon. Member for Nelson and Colne are prepared to accept all the benefits of North Sea oil and the enormous investment that multinational companies are continuing to put into that, yet continually deride those companies for their work.
We receive benefits not just in terms of investment and jobs—though they are extremely important in the overall balance—but because foreign investment has also given us more new and lasting jobs than the job creation scheme and other schemes contrived by the Government. They often bring other benefits, too. I shall refer to only one. They bring better management techniques to the running of companies in this country. I have a good example in my constituency of a foreign-controlled company that admittedly came here partly on financial criteria—to make a profit; and how right the company was to do that—but at the same time brought new management techniques and is among the best employers in my constituency, having lifted the whole atmosphere of employee relations compared with some more traditional firms.
It needs to be put on the record that many overseas companies who have brought in domestic subsidiaries and massive investment are among the best employers in this country. It is too simplistic to suggest that, shortly after coming here, some overseas companies declare redundancies. There are cases where this has happened many years after the initial investment, but it is frequently because of technological changes, and if the company had remained in the hands of a United Kingdom board of directors the same difficulties over redundancies would have arisen. The hon. Member for Nelson and Colne referred to the Pye company, and that is a good example of what I have been saying.
I want to see more foreign as well as domestic investment and for us to put the minimum number of extra obstacles—and 1100 I emphasise "extra"—in the way of those new investments. The proposed board would be yet another contribution to frightening them away from this country at a time when overseas confidence in the United Kingdom is so fragile. The Bill is another example of the fortress mentality of the Left and is similar to its constant demands for import controls as a way of solving our problems. I hope that the House will make it clear that it does not support this mentality.
My second reason for opposing the Bill is that we have a wider range of controls than the hon. Member for Nelson and Colne suggested. He failed to mention the Monopolies and Mergers Commission, the Director-General of Fair Trading and the fact that when regional grants and aids or other grants are sought by overseas subsidiary companies, the Government and their Departments have control of over what the companies do with the grants. I have another example of this near my constituency. A recent potential takeover by an American firm was referred to the Commission to make sure that a proper view was taken of the whole operation. There are existing controls, and I do not want to see them added to by a much bigger new board.
My final and most important reason is my objection to the rationale behind the introduction of the Bill by the hon. Gentleman and his colleagues. The hon. Gentleman made his motives clear. He objects to regional aids going to companies bringing in their own investment. He objects to their making profits and building up their operations and providing new jobs for this country and is deeply paranoid about multinational companies.
I am not suggesting that everything is perfect, but the objective of the hon. Member for Nelson and Colne is to bring in a totally different system under which all investment would be directed by himself and his friends for political reasons. [HON. MEMBERS: "Hear, hear."] I am glad to hear his hon. Friends making that clear by their response to what I have said. They would direct investment for political reasons and not for reasons of profit, the creation of lasting jobs or anything of that sort. When hon. Members opposite talk about social return, they forget that they will frighten any new investors if they see that the trend in this 1101 country is towards the direction of investment for purely political reasons. We shall not get the creation of lasting jobs in that way.
The Bill is part of a whole trend. The hon. Member for Nelson and Colne and his friends want to nationalise the banks and insurance companies so that their investment funds can be directed by a small group of politicians. They want to get a trade union majority on the boards of occupational pensions funds for the same purpose. They believe in much higher taxation of profitable firms so that the resources can go to organisations that they run rather than on ensuring that investment is properly directed. They are arguing the case for an inward investment board on the same grounds—that existing institutions have failed and that they would know how to control them better.
This is not the moment to go into the whole question of what is before the Committee set up under the chairmanship of the right hon. Member for Huyton (Sir H. Wilson), but it is interesting to note that most of the organisations giving
| Division No. 156] | AYES | [3.48 p.m. |
| Allaun, Frank | Evans, loan (Aberdare) | McDonald, Dr Oonagh |
| Archer, Rt Hon Peter | Fernyhough, Rt Hon E. | McElhone, Frank |
| Armstrong, Ernest | Fitch, Alan (Wigan) | MacFarquhar, Roderick |
| Ashley, Jack | Flannery, Martin | MacKenzie, Rt Hon Gregor |
| Ashton, Joe | Fletcher, Ted (Darlington) | McMillan, Tom (Glasgow C) |
| Atkins, Ronald (Preston N) | Foot, Rt Hon Michael | Madden, Max |
| Atkinson, Norman | Forrester, John | Magee, Bryan |
| Barnett, Guy (Greenwich) | Fowler, Gerald (The Wrekin) | Mallalieu, J. P. W. |
| Bates, Alf | Garrett, John (Norwich S) | Marks, Kenneth |
| Benn, Rt Hon Anthony Wedgwood | George, Bruce | Marshall, Dr Edmund (Goole) |
| Bidwell, Sydney | Gilbert, Dr John | Maynard, Miss Joan |
| Blenkinsop, Arthur | Golding, John | Mendelson, John |
| Bray, Dr Jeremy | Graham, Ted | Mikardo Ian |
| Brown, Hugh D. (Provan) | Grant, George (Morpeth) | Millan, Rt Hon Bruce |
| Buchan, Norman | Grant, John (Islington C) | Miller Dr M. S (E Kilbride) |
| Callaghan, Jim (Middleton & P) | Grocott, Bruce | Mitchell, Austin Vernon (Grimsby) |
| Campbell, Ian | Hamilton, James (Bothwell) | Molloy William |
| Canavan, Dennis | Harper, Joseph | Morris, Charles R. (Openshaw) |
| Carmichael, Neil | Harrison, Rt Hon Walter | Noble Mike |
| Cartwright, John | Hatton, Frank | Orme, Rt Hon Stanley |
| Clemitson, Ivor | Hayman, Mrs Helene | Ovenden John |
| Cocks, Rt Hon Michael | Heffer, Eric S. | Padley, Walter |
| Coleman, Donald | Hoyle, Doug (Nelson) | Palmer, Arthur |
| Colquhoun, Ms Maureen | Huckfield, Les | Pavitt, Laurie |
| concannon, J. D. | ||
| Conlan, Harry | Hughes, Robert (Aberdeen N) | Prescott, John |
| Corbett, Robin | Hughes, Roy (Newport) | Price, William (Rugby) |
| Cowans Harry | Hunter, Adam | Radice, Giles |
| Cox, Thomas (Tooting) | Jeger, Mrs Lena | Rees, Rt Hon Merlyn (Leeds S) |
| Crowther, Stan (Rotherham) | Jenkins, Hugh (Putney) | Richardson, Miss Jo |
| Davidson Arthur | Jones, Alec (Rhondda) | Roberts, Gwilym (Cannock) |
| Davies Bryan (Enfield N) | Jones, Barry (East Flint) | Robinson, Geoffrey |
| Dean, Joseph (Leeds West) | Jones, Dan (Burnley | Roderick, Caerwyn |
| Dempsey, James | Kelley, Richard | Rodgers, George (Chorley) |
| Doig, Peter | Kilroy-Silk, Robert | Rooker, J.W. |
| Dormand, J. D. | Kilroy-SiIk, Robert | Ross, Rt Hon W. (Kilmarnock) |
| Douglas-Mann, Bruce | Kinnock, Neil | Rowlands, Ted |
| Duffy A. E. P. | Lamond, James | Ryman, John |
| Eadie Alex | Latham, Arthur (Paddington) | Sandelson, Neville |
| Edge, Geoff | Lestor, Miss Joan (Eton & Slough) | Sedgemore, Brian |
| Ellis, John (Brigg & Scun) | Lewis, Ron (Carlisle) | Selby, Harry |
| English, Michael | Lipton, Marcus | Shaw, Arnold (llford South) |
| Ennals, David | Loyden, Eddie | Short, Mrs Renee (Wolv NE) |
| Evans, Fred (Caerphilly) | McCartney, Hugh | Sillars, James |
§ evidence to that Committee are drawing attention to the true reasons that investment is not taking place on the scale required, one of the most important of which is the dramatic decline in the rate of return on capital, which gives no encouragement to investors to invest, and not to this sort of spurious reason.
§ I hope that the Bill will not be supported by the Government and will not be part of the Lib-Lab pact. I hope that the Liberals will not support it. I shall divide the House in an attempt to prevent leave being given to introduce the Bill, thus enabling potential overseas investors to see that the trend of thinking to which I have referred does not have the support of the House and will not be part of British policy for the next 10 or 20 years at least.
§ Question put, pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of Public Business):—
§ The House divided: Ayes 161 Noes 176.
| Silverman, Julius | Tierney, Sydney | White, James (Pollok) |
| Skinner, Dennis | Tinn, James | Williams, Alan Lee (Hornch'ch) |
| Small, William | Torney, Tom | Wise, Mrs Audrey |
| Snape, Peter | Tuck, Raphael | Woodall, Alec |
| Spearing, Nigel | Wainwrighl, Edwin (Dearne V) | Woof, Robert |
| Stallard, A. W. | Walker, Harold (Doncaster) | Wrigglesworth, Ian |
| Stewart, Rt Hon M. (Fulham) | Walker, Terry (Kingswood) | Young, David (Bolton E) |
| Stoddart, David | Ward, Michael | |
| Summerskill, Hon Dr Shirley | Watkins, David | TELLERS FOR THE AYES: |
| Swain, Thomas | Weetch, Ken | Mr. Ron Thomas and |
| Taylor, Mrs Ann (Bolton W) | Weltzman, David | Mr. Stan Thorne. |
| Thomas, Mike (Newcastle E) | White, Frank R. (Bury) |
| NOES | ||
| Adley, Robert | Harvie Anderson, Rt Kon Miss | Powell, Rt Hon J. Enoch |
| Amery, Rt Hon Julian | Havers, Rt Hon Sir Michael | Price, David (Eastleigh) |
| Atkins, Rt Hon H. (Spelthorne) | Hayhoe, Barney | Prior, Rt Hon James |
| Awdry, Daniel | Hicks, Robert | Pym, Rt Hon Francis |
| Bain, Mrs Margaret | Hlggins, Terence L. | Raison, Timothy |
| Berry, Hon Anthony | Holland, Philip | Rathbone, Tim |
| Biffen, John | Hordern, Peter | Rees, Peter (Dover & Deal) |
| Biggs-Davison, John | Howe, Rt Hon Sir Geoffrey | Rees-Davies, W. R. |
| Blaker, Peter | Howell, David (Guildford) | Renton, Rt Hon Sir D. (Hunts) |
| Body, Richard | Howells, Geraint (Cardigan) | Renton, Tim (Mid-Sussex) |
| Boscawen, Hon Robert | Kurd, Douglas | Rhodes James, R. |
| Bowden, A. (Brighton, Kemptown) | James, David | Ridley, Hon Nicholas |
| Boyson, Dr Rhodes (Brent) | Johnson Smith, G. (E Grinstead) | Ridsdale, Julian |
| Braine, Sir Bernard | Johnston, Russell (Inverness) | Rlfklnd, Malcolm |
| Brittan, Leon | Joseph, Rt Hon Sir Keith | Roberts, Michael (Cardiff NW) |
| Brocklebank-Fowler, C. | Kershaw, Anthony | Roberts, Wyn (Conway) |
| Brooke, Peter | King, Evelyn (South Dorset) | Ross, Stephen (Isle of Wight) |
| Brown, Sir Edward (Bath) | Kitson, Sir Timothy | Rossi, Hugh (Hornsey) |
| Buchanan-Smith, Alick | Knox, David | Rost, Peter (SE Derbyshire) |
| Buck, Antony | Lamont, Norman | Sainsbury, Tim |
| Butler, Adam (Bosworth) | Langford-Holt, Sir John | Shaw, Giles (Pudsey) |
| Carlisle, Mark | Latham, Michael (Melton) | Shelton, William (Streatham) |
| Churchill, W. S. | Lawrence, Ivan | Shepherd, Colin |
| Clark, William (Croydon S) | Lawson, Nigel | Shersby, Michael |
| Clegg, Walter | Le Merchant, Spencer | Silvester, Fred |
| Cockcroft, John | Lewis, Kenneth (Rutland) | Sims, Roger |
| Cooke, Robert (Bristol W) | Luce, Richard | Sinclair, Sir George |
| Cope, John | McAdden, Sir Stephen | Skeet, T. H. H. |
| Cormack, Patrick | McCrindle, Robert | Smith, Cyril (Rochdale) |
| Costain, A. P. | Macfarlane, Nell | Smith, Dudley (Warwick) |
| Crawford, Douglas | MacKay, Andrew James | Smith, Timothy John (Ashfield) |
| Davies, Rt Hon J. (Knutsford) | Macmillan, Rt Hon M. (Farnham) | Speed, Keith |
| Dean, Paul (N Somerset) | McNalr-Wilson, M. (Newbury) | Spence, John |
| Douglas-Hamilton, Lord James | Marshall, Michael (Arundel) | Spicer, Michael (S Worcester) |
| Drayson, Burnaby | Marten, Neil | Sproat, lain |
| Durant, Tony | Mates, Michael | Stanbrook, Ivor |
| Dykes, Hugh | Mather, Carol | Stanley, John |
| Edwards, Nicholas (Pembroke) | Maudling, Rt Hon Reginald | Stewart, Rt Hon Donald |
| Elliott, Sir William | Miller, Hal (Bromsgrove) | Stradling Thomas, J. |
| Evans, Gwynfor (Carmarthen) | Mitchell, David (Basingstoke) | Tebbit, Norman |
| Eyre, Reginald | Moate, Roger | Temple-Morris, Peter |
| Fairgrieve, Russell | Molyneaux, James | Thatcher, Rt Hon Margaret |
| Finsberg, Geoffrey | Monro, Hector | Thompson, George |
| Fletcher. Alex (Edinburgh N) | Montgomery, Fergus | van Straubenzee, W. R. |
| Fookes, Miss Janet | Moore, John (Croydon C) | Vaughan, Dr Gerard |
| Forman, Nigel | Morgan-Giles, Rear-Admiral | Wainwrlght, Richard (Colne V) |
| Fowler, Norman (Sutton C'f'd) | Morrison, Charles (Devizes) | Walker, Rt Hon P. (Worcester) |
| Fraser, Rt Hon H. (Stafford & St) | Morrison, Hon Peter (Chester) | Walters, Dennis |
| Gilmour, Rt Hon Sir Ian (Chesham) | Mudd, David | Weatherill, Bernard |
| Glyn, Dr Alan | Neave, Airey | Wells, John |
| Godber, Rt Hon Joseph | Nelson, Anthony | Wiggln, Jerry |
| Goodhart, Philip | Neubert, Michael | Wlgtey, Dafydd |
| Goodhew, Victor | Newton, Tony | Wilson, Gordon (Dundee E) |
| Gorst, John | Onslow, Cranley | Winterton, Nicholas |
| Gower, Sir Raymond (Barry) | Oppenheim, Mrs Sally | Young, Sir G. (Ealing, Acton) |
| Grimond, Rt Hon J. | Page, Richard (Workington) | Younger, Hon George |
| Grist, Ian | Pardoe, John | |
| Grylls, Michael | Parkinson, Cecil | TELLERS FOR THE NOES: |
| Hall, Sir John | Pattie, Geoffrey | Mr. Nick Budgen and |
| Hamilton, Michael (Salisbury) | Penhaligon, David | Mr. John MacGregor |
| Question accordingly negatived. |