NATIONAL ENTERPRISE BOARD (CAPITAL REQUIREMENTS)

HC Deb 10 April 1978 vol 947 cc998-1125

4.27 p.m.

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

I beg to move, That the draft National Enterprise Board (Financial Limit) Order 1978, which was laid before this House on 3rd April, be approved. The order is to increase the National Enterprise Board's financial limit from its present level of £700 million to the level of £1,000 million provided for under Section 8 of the Industry Act 1975.

I understand that it will be for the convenience of the House if we discuss at the same time the other motion in my name: That this House authorises the National Enteprise Board on the direction of the Secretary of State, given under section 3 of the Industry Act 1975, to pay or undertake to pay by way of financial assistance under section 8 of the Industry Act 1972 (as amended by section 22 of, and Part 1 of Schedule 4 to the Industry Act 1975, and section 1 of the Industry (Amendments) Act 1976) sums to British Leyland Limited or any of its subsidiaries not exceeding in the aggregate £150 million, being sums in addition to the £30 million previously paid by the National Enterprise Board to British Leyland Limited under that section 8. These measures are necessary in order that the National Enterprise Board may meet the capital requirements of British Leyland and the other companies for which it is responsible, as well as undertake its wider statutory purposes. In its votes today, the House will be directly influencing the livelihoods of hundreds of thousands of the electorate and their families. The total number employed in companies in which the NEB has a stake is over 330,000. I am very pleased that the right hon. Member for Lowestoft (Mr. Prior) will be taking part in the debate as the Opposition spokesman on employment matters. Additionally, about 90 Members of Parliament have a direct constituency interest in the votes tonight.

We clearly cannot debate the Board's finances without devoting the major part of our time and attention to the largest NEB company, British Leyland. I shall have something to say about the other NEB interests later in my speech.

British Leyland is enormously important to this country. At the end of 1977 there were over 170,000 employed in that company, of whom 130,000 worked for British Leyland Cars. This is simply the direct employment in the United Kingdom. If we add the number of people dependent on British Leyland in the components and supplying industries, we have at the very least twice as many. If we also include the numbers of people whose jobs depend on the spending power of Leyland workers, the number is bigger still.

Even more important, perhaps, is the concentration of jobs at stake in particular areas, particularly the West Midlands and the South Midlands. The collapse of British Leyland or British Leyland Cars would make the Midlands an industrial wasteland. But British Leyland also makes a substantial—

Mr. Eddie Loyden (Liverpool, Garston)

Will my right hon. Friend give way?

Mr. Varley

I am sure that I am coming to the point which my hon. Friend wishes to raise, and I think I had better get on. I was saying that British Leyland makes a substantial contribution also to the economies of Scotland and Wales. It has about 10,000 employees in Scotland and over 5,000 in Wales.

Last year, British Leyland's exports totalled over £850 million, which makes it the largest net exporter in the whole of United Kingdom manufacturing industry in recent years. What is more, although British Leyland has only about one-quarter of the United Kingdom car market, it still provides over half the total number of cars produced for export in the whole of the United Kingdom and in terms of value the proportion is even higher. Its contribution to import saving is more considerable. British Leyland Cars expects to sell over 400,000 vehicles in the domestic market this year.

The strategy summarised in the National Enterprise Board's report to the House is the result of the fresh look which Mr. Michael Edwardes and his team have been giving to the prospects for the company over the next few years. Neither the chairman of the National Enterprise Board nor I gave Mr. Edwardes a special remit or terms of reference except in one respect. We told him that the plan had to be realistic.

The detailed targets that the company has set itself for 1978 are achievable, but the prospects for the period beyond need to be looked at, of course, with caution. The National Enterprise Board has, however, decided that, if the company can recover its position over the next couple of years and return to health in the 1980s, there should be no problem about finance in the years following the plan period.

The Government's objective remains unchanged. British Leyland should become a viable manufacturer independent of public funds in the 1980s.

I shall now detail the financial proposals. During the period since we rescued British Leyland up to the end of last month the company has borrowed a total of £150 million of the £1,000 million envisaged by the Ryder plan. The poor performance in the cars business in 1977 has meant that the company has failed to generate significant funds of its own for new investment, and the required level of expenditure on new plant, facilities and models which is needed to put British Leyland on a viable footing can be met only by the provision of public investment on the scale envisaged by the Ryder plan. The Government's view is that there is no point in this situation in making do with half measures.

In the period from last March to late March 1978, British Leyland received only £50 million from public funds. The National Enterprise Board decided last October, quite rightly, that it should not make available even the remaining £50 of the £100 million approved last July until the new board of British Leyland had put forward its own corporate plan. These sums are clearly inadequate to sustain the investment needed by any company with ambitions to remain a substantial volume car producer.

Even the provision of £450 million, which the National Enterprise Board has determined, after careful consideration, is the sum required for 1978, means that some desired programmes have had to be cut back—for example, the foundry modernisation programme. In deciding to make this money available in equity form, the Government have accepted the National Enterprise Board's view that there is an immediate need to strengthen the balance sheet by establishing a more satisfactory debt-equity ratio.

Clearly, Government backing in the form of a major equity injection will make it easier for British Leyland to meet its additional requirements from the banks rather than from the public purse, and it is highly desirable that British Leyland should be in a position, where it can, to look increasingly to private sources for those of its financial requirements which cannot be met by funds generated internally.

Mr. Ian Lloyd (Havant and Waterloo)

The right hon. Gentleman has said that so far about £50 million has been invested by the taxpayer to sustain the investment of British Leyland. One matter which troubles the House and, I am sure, troubles the country is the question of what proportion of this money has actually been invested by British Leyland in new capital projects as opposed to being used by the company to support and sustain its wage bill. I am sure that our attitude towards all these future proposals will be very much conditioned by what the Secretary of State has to say about that.

Mr. Varley

Not all the £150 million has been used for capital investment. That has been made clear on previous occasions. I do not have the actual breakdown of the figures with me, but I can arrange for the hon. Gentleman to receive the figures in due course. I want to come on to that point because I agree that it is crucial. The provision of further loan money now, whether from private or public sector sources—this is the essential point of putting the £450 million in equity form—would merely have added to the interest payments burden at a time when only modest profit can be expected during the next two or three years.

Mr. Norman Lamont (Kingston upon Thames)

The Secretary of State has talked about British Leyland becoming independent of the taxpayer. The target rate of return in the Edwardes plan is 10 per cent. For the period 1968 to 1973–74, according to the statistics—not my statistics but the statistics in the Ryder plan—that was the rate of return which British Leyland earned just before it had to go to the Government and be rescued. Is the Secretary of State confident that the rate of return in the Edwardes plan is sufficient to return the company to viability and independence of the taxpayer?

Mr. Varley

In the early years of the plan the rate of return will not be satisfactory by normal standards. We have made no secret of that, and I do not think that British Leyland or the NEB has made any secret of it. One can never be absolutely certain about the future either, but the figure contained in the proposals—that the real rate of return at the termination of the plan in the 1980s will be about 10 per cent.—is, I think, broadly correct. But it depends on all kinds of factors which, I am sure, the hon. Gentleman fully understands.

Mr. Michael Grylls (Surrey, North-West)

Will the right hon. Gentleman give way?

Mr. Varley

No, I want to get on. I want to deal further with the point that has been raised. That is the reason why I put the financial duty on the National Enterprise Board in respect of the Board's investment in British Leyland. As I have said, this is the form of the target rate of return on capital employed in British Leyland at 10 per cent. by 1981. In the years prior to 1981, the Board is to maintain progress towards that objective.

I am very conscious that this target is modest in comparison with previous expectations, but it is consistent with the whole approach—the approach which, I think, the board of British Leyland has been taking—and it has to be utterly realistic, setting realistic and achievable objectives for the company.

The Government have come to the conclusion that the Ryder plan concept of linking funding decisions not only to overall performance but to specific progress in industrial relations and productivity has been unhelpful—

Mr. J. W. Rooker (Birmingham, Perry Barr)

My right hon. Friend can say that again.

Mr. Varley

—and it has led to considerable uncertainty about the availability of future funds whenever there has been an industrial dispute. In fact, world-wide dealer and consumer confidence alike have been damaged, and the NEB and the Government have come to the conclusion that the annual funding decisions will be determined by overall assessment of performance against the plan's targets and the company's prospects.

Obviously, since the question of productivity and the state of industrial relations have a direct bearing on performance, these will be two important factors which will have to be taken into account in the determination of future funding. The Government therefore intend that in future years funding decisions should be made annually on the basis of a report each November, beginning this November.

There is one other thing I wish to say about British Leyland before turning to other aspects of the National Enterprise Board's activities, and I know that the Opposition are keen on looking at other aspects of the NEB's activities. The view is held in some quarters that the solution to British Leyland's problems is to hive off the most profitable parts of the company to private enterprise. It makes it even harder to believe that the hon. Members concerned really want to see British Leyland's success when ideas of that kind are put forward.

It has been suggested that the old special products division of British Leyland, now Special Products Industries, should be separated from the company. SP Industries has in recent years expanded into a company with a turnover of £200 million a year, making a very useful contribution to British Leyland's profits. If hon. Members think that the hiving off of Special Products Industries would make it earlier for British Leyland to increase its private sector borrowing facilities, we have only to consult people in the City, who would tell us that it would make it much more difficult.

In my judgment, the only purpose that this talk of hiving off achieves is to demoralise the new management and also to demoralise the work force of British Leyland. It is seen by them simply as the first stage of a carving-up exercise for the company. The same argument applies even more strongly to the suggestion that British Leyland should, for example, hive off Rover production.

I want to make it absolutely clear that none of the British Leyland profitable activities—Special Products Industries, Rover/Jaguar Cars and Bus and Truck—is for sale. It is as well that I should make that clear right at the beginning of the debate.

Mr. Alan Clark (Plymouth, Sutton)

Surely those who are in favour of hiving them off simply have the interests of those concerned at heart. If they are hived off, they at least will be saved. If they are left any longer with this dinosaur, they will probably sink into the mud with it.

Mr. Varley

That view is not shared by the present realistic board of British Leyland or by the NEB, consisting of senior industrialists and senior trade union leaders.

As the House knows, the statutory purposes of the NEB, which were agreed by the House, are to promote industrial efficiency and international competitiveness, and to provide and safeguard productive employment. These are formidable tasks, and in pursuing them over the last two and a half years the NEB has gone a considerable way towards fulfilling the role for which it was established.

The NEB is required, under the guidelines, to see the prospect of an adequate return on its investment within a reasonable period. The duty is to ensure a return of 15 per cent. to 20 per cent. on capital in 1981 and to make steady progress towards this target in the meantime. I have now determined a financial duty in respect of British Leyland which is similar in form to its general duty. I intend to determine a duty for Rolls-Royce within the next few months, when discussions on the company's plans are concluded.

By the end of 1977, the NEB and its subsidiaries had a turnover of £3,500 million and had exports worth nearly £1,200 million during the year. Employment in the companies in which the NEB has a stake, as I have told the House, is over 330,000. Apart from its subsidiaries, the NEB has minority shareholdings in an increasing numbers of companies whose expansion is being financed through funds provided by the NEB.

During 1977 the NEB invested £200 million in 22 companies, and now has shareholdings in 39 companies. Members will have seen the NEB's preliminary results for 1977. The NEB will submit its annual report and accounts to Parliament early in May.

The House will, I hope, have noted with satisfaction the announcement made by the chairman of the NEB last week that Rolls-Royce made a pre-tax profit of £20 million last year. That is very good news, particularly following the company's loss of £23 million in the previous year. It is particularly impressive at a time when the level of activity in the aerospace and aero engine industry world-wide has been depressed.

These encouraging results from Rolls-Royce give the lie to the Press reports earlier this year which suggested that the company had made substantial losses in 1977. As the results have shown, those reports are completely without foundation. Fortunately, these rumours—which could have had a damaging effect on consumer confidence but did not have this damaging effect—did not stop the company from successfully concluding a major deal with Pan American World Airlines, announced only the other day. It is no exaggeration to say that this contract is the most significant order which Rolls-Royce has obtained for its RB211 engines in recent years, and the immediate prospects for the company's civil business, of which the RB211 is the mainstay, look promising, as long as the company remains competitive.

At the end of 1977 we received the Rolls-Royce corporate plan. That was made available to the NEB and, together with the NEB's own recommendations, we are considering the whole future of Rolls-Royce and its future technical and commercial strategy. We expect to receive proposals quite soon for a major new development programme which is currently being considered by the NEB.

Mr. Grylls

Naturally, we are delighted with the Rolls-Royce success story in recent weeks, but what contribution has the NEB made to achieve this deal? Would not Rolls-Royce have done it perfectly well off its own bat? What role has the NEB had to play?

Mr. Varley

The NEB has been of assistance to Rolls-Royce. That, I think, has been publicly acknowledged. If not, I am sure that the chairman and board of Rolls-Royce would acknowledge it. The relationship which exists between Rolls-Royce and the NEB is extremely satisfactory and harmonious. Therefore, it would be a mistake for the hon. Gentleman to suggest that the NEB has not been involved.

In fact, the company has come a long way since it was brought into public ownership in the early 1970s. We have shown our faith in its potential by supporting it—it has gone through extremely difficult times—particularly through our commitment to the successful development of the RB211 engines. Recent events have justified this faith. We are confident that Rolls-Royce can continue as one of the world's leading suppliers of aero engines, and we shall do all we can to make this possible.

Another aspect of the NEB's activities is the increasing involvement that I hope it will have in regional activities. The NEB's regional boards in Newcastle and Liverpool were recently established to make available to the North and North-West regions the fullest possible assistance for industrial development. There is no limit, within the NEB's total budget, to the funds available for regional purposes. The regional boards have been in operation for only a relatively short time, but both boards contain members with wide experience of all aspects of industry, and I am confident that they will make a real contribution to their regions in support of industry.

The record of achievement of the NEB in a relatively short time since its inception has been remarkable. As I have already said, we are very fortunate in getting senior trade union leaders and industrialists as members of the Board. By the very nature of things, this has been a period of preparation. The NEB has only a small central organisation, but it has first-rate managers with a wide range of industrial experience. This team has been working carefully to lay solid foundations for the future.

Mr. Tim Renton (Mid-Sussex)

Of the 22 new companies in which the NEB invested last year, how many are at or close to achieving the rate of return on capital employed of 15 per cent. to 20 per cent. that the Secretary of State outlined as a target for the NEB in 1981?

Mr. Varley

I cannot give the hon. Gentleman exact figures, but I shall see what further information can be provided on that front. I have not the figures to hand, but the general objective is that which I have already stated to the House.

The NEB's main task at present is to work by agreement to create partnerships with both existing companies and any new companies in which it invests. There are no easy solutions to our industrial problems, but there are solutions. I believe that the NEB can create the framework within which its current companies have a better chance of flourishing. I believe that it is possible to identify a number of real opportunities for British manufacturers, given the necessary backing, to succeed in world markets.

I see the role of the NEB in the coming years as follows. First, it is to ensure the success of its original major subsidiaries. These NEB subsidiaries represent a significant stake in three vitally important British industries—motor vehicles, aero engines and machine tools. The first priority, therefore, is to help these companies to succeed and to ensure a strong British capability in these industrial sectors.

The three original major engineering subsidiaries—British Leyland, Rolls-Royce and Herbert—are large and extremely complex companies operating in difficult circumstances in fiercely competitive world markets. They did not come to the NEB in the best of health. In fact, they all failed under private ownership. The NEB's role is based not on detailed interference with the management of the companies but on regular consideration of this overall strategy, the direction to be taken and the risks to be faced over the coming years.

The second task of the NEB is to expand the national strategy in a number of growth industries. Over the last two years detailed studies, in part based on the sector working party reports of the National Economic Development Office and a number of manufacturing sectors, have been undertaken. Resources are being concentrated on investment opportunities in a number of key areas. These investments will create partnerships with succuessful firms and expanding industries which can offer a good return for Britain, secure growth and long-term employment.

One sector is computers and electronics, particularly micro-electronics. With the major stake that NEB already has in Ferranti—in itself a success story, both for its own management and for the NEB—as well as the stake that it has in ICL and Data Recording Instruments, the NEB already payes a crucial role in this vital sector of the economy. Data Recording Instruments is, for example, the only United Kingdom-owned computer peripheral manufacturer of any significance. With the NEB's support, we are currently undertaking a major investment programme. The practical effect of not proceeding with the programme would have been to exclude the United Kingdom from the world peripheral markets.

Again, the creation of its new company—INSAC—has greatly strengthened the position of the United Kingdom computer software industry. Five of the most successful and profitable companies in the industry which will influence the development of manufacturing in the coming decade have now joined with the NEB in this venture. The same approach is adopted in laying the foundations for growth areas, as can be seen, for example, in the investment which has taken place in Sinclair Radionics. It is now producing and selling about 4,000 sets a month and is operating profitably. It has ambitious plans for future development.

In fact, I was heartened to read last week in The Daily Mail what was said by a finance director of a small manufacturer in the North-West in which the NEB had just invested. He said that he and others had picked the National Enterprise Board because of their muscle in electronics and their support for family concerns". The NEB's third priority is to stimulate growth of exports by encouraging overseas marketing ventures. There is no doubt in my mind that this can be done. Britain has been suffering because it has not been able to get the investment packages that are necessary for overseas marketing in order to compete successfully in world markets. The NEB has recognised this and intends to create, where appropriate, substantial marketing organisations. An example of this is the new company—United Medical Enterprises—created in collaboration and in partnership with three large City organisations to encourage the export of British medical equipment and supplies. The total capital is about £8 million. It has been in existence for only one month, but I am sure that hon. Members will welcome that involvement. There is no doubt in my judgment that there is substantial potential business in that area.

There is, however, one further theme underlying the NEB's current activity and its planning for the future. It aims to provide the capital needed by successful small manufacturers, particularly in the regions. In a rapidly changing world, we need a spread of companies. Above all, we need to back the creation of employment opportunities, particularly in the regions.

Mr. Nick Budgen (Wolverhampton, South-West)

Will the Secretary of State explain why the Government cannot keep to a more modest objective for the NEB, such as the resuscitation of what are said to be temporarily ailing industries or firms, and sell off successful firms such as Ferranti and avoid going into other objectives for the NEB?

Mr. Varley

I do not know whether the hon. Gentleman was in the House earlier when this question was raised. I made it plain that none of the NEB's profitable companies, particularly those making up British Leyland, is for sale. I do not think that that would be the way to go about it. That is not recommended by the NEB, which consists of senior industrialists and senior trade unionists. It is not recommended by the board of British Leyland. That would serve only to demoralise existing management and create unnecessary fears.

The NEB is confident that it can achieve a target yield of 15 per cent. to 20 per cent. by 1981. In doing so, there is every hope that it can make an important contribution to sustaining the economic future of the country, improving competitiveness and providing employment. The work which the NEB is doing on British Leyland, Rolls-Royce, Herbert and the other 30 companies which look to it for financial and professional resources needs to be done in order to improve its overall performance.

All these activities have a continuing role within the framework of the NEB. To carry them out—that is, not only to proceed with the work but to finish that work, and particularly to carry through the work which Parliament has charged the NEB with fulfilling—we must allow that body to have the financial resources that are needed. Inevitably British Leyland presents the heaviest demand on the NEB's purse. It is clearly right that we should consider the NEB's statutory financial limit at this particular time.

But the House should be clear what the consequences would be for British Leyland and other NEB companies if the affirmative order to increase the NEB's financial limit were not approved. If British Leyland is to continue in business with a prospect of viability in the 1980s—

Sir Keith Joseph (Leeds, North-East)

The right hon. Gentleman is talking too fast. I cannot follow him. Will he speak less quickly?

Mr. Varley

I am sorry, but I have a lot to say.

Sir K. Joseph

On a point of order, Mr. Deputy Speaker. The Secretary of State read the last passage too fast. Could not the right hon. Gentleman go back a page or two and read it again?

Mr. Varley

I have a great deal to say, and I do not want to take up too much of the time of the House. In the remaining section of my speech, I shall speak slowly and deliberately for the benefit of the right hon. Member for Leeds, North-East (Sir K. Joseph).

The House should be clear what would follow if the House did not agree to increase the financial limits of the National Enterprise Board. Of course the sums for which we are asking in respect of British Leyland are very large, and the proposals come to us only after a very thorough consideration of the company's prospects first by the new board of British Leyland, headed by Mr. Michael Edwardes, and then by the National Enterprise Board. The Government have decided that it is right to endorse those conclusions of the British Leyland board and the NEB.

Mr. Loyden

I am glad that my right hon. Friend has now returned to what he was saying in his opening remarks about the consequences to British Leyland's position if Government resources were not made available. However, is my right hon. Friend aware that the plan which he is now recommending includes the closure of a factory in my constituency which has been supported by the NEB which has been given the task of creating employment opportunities in the area? Is my right hon. Friend aware, further, that it is my firm opinion that the Government's decision to back the Edwardes plan has triggered off a number of decisions by major companies to close factories or to declare redundancies resulting in the loss of 15,000 jobs—[Interruption.] This is not a laughing matter.

Mr. Deputy Speaker (Mr. Oscar Murton)

Order. I hope that the hon. Member for Liverpool, Garston (Mr. Loyden) has completed his intervention.

Mr. Loyden

I am asking my right hon. Friend whether he is aware that the Government's decision has been responsible for triggering off these decisions in private enterprise and that even at this late stage further thought should be given to the closing of the No. 2 plant at Speke.

Mr. Varley

I know that my hon. Friend feels very strongly about this matter. He has discussed it with me on more than one occasion, and not only have I made my views known to my hon. Friend and to the House but they have been made known by my right hon. Friend the Prime Minister on behalf of the whole Government.

British Leyland has the backing of the NEB and of the Government in the way that it is proceeding to operate. I very much regret the difficulties in the constituency of my hon. Friend the Member for Liverpool, Garston (Mr. Loyden), and we shall do all we can to overcome them. However, I cannot hold out any hope that there will be a reversal of the decision about Speke. So that I do not mislead my hon. Friend or the House, I must make that plain today.

We are asking for very large sums in respect of British Leyland. We make no secret about that. The Government have decided that it is right to endorse the plan which has been put to us. If we cannot provide the assurance for the National Enterprise Board and for British Leyland, the prospects for British Leyland are at risk and the consequences will be very serious. We need to do all we can to restore confidence in British Leyland, and we cannot do that by means of drip feeding. I have made it plain already that what we practised two years ago was incorrect. I do not think that it helped one little bit.

A vote against this much-needed investment would be a vote against our one nationally owned major vehicle assembler and it would be interpreted in some quarters as a vote of no confidence in this country's largest export earner—[Interruption.] Certainly it has been our largest export earner in the last few years. It would be a vote which could deprive several hundred thousands of workers of their jobs. It is essential to restore confidence in British Leyland, and I think that a good start has been made.

Mr. Hal Miller (Bromsgrove and Redditch)

Will the right hon. Gentleman give way on a point about finance?

Mr. Varley

No. I have given way many times already. I shall not give way to the hon. Member.

Mr. Miller rose—

Hon. Members

Give way.

Mr. Deputy Speaker

If the Secretary of State does not wish to give way, he cannot be pressed to do so.

Mr. Varley

I reckon that I have given way a great many times already, and I have given a great deal of information.

Mr. Miller

We want some facts.

Mr. Varley

There has been quite a success over the last few months. The market share of British Leyland last month reached 31 per cent., whereas in January it was only 21 per cent. That is a considerable achievement. No one would claim that we are yet out of the wood, but the management and the workers in Leyland are taking a realistic view about matters.

I ask the House to support and to have confidence in British Leyland and in the approach which has been made by the new management. I have no doubt that a vote in this House in support of these proposals will help to restore consumer confidence in British Leyland both at home and abroad. It is my view that the trade unions in British Leyland are now making a realistic assessment of the position. That was demonstrated at a conference only a few months ago. I think there is widespread agreement that British Leyland has an excellent and effective mamangement and we need to back it.

I have no hesitation in asking the House to approve both these orders.

5.6 p.m.

Sir Keith Joseph (Leeds, North-East)

There is an element of subterfuge about the bringing of these two orders before the House, and the Secretary of State has made a disingenuous speech. He has tried without actually telling any untruth—although I shall have to go through his speech carefully later—to say that without the additional money for the National Enterprise Board some part of the additional money proposed for British Leyland will not be available. That is plainly untrue. In fact, can the Secretary of State deny that out of its existing resources the NEB has already lent to British Leyland £275 million of the £300 million which the plan approved by the Government proposes should be made available to British Leyland by the NEB by way of equity?

The intention of the NEB is to convert that £275 million loan into a £275 million equity and to add a further £25 million equity to bring up the total contribution at this stage to British Leyland to £300 million. No extra order to raise the funds of the NEB from £700 million to £1,000 million is needed to achieve that. The money, all but £25 million, has already been transferred to British Leyland.

So the Secretary of State is charged with disingenuousness in failing to make that clear, and it reveals the furtiveness of this whole approach. Under the guise of helping British Leyland, we are asked to pass an immense additional burden on to the taxpayer for the NEB at a time when the NEB has produced only a preliminary statement of its 1977 results. The final results for 1977 are due in about four of five weeks.

When the Government seek such vast additional sums from the taxpayer, it at least behoves them to lay before the taxpayer and his representatives in this House some decent record of achievement, some decent programme of intentions such as Government supporters would rightly expect any bank or stockbroker in the City to lay before the investing public when seeking money.

Mr. Geoffrey Robinson (Coventry, North-West)

I am sure that the right hon. Gentleman does not wish us to think him disingenuous. Will he therefore be very clear about one matter? If the whole of the money for British Leyland was being advanced under Section 8 of the Industry Act, would the Tories vote for it?

Sir K. Joseph

We have enough difficult questions to deal with without attempting to answer hypothetical ones. I shall try to deal with each of the questions in turn. But the first crucial matter to make clear is that the Secretary of State has fallen below even his standards in his presentation—[HON. MEMBERS: "Oh."] Yes, even his standards, because I thought in several cases during the steel controversy that he was less than frank with the House. So I repeat that he has fallen below even his standards in presenting the case for these two quite separate and distinct orders which are linked only for the purposes of easing the passage of additional money to the NEB from the taxpayer under the camouflage of an urgent need for Leyland which to a large extent has been met already.

I shall turn to the subject of Leyland and at a later stage turn to the NEB. We all want British Leyland to succeed.

Mr. Rooker

All of you?

Sir K. Joseph

We want the company to succeed. That does not mean that it is right in the interests of the taxpayer, whom we also represent, to go beyond a certain point with finance for British Leyland if British Leyland fails to play its part, as it has already failed, in providing its own contribution towards the funds needed for investment and working capital.

We were sceptical about the Ryder plan. We were much criticised for being sceptical, but the Ryder plan has been torn up and our scepticism has been shown to be correct.

In recent years I have not hidden my attitude to subsidies for industry. I am a learner, and I have learned a bit from recent years. I hope that hon. Members on both sides of the House have learned. There is plently to learn from the Leyland story and the NEB story. I believe that subsidies to industry do more harm than good except in the rarest cases and that they should be provided for as short a time as possible.

The Secretary of State spoke about large sums, but never once did he say from where these sums are to come. It was as if the Government have a private mine. Well, they do—it is the taxpayer. However, if the money comes from the taxpayer's pocket, the taxpayer has less to spend elsewhere. For every job that is visibly saved there is probably more than half a job, if not a whole job, invisibly lost, or unidentifiably lost, somewhere else. No one can contradict that. Not even the Secretary of State will claim to have money to give to one place without taking it from somewhere else, either by borrowing, printing or taxing.

We regard it as disingenuous to speak of the money as if it could benefit British Leyland, and, heaven help us, the NEB without disadvantaging others. It is always possible that it is sensible to transfer money from taxpayers for certain purposes. We do not deny that. However, we do not believe that the right hon. Gentleman has made out a case in terms of the NEB.

We are asked to approve large sums of money. One of the main differences from the Ryder plan is that on this occasion large sums are to be made available without the regular monitoring that was part of the Ryder plan. One or two Labour Members expressed great satisfaction at the end of the regular monitoring. I am sure that monitoring was highly inconvenient and had many disadvantages. However, there are disadvantages when monitoring is dropped. The disadvantages lie with the taxpayer.

The taxpayer is now being asked to find £450 million this year and £400 million next year. I accept that we are not concerned with the latter sum at present. The taxpayer is being asked to find large sums without being able to check during the spending of the money and before the next slice is released the degree to which the NEB or British Leyland, as the case may be, is living up to its intentions.

Mr. Rooker

Es once a year not enough?

Sir K. Joseph

It was not considered enough in the Ryder plan, which the Government approved. The right hon. Gentleman has openly confessed that the Government took a wrong decision about monitoring. They backed monitoring for the progress of industrial relations and productivity. They did so for a certain while and now they have dropped it. They are entitled to do so, but it follows from their change of policy that the taxpayer is asked to bear an even larger risk than otherwise.

We recognise that British Leyland is like a great ship aground. The Government have set themselves, with the taxpayers' money, to enable it to float again. British Leyland may in the event be providing us with an experience that will discourage future Governments from embarking on such rescues. We shall soon see, because it is made clear in the NEB report on British Leyland's plan that it believes The main problem facing the company"— —that is, British Leyland—is really British Leyland Cars. The NEB believes that British Leyland is right to give the highest priority to a programme of short term actions designed to produce success in 1978 and 1979. Therefore, we shall soon see whether the plans of the Government and NEB will be proved successful.

We want British Leyland to succeed. Who, with any sense, could conceivably want it not to succeed? It would be inconceivable for anyone to want it not to succeed. As I have said, we want it to succeed, but that leaves in our minds a number of doubts. We have towards British Leyland great good will and considerable anxieties. Our anxieties are not ours alone. They are anxieties that are shared by many voting for all parties in all parts of the country. They are anxieties that are shared by many industries and many regions. There is anxiety that vast sums are to go to one firm in one industry in a limited number of regions. Therefore, we do not have to apologise for having anxieties coupled with our good will.

Our anxieties can be dispelled only by British Leyland. However, much we may admire Mr. Michael Edwardes—I shall come to him with admiration shortly—a few good speeches—he has made some first-class speeches—and a few months of good performance—and there have been some months of good performance—are not sufficient in themselves to end all our anxieties. We all share the same purpose—that the company should be profitably competitive. That implies that success must be achieved in design, quality and productivity.

What are our anxieties? I shall rehearse them relatively briefly. There are some who seem to be making war on parts of the company. One of our anxieties is whether this massive funding will weaken or strengthen the hand of that small minority.

Mr. Tom Litterick (Birmingham, Selly Oak)

Who are these people?

Sir K. Joseph

It is relevant to say that the modest and perhaps realistic targets for improved productivity in the Leyland plan are not nearly ambitious enough. The assertion of modesty in connection with a rise from five cars per employee per year to eight cars per employee per year by 1980 has to be seen against the unpalatable fact that productivity is not static at either end of the bracket. As we improve our productivity, those devils, our rivals, in other countries will probably improve their productivity, too. The danger is that we shall not close the gap unless management starts off and trade unions start off with ambitious plans to improve productivity.

It is relevant to observe that new and formidable makers of volume cars will be coming, on to the international scene. It is relevant to warn of increasing overseas competition. It is relevant to consider the dismaying record of British Leyland. At page 13 of the NEB report it is stated: Despite the disappointing performance in the recent past, it is premature to conclude that the company has no future. That is the NEB's view. I do not adopt that point of view. That is the attitude that the NEB is adopting. It is not a wildly enthusiastic assessment. That is relevant to our anxieties. It is relevant even to doubt the lasting effect of "Super-deal", which has accompanied the rise in share of market to which the right hon. Gentleman referred at the end of his remarks. We hope that it does not merely mean that some sales have been brought forward because of the large discount that has been offered during recent weeks.

In terms of our anxieties it is relevant to consider the cost of the rescue. There are the jobs that are threatened elsewhere. There is the burden on the taxpayer and the effect on tomorrow's Budget.

But our anxieties focus upon one feature above all, because there is one feature of the British Leyland-NEB plan which summarises the net effect of all the individual proposals. That anxiety is connected with the retained earnings which British Leyland has pledged itself to find as its contribution towards extra finance.

The House will perhaps need reminding that of the £2 billion covered by what is now the Edwardes plan, no less than £850 million is to be found by British Leyland from retained earnings between January 1978 and the end of December 1981. That is over £200 million per annum.

There are two questions. First, can this be done? I believe that it certainly can be done. The second question is will it be done. The records from the past of similar pledges to contribute from retained earnings have not been fulfilled. That does not mean that under the new management the new pledges will not be fulfilled. We fervently hope that they will be fulfilled. If they are to be fulfilled, designs have to be right, quality has to be right and productivity has to be right. If these are not right and the retained earnings do not make the contribution proposed, either the taxpayer will have to stump up more money or somewhere along the route there will have to be changes. These add up to big anxieties.

There was one question to which the Secretary of State could have given an answer, had he chosen, which would have eased our anxieties to some extent. I hope that the Minister of State in winding up the debate will give us a clear answer. The NEB and British Leyland have both talked of their intention to secure manning agreements for new machinery before the machinery is ordered. Could we have an answer from the Minister of State whether that intention has been and is being fulfilled? Have manning agreements to produce the productivity necessary to yield the retained earnings on the assumptions for sales started to be made at satisfactory levels?

Against these anxieties I come to the plus points, because obviously we would not be here today if there were not some assets. The evidence that we have in favour of the British Leyland plan to dispel those anxieties is that there have been several months of better performance. That is enormously to be welcomed. We only hope that it is not a flash in the pan. We welcome it. We hope that it is the prelude to sustain better and better performance.

The even bigger asset now in our minds is the change of management, not because the previous managers were in any way to be blamed but because the NEB had invited to take the chairmanship a part-time non-executive chairman, and the change to a full-time chairman and chief executive is one which in principle is to be welcomed, particularly as the man filling the job, Michael Edwardes, for whom we have respect, is a man with a proven record. He seems to us to have made an excellent start. We hope and believe that the large majority of people who work in British Leyland are 100 per cent. with him and share his purposes and hopes. We want to believe that this man can manage this Herculean task. As he himself said, it is a gamble, an act of faith.

We regret that there is only one opportunity in the running of this financial plan to monitor the performance. Monitoring seems to us very important, however inconvenient it may be, as a check on taxpayers' funds. It was precisely to reduce the call upon the taxpayers' risk funds that I, for one, thought that it might be sensible to reduce the call upon the taxpayer by shifting some of the needs of investment money on to the shoulders of the private sector. The Secretary of State was very fierce about the possibility of letting any of the profitable parts of British Leyland finance themselves. He does not have to read sinister motives into such a proposal. He is taking a very inconsiderate attitude to the taxpayer. We would have hoped that he would try to reduce the call on the taxpayer as much as possible.

The House will perhaps be interested to know that nearly a third of the total finance for the four years is for investment and increases in working capital for those parts of the business which are not cars at all. I am talking not about Rovers but about buses and trucks and special products which are not cars in that sense I am not going so far as to say that it would necessarily have been sensible to let that third of the finance come not from the taxpayer or from retained earnings but from the private sector through various alternative arrangements which could have been made. But I think that it would have been right for the Government and the NEB to consider this proposal to reduce the risk on the taxpayer I hope that the Secretary of State will not omit consideration of that if it becomes suitable.

Mr. Rooker

How can the right hon. Gentleman, on the one hand, say that he and the House have great confidence in Michael Edwardes and, on the other hand, say or imply that he wishes to be looking over the man's shoulder every working day of the year to make sure that he is up to the job? Why is not once a year sufficient? It was sufficient and successful for shareholders when Mr. Edwardes was in private industry with Chloride. Why cannot that be accepted now?

Sir K. Joseph

I think that Mr. Michael Edwardes would well understand our anxiety. He has to face putting right a tangled inheritance from years past. [Interruption.] I do not normally ask for your protection, Mr. Deputy Speaker, but the hon. Gentleman is suggesting that I am offering my advice to Michael Edwardes. That I should not presume to do. It may be that what we have witnessed in recent weeks—the improvement in performance—may—I am not making a charge—have had something to do with putting on a good show so that the next stage of finance will be available. I do not assert that. It is a possibility within human nature. If we remove that sanction, we make Michael Edwardes' job harder. It may be that Michael Edwardes has on balance asked that things should be this way. I expect that he has so asked. But I still regret, in the interests of the taxpayer, first, that the money is so big—I have pointed to a way by which it might have been reduced—and, secondly, that, being so big, it is scarcely to be monitored.

We want to give Michael Edwardes and those throughout British Leyland who share his purposes every chance of success, so I shall advise my hon. Friends not to stand in the way of the Section 8 order for direct money for British Leyland. I ought to add that I think that both the NEB and British Leyland emphasise that the calibre of management to support Michael Edwardes will need to be improved, and we understand and welcome the upgrading that must be occurring.

Now I turn to the National Enterprise Board order. I repeat—and I do not believe that anybody in this House or the Secretary of State can in any way contradict it—that it is utterly unconnected with the need for extra money for British Leyland. The National Enterprise Board, I repeat, has already provided £275 million of the £300 million proposed by way of loan. It will be converted into equity, and the NEB will add £25 million additional equity to bring it up to the £300 million. When it has done all that, as I understand it, it will still have over £60 million headroom below the £700 million ceiling which already exists.

If the National Enterprise Board wants more money to carry out commitments made to or by its subsidiaries, it will have that £60 million headroom. It also has the possibility of selling some of its subsidiaries. I believe that I have seen in the newspapers a proposal that Ferranti should be returned to the market. I think that has already been announced. There are other possibilities no doubt.

The NEB, in our minds, remains as a final financial standby in rare cases. We did not like the Bennery period of NEB. We did not like the Bennery proposals for the NEB that emanated from the Tribune group. We are not particularly keen on the Nebbery proposals. They are a far cry from Bennery—although nearly a synonym—but they come from the same stable. That stable is the State punting with the taxpayers' money. On this side of the House we do not like the State punting with the taxpayers' money. We do not want to put the National Enterprise Board in funds to offer, perhaps more or perhaps less discriminatingly, support to the private sector. Perhaps it is more discriminating than done by the market, but it might be less discriminating. There are plenty of agencies offering investors' funds to business. There is no evidence that in this capacity there is any need for the NEB.

We do not criticise business men who go to the NEB for funds. If they suspect that the NEB is a softer touch it is sensible for them to go to it. In my remarks about the NEB I hope that I am not damaging my friendship with its chairman, for whom I have both liking and respect. One can have a liking and respect for a man and disagree with some of his opinions.

If the NEB needs more money than it has, let it put itself in funds. If it needs more, let the Government make out a proper case. It is not a proper case for the Secretary of State to make a few airy pronouncements about his judgment. It is his judgment, but it is not his money. It is his judgment on the taxpayers' money. It is not enough for the Secretary of State to make a few airy pronouncements on the basis of a preliminary report of the NEB and then ask for £300 million extra—a sum which has probably never been provided by the stock market to one company at one go.

Mr. John Garrett (Norwich, South)

Has the right hon. Gentleman considered the specific case of Sinclair Radionics, a company which has considerable technical potential and which is of great value to the country? That company would have gone to the wall without assistance from the National Enterprise Board.

Sir K. Joseph

I do not sit in instant judgment, but I observe that there are many businesses which are seeking profitable businesses in which to invest. The NEB is now one of them. I do not wish to comment on Sinclair Radionics, but a stronger case needs to be made out before £300 million of taxpayers' money is provided.

It is shameful that the Secretary of State and the Government should use British Leyland and its needs as a camouflage for this different and separate order for the NEB. I ask the House to realise that if the NEB order is passed and the funds are raised from £700 million to £1 billion we shall lose in the House all power to control a second huge instalment from the NEB to British Leyland at the end of this year. That is because if NEB chooses it can hold in reserve enough money for a large part of the second proposed instalment for British Leyland without coming back to the House. That means that the limited power of monitoring which we hoped to retain will be lost if the NEB order is passed.

Finally, I come to a point about the NEB, on which the Secretary of State laid great emphasis. What a ridiculous, almost farcical position it is that the Labour Government and the trade union leaders together impose upon business, enterprise and the entrepreneurs of the country curb upon curb, discouragement upon discouragement, obstacle upon obstacle, high taxation and an avalanche of controls, regulations, Luddism and lack of understanding of how enterprise works. They impose all this upon them and when, by this blanket discouragement, they reduce the inherent, marvellously dynamic capacity of private enterprise, within a framework of humane laws, to create jobs and prosperity and higher living standards, they then come and ask for the NEB to make it all good by intervention on the side. What an absurd paradox it is that instead of the Labour Government and trade union leaders recognising that the rising unemployment and the static standard of living come precisely from discouragement by them of the process of job and wealth creation that the private sector, left to itself within a proper framework of laws, could carry out, instead of beginning to remove those discouragements they create the National Enterprise Board "investing from the hip" to make good the lack of enterprise. "Investing from the hip" was a phrase that came from an excellent speech by Mr. Ronald Grierson, a former chief executive of the IRC, which was a creation of the previous Labour Government.

We have to make two decisions this evening. On Section 8 I suggest to my hon. Friends that on balance we allow our hopes for British Leyland and our faith in Michael Edwardes and all who agree with him within British Leyland to outweigh our anxieties for the taxpayer. We want British Leyland to succeed and we back the Michael Edwardes-British Leyland effort. We should not, therefore, stand in the way of the proposed order.

However, on the NEB, which has already provided the bulk of the money for British Leyland and can provide the residue, I hope that my hon. Friends will vote against extending the funds, not for British Leyland, but for generally buying into British business.

5.38 p.m.

Mr. Geoffrey Robinson (Coventry, North-West)

I am grateful for the opportunity of taking part in the debate. I shall be brief because I know that many other hon. Members wish to take part. I shall direct my remarks to the question of British Leyland. I hope to be a little more decisive, direct and forthright than the right hon. Member for Leeds, North-East (Sir K. Joseph). May I inoffensively put to the right hon. Member that watching him perform from this side of the House one gets the impression that he is being tortured on the rack rather than speaking with the authority that the Dispatch Box should confer upon him? This pattern of tortured indecision bodes ill for the Opposition if, in the unlikely event of their coming to power, they persevere with the right hon. Gentleman's policies.

Since we last debated British Leyland a great deal has happened. Nearly everything that has happened has been for the good, ever since the chairman of the NEB, seeing that a strategy was in ruins and that a major national British asset faced destruction if a plan was persevered with, had the courage to make decisive and fundamental changes in the direction, the organisational structure and management of that company.

That could not have been easy. Those of us who have been in that situation at such difficult times known what is involved. That tribute should be put on the record.

The benefits have come quickly. They have come more quickly than I should have believed possible. Since then we have seen the redundant old top board scrapped. We have seen the meddlesome tentacular head office disbanded. We have also seen the ineffective, inefficient unrequired post office that the international department then was disbanded. Most critically—and this must have been the most difficult point, also—we have seen the car activities divided on a coherent and, from a product point of view, logical basis. We now have the volume cars and specialist cars decisively and critically split. We have also seen new line management, which was previously weak, being recruited. We are seeing what was also very necessary to the company—decision-making being pushed down the line to the factories and to the line managers, who must have it. All that Mr. Edwardes has achieved quickly, decisively and with commendable business acumen.

The benefits have come through very quickly. The market share has shot up. It has gone up to 31 per cent. That may well be unsustainable. I would not disagree with those who obviously would argue that going in a matter of a few months from the dangerous precipice of 20 per cent.—the share could not have been allowed to go any lower than that—to 31 per cent. is probably too sharp a rebound. Not only do we notice improvements in the market share—critical an indicator though that is—but those of us in the Midland factories in the Cowley area see a growing resurgence of confidence among working people in the new management and in the new organisational structure that has been imposed.

As the Secretary of State said, it is a whole question of confidence. Confidence in British Leyland has not been helped at all by the ineffective irresponsible and at times incomprehensible speech that we have heard this afternoon from the right hon. Member for Leeds, North-East. Confidence in British Leyland can be got back. The management must realise that its initiatory role is also the prime one, because it is management's role to get the confidence of the men back. That confidence will be got back only by integrity and competence on a sustained basis by management. It can be got, but it will not be easily won, and it will have to be deserved by performance.

Next, there is the role of Government in the question of confidence, and that is a crucial role. I believe that the single most significant part of the Secretary of State's speech was on the question of the funding and the conditionality of it. It is not the monitoring that is in question at all. Everyone agrees that we have to monitor. It is the day-to-day linking of the availability of the funds to specific instances of management decision or particular decisions in particular factories that makes for no sense.

Indeed, I think that the most significant paragraph of the NEB's report, which deserves a good deal of reading on the Opposition Benches, is paragraph 11.12, on page 12, from which I should like to quote: The new Board of British Leyland argues that it must have an assured level of funds in the form of equity if it is to manage the company efficiently and if it is to concentrate on the tasks essential to restore it to commerial and financial health. It believes that the funding of the business is a means to an end and that it is not an end in itself, as is implied by the arrangements under which future funding is conditional upon, and regarded as, a reward for good behaviour. I could not have put it better myself.

Listening to the right hon. Member for Leeds, North-East, one would have thought that he was trying to run a prep school and not a major British industry, with prefects monitoring daily behaviour. It may be one way of running a Shadow Cabinet. Looking at the composition of the Shadow Cabinet, it may be that some right hon. Members of the Opposition, particularly the right hon. Member for Worcester (Mr. Walker), agree with me that it is appropriate to the present Shadow Cabinet. But that is no way to run a major industry such as British Leyland.

I am pleased to see that the NEB agrees with that. I am also pleased to see that the Government have finally discarded a policy that was psychologically unproductive and was, from a practical point of view, also incapable of implementation.

Therefore, after two and a half years of going down the right track we find ourselves a long way behind. There is no doubt that those two and a half years have cost us far more than the two and a half years that they have lasted. We must realise then that we are starting from a long way back. We are, indeed—and I think that this is probably the one point on which I agree with the right hon. Member for Leeds, North-East—shooting at a moving target. None of us must try to pretend that this will be easy to handle. We are in for a long and difficult haul. I say this with particular reference to the hon. Member for Surrey, North-West (Mr. Grylls). I am pleased to welcome him back to the Chamber from his excursion to Alice in Wonderland in his Sunday Telegraph article of yesterday.

Pulling this company back, getting it to be remotely profitable and generating the sort of cash flow that is required, is not something that we shall be able to see done in three years. I believe that we have to adopt a different approach to this. I do not believe that we should make the funding any more conditional on a 10 per cent. rate of return on assets, which, of course, will be far bigger than the assets to which the hon. Member for Kingston upon Thames (Mr. Lamont) referred during an intervention in my right hon. Friend's speech. Much bigger returns will be required by British Leyland to earn 10 per cent. on assets that will be increased by perhaps up to £2,000 million which will be invested over the next four to five years.

The approach that the Government should adopt, and that we as a nation and the Opposition should support the Government in adopting, is the policy that the French Government have shown for the last 27 years—I have dug out the figures to make the point—towards Renault. Since 1950 Renault—which I think most people would agree is now one of the best managed and most successful motor companies in Europe—has made £44 million profit in total. I would have expected the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) to throw his hands up in the air in dismay at the prospect and to declaim "What an awful investment." But, in fact, that investment made by the French people in their nationalised motor industry has been an extraordinarily good one for them. In those 27 years employment in Renault has increased by 120 per cent. It now employs 70,000 people more than British Leyland employs. In that period exports have increased by 2,000 per cent. That may be a meaningless figure, given the low base, but Renault is now exporting nearly 1 million cars a year, which makes the point. Renault's turnover is £3.5 billion—more than the whole of the NEB.

Those are very substantial national benefits, benefits that have been achieved because a Government have had a sustained purpose. I believe that the British Government, if they can find the will, the courage, the vision and the self-confidence to back this team and this management, and if we could count on an iota of support from the Opposition, could do for British Leyland what the French have done for Renault. We should set our sights no higher and no lower than that.

5.46 p.m.

Mr. Peter Walker (Worcester)

I think that all of us, on both sides of the House, can agree that the hon. Member for Coventry, North-West (Mr. Robinson) is perhaps almost the only Member of the House who speaks with considerable practical experience of the motor car industry both at home and abroad. Therefore, his observations upon both British Leyland and Renault will be listened to in the House with considerable interest. I very much agree with the hon. Member about the vital importance to this country of British Leyland succeeding.

I think that this debate has been one of the most interesting debates from a political viewpoint that the House has seen for some time. It has been interesting from both sides of the House.

I found the speech of the Secretary of State for Industry interesting because he spoke with some justified pride as to the new team that has taken over British Leyland, and as to what he called the practical nature of the board that is now in charge. This is a long way from the sort of basic original dreams of nationalisation and all that. What the Secretary of State was saying was "I have succeeded in getting a team that is highly commercial, that intends to run this business efficiently and well, and I am giving it full backing."

I found that very refreshing, because the Secretary of State in his job, like myself in the same job, has made his mistakes. He enthusiastically supported the Ryder Report. This shows the difficulty of a politician such as the right hon. Gentleman, or myself, or any other politician, in making judgments on these great commercial issues. We all think that we know. We look at a few figures and facts and compare them with someone else's, and say that this should be done and that should be done. That is why I found the comments of my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) interesting in terms of his lust for monitoring. My difficulty is to know who does the monitoring. Even my right hon. Friend, who has considerable commercial experience and ability, would agree, I think, that he is not a terribly good bloke to monitor the motor industry.

Sir K. Joseph

indicated assent.

Mr. Walker

I admire all those splendid civil servants who work for the Secretary of State. They are men of great ability and integrity. But I do not think that they possess the immense ability to monitor commercial concerns.

What we in this House must face is that if we have a mixed economy, the only way in which we shall succeed is in finding chaps like Michael Edwardes, who surround themselves with some talented, able men who understand the world of commerce, and, if we think they have a good team, backing them. We have backed some losers. Occasionally we shall back some winners. What is desperate in regard to the present position is that we should back British Leyland in the attempts that it is making.

As regards the argument that if one backs one firm, one does not have the ability and money to back another, if we do not back British Leyland and if it does not succeed, such will be the increase in public expenditure for unemployment benefit and social security benefits, such will be the loss to the balance of payments, that we shall not be providing an immediate benefit available for other firms which could, perhaps, make better use of the money.

Therefore, in this debate my right hon. Friend was rather reluctant—understandably, because of the views that he has held over the years, which I respect, if I do not agree with them all—to say that we support giving a fairly substantial sum of money under the first order to British Leyland. But in his last remarks he made clear that the Opposition have decided that in their view British Leyland will be backed. My right hon. Friend the Leader of the Opposition has said that publicly now on a couple of occasions. The Shadow Secretary of State for Employment, my right hon. Friend the Member for Lowestoft (Mr. Prior), who is, I believe, to wind up the debate, has made this clear in speeches in the Midlands.

If that is clear on both sides of the House, I hope that we shall as a united House go on backing this scheme to see that it succeeds. There is immense commercial advantage if we have that certainty. There is first the advantage of recruiting top management. It is difficult to get the best men in the world to help with the company's management if there is some political uncertainty about its prospects in the immediate future.

That is important for overseas confidence. British Leyland exports £2½ million-worth of goods a day already—and that is after an immense loss of confidence abroad which will take some time to restore. There will not be much confidence abroad if there is any suggestion that a change of Government will mean a change of investment plans.

I very much favour the equity system. I think that my right hon. Friend the Member for Leeds, North-East would agree that a unique advantage of British Leyland in its present form, apart from the calibre of the new management—it now has one of the highest calibre boards in the country—is the insistence on keeping a private equity in that company. It may be minute, but it gives the board the right to tell the Government, "We will not do that under your direction, even though, politically, you think that it is right. We have all the safeguards of outside shareholders and the Companies Acts to protect their interests".

I hope that the Government, having kept a quotation for this company, having kept a private sector element—albeit small will, when industrial relations improve, as they must in the tolerably near future, ensure that further equity is given to those employed in British Leyland.

It would not be a bad thing, as the article in the Sunday Telegraph said, to have some direct stake for the whole team who will embark on the revival of this national company. It would give them some feeling that if they co-operate and collaborate in all the difficult decisions, they, too, will obtain some capital reward as the years go by.

I rejoice that in this debate the Labour Party has left aside its political attitudes towards nationalised industries. It has recognised that it has the best commercial board that it could find. I hope that Ministers will give it the equity and let it get on with the job. If it fails, we shall all enjoy attending the public hanging of Michael Edwardes by denunciation, his removal from the board and his place being taken by another.

But if I still held the Secretary of State's office, I would find it difficult to find a board of higher calibre than the present one. It is desperate for the next Conservative Government that British Leyland should succeed during its period of office. I am glad that my right hon. Friend has agreed to support the order. I hope that we shall make it clear publicly and internationally that Michael Edwardes and his team have the support of the whole country.

5.53 p.m.

Mr. Tom Litterick (Birmingham, Selly Oak)

This is a strange occasion for the House, since the Conservative Party is apparently bending all its energies to convincing the British people that it is actually backing a nationalised industry. We should remind ourselves that, in this, the Conservatives are not running to form. Nor does this attitude conform to the propaganda that they manufacture daily in the country through their faithful servitors in the Press. Hardly a day passes without publicly owned industries being attacked, usually in the reporting of speeches by Conservative Members, who have a dogmatic and lasting hostility to public enterprise. Mercifully, the British people are all too familiar with this approach. Therefore, they will be able to judge the speeches of Conservative Members today in sophisticated terms.

For example, in Birmingham they will know that the various speeches made in pretence of supporting British Leyland are election speeches, designed to convince people that a vote for the Tory Party is tantamount to a vote for their jobs, when we all know from hints dropped already that they might carve up British Leyland should they win another election. That is a danger to which the people in the West Midlands are alive.

It is also remarkable, when one thinks back, to reflect on the Tories in their other incarnation as shareholders and people who work for shareholders through merchant banks. They were unwilling to support British Leyland when it needed financial support. The House and the country will remember vividly Stokes' cri de coeur, and how British Leyland was valued by the very people who are now suggested as arbiters of success. They valued British Leyland at less than the value of the empty Centre Point in the middle of London. No one in the private enterprise sector then would provide a halfpenny of support for the then dying private enterprise British Leyland. Through an elected Labour Government, the British people decided that British Leyland, in their interests, must not be allowed to die.

The House should bear in mind that British Leyland is the only truly British motor vehicle manufacturer. That is not a chauvinistic point. So long as that remains true, there is still a chance that the British people will retain some real democratic control of one of their major industries. Ultimately, British Leyland should be used as the means of creating a truly national British motor vehicle corporation, incorporating all the existing motor manufacturers in this country which are currently owned by foreign-based multinationals. However, that is a task to which I am sure my right hon. Friend will look forward happily when fulfilling a future Labour Party election programme.

It should also be remembered that British Leyland is the only net exporter of motor vehicles in the British economy. The other three major manufacturers—Ford, Vauxhall and Chrysler—despite the public involvement in Chrysler, are all net importers. In the case of Chrysler, that is a continuing scandal. I had hoped to put a Question to Ministers on that earlier today, but apparently I missed it.

Those three companies make no positive contribution to the British balance of payments. That has nothing to do with the quality of the British worker or the state of the British capital market. It is simply the result of calculated decisions by those in charge of the three corporations to run a balance of trade deficit in Britain. They are concerned not about British interests but about the interests of General Motors, of Chrysler and Chrysler-Mitsubishi, and of the Ford Motor Company.

Mr. Hal Miller

Would the hon. Gentleman look again at his figures about the balance of trade of the multinational car companies in this country? Would he be fair to General Motors and take into account the Bedford truck? Would he look again at the figures of Chrysler exports to Iran, and would he re-examine the Ford figures? He could not then sustain his present argument.

Mr. Litterick

Yes I could, with total confidence, because I am not relying on the information that the hon. Member has. I have gone into the detail of those figures. Many a car on British roads masquerading as a Ford, for example, was not made anywhere in Britain. A number of cars masquerading under various exotic names do not come from where they seem to come from. Even British Leyland, of course, actually imports cars, but—I repeat with all the confidence in the world—it is the only one of the four major car manufacturers in Britain which is actually a net exporter.

The situation is getting worse, not better, because we do not exercise control through our trade policy or through the planning agreements which we on this side have advocated to control the activities of the motor manufacturers. Therefore, the order making additional funds available to British Leyland is to be commended.

I am glad, too, that the Secretary of State has at least assured the House that the Government will stop pointing the gun at British Leyland's labour force and will cease the ludicrous practice of threatening workers at Leyland that investment funds will be cut off if they do not behave themselves—to use the usual Daily Telegraph terms—that is, if they do not become quiet, submissive employees. That was always a lunatic policy and it was inevitable that it would cause more disruption than anything else in the company, and it did. I am glad to hear that that policy is being abandoned—at least by the Labour Government.

The right hon. Member for Leeds, North-East (Sir K. Joseph) was still clearly hankering after something of the sort, the idea being that workers will work effectively only if they are threatened. Last week the correspondent of The Times, who I understand has no great sympathy for the Labour Party, talked of much whip cracking on the assembly lines, in the context of the Edwardes plan. I promise the correspondent of The Times and the Tory Party that, if there is any damn whip cracking, there will be disruption and the Tories will be the authors of it if they try it. Workers, who are, after all, human beings, do not make a positive response if they have whips cracked over their heads. British workers, in particular, do not respond positively to such an expression of contempt.

We are aware of the consistent and unrelenting hostility which has been expressed by the Conservative Party ever since British Leyland was rescued by the State, at a time when the Labour Party was in power. We understand that it is the intention of the Tories, if they get the chance, to break up British Leyland and throw the good parts of that organisation to the highest bidder and the rest to the wolves, which means throwing thousands who work at British Leyland and tens of thousands who are dependent on supplying British Leyland with parts out of work, as the Tories would have happily allowed to happen in 1973–74 if they had had the chance. They would have allowed the organisation to fall apart.

The right hon. Member for Leeds, North-East, who was a prominent member of the previous Tory Administration, is wholly committed to the concept that the market must be allowed to have its way. The market having its way in this case would have meant the devastation of an organisation and other organisations employing more than 600,000 people, with catastrophic consequences for a number of communities and for the Exchequer.

A number of speeches, particularly the speech of the right hon. Member for Leeds, North-East, have illustrated the Tory fixation with the idea that an organisation does not become more efficient unless someone is being made unemployed. This monomaniac notion should be dispelled from Ministers' minds. There is no necessary correspondence between making people unemployed and an organisation becoming more efficient.

One of the shortcomings of the so-called Edwardes plan is that its assumptions about the size of the market in which British Leyland will be able to operate are very modest. Therefore, the consequential effects of the changes in technology that are involved in this so-called plan mean that people will be made unemployed.

On different market assumptions that would not be so. In short, the assumptions are far too modest. They assume the inevitability of a contraction in the labour force instead of asserting the possibility of expanding the market itself. The potential market is not confined to the existing markets, which are all too dependent on the highly developed durable consumer goods market of Western Europe. The markets are in the rest of the world, and British Leyland has ample experience of marketing in the rest of the world. I therefore suggest that possibly one of the fatal weaknesses of the so-called Edwardes plan is that it is far too modest in concept and will inevitably result in unemployment on a significant scale, which will damage the West Midlands economy even if the plan proceeds. To that extent I remain a critic of the Edwardes plan.

There has been much talk of the fact, as the right hon. Member for Leeds, North-East said, that British Leyland did not need the funds. There was certainly a very large shortfall in investment fund spending last year and that has resulted in a considerable disruption in other British industries, particularly the machine tool industry, but it has been widespread. The investment programme should be enlarged and accelerated. The market on which the plan is based should be revised and should be seen as a bigger potential market than that in which British Leyland is to work. If the investment programme is not put through in its entirety, the West Midlands economy will be severely damaged. Time is of the essence. Many of the things that need to be done take a considerable time to take effect, but if action is not taken speedily on this order the West Midlands economy will be severely damaged.

6.5 p.m.

Mr. Andrew MacKay (Birmingham, Stechford)

The hon. Member for Birmingham, Selly Oak (Mr. Litterick) was quite right in saying that British Leyland is one of our biggest exporters. I could not understand his argument, however, that we should introduce import controls. Would not that lead to a tariff war? I am convinced that British Leyland does not want import controls providing that competition from abroad is fair and is not subsidised.

Another point that worried me about the hon. Member's speech was that he had what he thought was a great idea to the effect that there should be one British national motor company. I believe that that would be a disastrous mistake. There would be no competition. It would be bad for such a company in the long run, and it would be extremely damaging to British consumers. I am sure that in replying the Minister will not adopt that argument.

We start from a position from which many of us would not like to start. A large number of mistakes have been made in British Leyland's immediate past. The 1968 merger was entirely unproductive and has proved again that a big organisation is not always beautiful. Secondly, the Ryder plan was, rightly, criticised on this side of the House. We are naturally delighted that today the Secretary of State admitted that the plan was hastily conceived. We made many mistakes in swallowing that plan hook, line and sinker.

There are two logical choices for Leyland. The first is that no Government money is made available. The second is that we back British Leyland financially to the hilt. It is totally unacceptable in logic to give British Leyland a little money and then say "Let us see how we go from here" and then possibly make available a little more money. That would be the worse of both worlds. It would bankrupt the company in the end and would waste a sizeable sum of taxpayers' money. I do not believe that the House wants either.

It is important that the nation gives Michael Edwardes and the Leyland organisation the money they require. I only wish that the Secretary of State had been a little more straightforward when he asked us to approve the sum of £150 million, which the Tories will certainly approve, and then suggested that some or all of £300 million will be required to go to Leyland Cars. My right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) has proved the contrary to be the case. The Minister did the cause of British Leyland no good, and I regret that.

I want to give some extra reasons why it is important for us to back British Leyland in these difficult times. Hon. Members opposite sometimes say to me "You are two-faced because of your constituency interests. You are prepared to back British Leyland and to vote money for that cause because you come from Birmingham, which you represent and where you have a business interest, but you are not prepared to back other companies which have run into difficulties."

My answer to that charge is this. I I believe that there is a future for car manufacturing. Cars will be manufactured and sold for many decades to come. I want Britain to play a part in the manufacturing of cars. It is, on the other hand, fruitless to waste the taxpayers' money by giving—through the National Enterprise Board or by other means—great subsidies and thereby helping steel, shipbuilding and other dying industries if one is throwing good money after bad.

The second reason why I felt it important that we should help British Leyland was that the economic effects—here I agree with the hon. Member for Selly Oak—on the West Midlands and in the city of Birmingham would be considerable. This is not just for those who work at Leyland. It would also be very considerable for those who work in the component industry and the suppliers of labour.

I want to kill one myth, namely, that if Leyland went under the component manufacturers would find a ready market elsewhere. Only last week I was informed by a very senior director of a very important supplier and a household name in the Midlands that if Leyland went under only 10 per cent. of the production which goes to Leyland at present could be put elsewhere. That would have disastrous effects on this country as well as on Leyland. We have already heard that Leyland is a major exporter. Obviously the money that we receive from the sale of Leyland vehicles is of great benefit to our balance of payments.

There is an equally important side to this matter. Let us say that Leyland goes under and then some people say "The cars that are sold in this country—Ford, Vauxhall and Chrysler—will take up the slack." That is not the case. The majority of that slack would be taken up by Japanese and Common Market competitors, thereby making our balance of payments considerably worse and increasing the share of the market of the foreign manufacturers.

It is important that we give this money, because Leyland Cars is desperately in need of new models. I make no apology for mentioning the models. I would say to the management of Leyland that if, as is now happening, the Government and the taxpayers are giving money to help Leyland, it has to be prepared for a certain amount of public debate about the products involved. I know that there are disadvantages. A company in private hands can develop its model range without criticism in this place and without comment—not always constructive criticism—in every pub and bar in the country.

But it is apparent to everybody that the Marina, Allegro and Maxi and the Dolomite range are long in the tooth. It is apparent to every observer that this is an area in which there will be growth. The medium-size saloon for family and company use is where the important market will be in future. That is why I was so very pleased to see in the Edwardes plan that the money for the time being is to be retained and the new model will be in that area.

We talk about £450 million and other vast sums of money which we as individuals cannot even contemplate. Let us try to put it into perspective. It costs approximately £125 million to £130 million to produce and develop a new engine. It costs approximately £80,000 to produce and develop a new body. That shows that, although the sum of £450 million is vast and fantastic, at least we know where some of the money is going.

The second area to which the money must go is in improving the production speed and the quality control in the specialist car area where Leyland has immediate winners with the Rover, Jaguar, Land Rover and Range Rover modes. However, unfortunately, delivery is poor and the standard of reliability has let the company down in both home and overseas markets. I was delighted to see this as a major plank in the Edwardes plan.

One area to which the money should not go—it is important that the Minister and the NEB should ensure that it does not go to this area—is in developing the components side of the Leyland enterprise. We have perfectly good component manufacturers in this country who can supply, at the right price and with efficiency, Leyland cars. Let us not allow money to go to an area which is already well covered and which could well put people out of work in certain of the component manufacturing areas.

I suspect that certainly in my year in this House and probably for longer rarely has one man's name been mentioned so often in a debate except when he has been an international statesman, a politician or a criminal. Michael Edwards is not one of those three, but never has one person's name been mentioned so often in the course of a debate. I shall not dwell on it except to say that I find his plan to be excellent. I believe that he is very much on the right lines in reducing overmanning, which has to happen, no matter how unpalatable. Overmanning has to be considerably reduced in order to increase production.

Also—I speak advisedly, knowing that the hon. Member for Liverpool, Garston (Mr. Loyden) is present—it was right to close the Speke No. 2 plant. The industrial policy of not allowing expansion in the West Midlands and giving IDCs primarily to development areas has proved not to work in this case, because the standard of workmanship and of industrial relations has not been sufficiently high. It was a dreadful mistake for Leyland to go to Speke in the first place.

I believe that the morale in management is much improved in Leyland. I only wish that the same improvement and the same optimism had been shown on the shop floor. I see some improvement, but I was disturbed when I learned on Friday that by a two to one majority it had been decided not to accept the incentive productivity wage scheme. This is very regrettable. I hope that those people who voted against the scheme have some very good alternatives, because I believe that at this crucial time for Leyland they might be jeopardising their own jobs and the future of that company.

I conclude by stating one other fact. I do not accept the Secretary of State's argument that nothing in Leyland should be sold off. However, there is a big difference between specialist cars which are, rightly, part of the Car Division and special products. I do not accept the argument of selling off Rover and Jaguar or any other part of the Car Division. We must be vehicle manufacturers completely, with bus and truck as well. I believe, however, that in the fullness of time the Leyland board and the NEB must consider selling off parts of the Special Products area. First, they are nothing to do with the manufacturing of vehicles.

Mr. Robin Corbett (Hemel Hempstead)

As I have a Special Products plant of British Leyland in my constituency, I should like the hon. Member to be more specific and tell the House which bits of that division he would advocate selling and why and when.

Mr. MacKay: I am delighted to have that intervention from the hon. Member for Hemel Hempstead (Mr. Corbett). I shall expand on that matter. First, I believe that it will be up to the NEB and the Leyland board to decide which parts are profitable. Most parts are profitable. Most parts have no particular connection with Leyland. If they were separated and sold, that would affect neither the employment in the constituency nor the profitability of the plant concerned. The money obtained would go to finance the new models and to giving the other money which I have explained is required.

Whilst we in the House are prepared to grant money through the NEB to Leyland, it is important that Leyland also plays its part and sells off as and when it is convenient. By "convenient" I do not think we should just say "Special Products is going in the next few months and is up for offers." The sale has to be commercially organised. Parts of the company should be sold off as and when there is the right buyer at the right time. I do not believe that in the long term the manufacture of cars at Leyland would be affected. It would be a great advantage.

Mrs. Audrey Wise (Coventry, South-West)

Will the hon. Member give similar advice to other industrial conglomerates, namely, that they should sell off their more profitable sections, or is that the sort of advice that is reserved for publicly owned enterprises?

Mr. MacKay

If they need money. They do in the private sector. As a Member of Parliament, I shall not give advice to people who have not come to us for aid.

There are other very profitable sectors of Leyland, such as Jaguar, in the city that the hon. Lady represents, such as Triumph, Rover, MG, Leyland trucks and commercial vehicles. We are not suggesting that we should sell off only what is profitable and keep in the State what is unprofitable. We are suggesting that we should get back to vehicle manufacturing as the prime base of the Leyland enterprise and sell off such enterprises as the manufacture of freezers, trailers and a thousand and one incidental items.

My conclusion is that in due course, when Leyland is back on its feet financially, we must make sure that a certain amount of the equity is put back into the market and sold to the private investor, and—just as important, as my right hon. Friend the Member for Worcester (Mr. Walker) said—that it is offered to employees of Leyland so that they can feel that they have a greater part in the company. I can foresee at the very least a BP position, with the Government having a minority but substantial interest in Leyland.

I believe that with the degree of support that Leyland has had today from both sides of the House we can see a rosy picture. It will be a long hard struggle, but we must be realistic. I think that if we follow the line set out in this debate, Leyland has more than an even chance of succeeding, and—by God!—it must succeed.

6.21 p.m.

Mr. Eddie Loyden (Liverpool, Garston)

I do not want to follow the line taken by the hon. Member for Birmingham, Stechford (Mr. MacKay), but I want to make at least one point about his contribution. The House will understand if I later confine myself to the problems that beset Merseyside as a result of the National Enterprise Board's decision.

My main opposition to the whole statement that has been made, and the decisions that have been taken and supported by the Government, concerns the closure of the No. 2 plant at Speke. It is significant that those who want to act in a divisive way have supported the idea that that plant should be closed in the general interest of British Leyland. If the closure had been taking place in the hon. Gentleman's constituency, I wonder whether his views would have been consistent with those he has just expressed. I am certain that they would not.

I am concerned about the future of British Leyland as a whole, and in that sense I give qualified support to what the Government are saying about British Leyland's future. I am also concerned about the future of the National Enterprise Board and its activities. I want to give qualified support to the NEB and its future activities, but our experience is that the Board's activities have fallen far short of the Labour movement's expectations. On this issue, they have fallen far short of the expectations of the movement in the Merseyside area.

One of the Board's roles was to begin the process of refurbishing industries in areas of industrial decline and carrying out a job-creative programme in those areas The decision taken by Leyland, backed by the Government and with the involvement of the NEB, goes in a completely opposite direction.

It was reported today in The Daily Telegraph, I think with a great deal of justification, that Leyland's decision, with the involvement of the NEB and the Government, has resulted in the private sector in that area using that as a basis for decisions resulting in closures and redundancies that might well not have been made but for Leyland's decision. This suggests that the broader base of the economy will also be affected in this way. Labour hon. Members in particular should be concerned about the tendencies emerging from the decisions taken here and their effect on the Merseyside region. Since the Leyland decision, about 15,000 jobs have been threatened.

In the final analysis, it was not the production or performance of Leyland that was the major problem, as would be suggested by the Conservatives. It has been a question of producing cars that were unsaleable. That is true of the Speke No. 2 plant, tied exclusively to the production of the TR7.

There is no doubt in the mind of anyone who has followed the history of the TR7 that from day one it was a complete, abysmal and costly failure. It is obvious that when it became apparent that the TR7 was a costly and miserable failure the blame had to be pointed away from those responsible for making the decision about the production of the car and for the sort of market research that went into it to see whether the car was saleable in the United States and Canada, whether it was designed for that market and so on.

Anybody who has studied the history of the TR7 can come to only one conclusion, that the car was a failure from day one. It was not saleable on that market. Therefore, it would be in the interests of those who made the decision to bury as quickly as possibly the embarrassments that they would face over their decisions. Therefore, the whole question of fault is turned towards the workers at Speke No. 2 plant in particular.

It is interesting that in the New Statesman this week there are certain disclosures that would argue very forcefully against those who wanted to say that the performance at Speke was the main and almost exclusive reason for its closure. It is apparent from the disclosures in that journal that that is not so.

Although the Leyland management has offered to provide the figures that would prove conclusively that it was the case—and to be fair to the management, some figures have been produced—there has been no conclusive evidence that the reasons behind the closure of Speke No. 2 had anything to do with the question of performance.

What we are seeing in Leyland is the tendency for British industry now to start cutting back on its capacity. Where the Government back that sort of argument, as they are doing now, it follows that private enterprise will take advantage, as it is doing in Merseyside, to cut back capacity, in the realisation that the upturn in the economy that everyone has been hoping and praying for has not occurred.

Make no mistake about it: the decisions taken in that area will be extended into other sections of private enterprise and elsewhere, as we are already seeing with steel and other parts of the publicly owned industrial sector.

Therefore, the question of what is going on is vital to those in the Labour movement who believe, as I do, that the Government's whole economic strategy has been wrong for the past two or three years. Certainly the Government have not brought about the proper utilisation of the NEB. I did not envisage, and as far as I am aware no one else on the Labour Benches envisaged, that the NEB was brought into being for the purpose of recommending the cutting and slashing of 3,000 jobs in a publicly owned industry.

For us, it is not simply the future of Leyland that we are discussing, but the whole question of the Government's economic strategy. I give this warning to my Front Bench: if Ministers think that the fight for Leyland is over, they are sadly mistaken, because it will be for the Labour movement to take up the fight against unemployment generally in the area to which I belong and certainly in relation to Leyland. I shall support and join those forces that are resisting attempts to bring further unemployment to Merseyside with closures and redundancies. I shall identify myself clearly with those who are opposing that trend, since they are, in fact, defending the whole future of Merseyside in so doing.

If that decision is taken through, it will be no easy task. Let no one imagine that one can go ahead in a nice oily way to put through the decision for the closure of Speke. Yesterday on Merseyside there was a conference which made patently clear that there will be great resistance not only to the closure of Speke but to recent other happenings on Merseyside. For example, there is the recent decision to close the Spillers factory at Walton, in the constituency of my hon. Friend the Member for Liverpool, Walton (Mr. Heffer), threatening 8,000 more jobs. There will be spin-off effects from that for the Birkenhead docks, which now depend on the conveyance of Spillers' meal and grain, that factory being one of the main users of the dock facilities for those commodities.

Perhaps I have drifted somewhat from the subject of British Leyland, but it is imperative that we show that our concern is not just about British Leyland. What concerns us is the direction of the Government's economic strategy. For my area the present trend is tragic. My right hon. Friend the Secretary of State said that without the cash being available the Midlands will be made a wasteland. Let him go to Merseyside now. It is already beginning to be a wasteland, partly because of decisions taken by the Government, by the National Enterprise Board and by British Leyland regarding the closure of Speke No. 2 plant.

As I said earlier, the House should realise even at this late stage that if we do not wish to see a really worrying political situation develop in that area, the Government should think again about the closure of Speke No. 2 plant. There is no doubt that private enterprise is using it as a basis for arguing for closures and redundancies which will turn to nothing the Government's policies for special development areas. In fact, that has been made clear from the Opposition Benches. I hope that it will be noted that the Opposition have said that the Labour Government were wrong in the first place in sending Leyland to Merseyside and that their policy on industrial development certificates was wrong.

If it is said that the Government have been wrong, it is up to my Front Bench to think again about what their policy is doing for employment on Merseyside and, for that matter, throughout the whole United Kingdom. I hope that the Government will take seriously what is said in this debate and will realise that there will be full resistance to policies which put out of work people whom I represent by the closing of factories in my constituency and in other parts of Merseyside.

6.32 p.m.

Mr. Richard Wainwright (Colne Valley)

Fortunately for British industry and for the reputation of the House, the adversary approach which the right hon. Member for Leeds, North-East (Sir K. Joseph) sought to adopt at the beginning of the debate has not so far been followed on his own Benches, and, in so far as there have been controversial speeches, they have come from below the Gangway on the Government side. That leads me, at least, to feel that both Mr. Michael Edwardes and the National Enterprise Board are broadly probably on the right path at present.

Before coming to two or three of the matters which have proved somewhat controversial, I shall refer to two matters which seem to me to be constituted of sheer fact. First, it seems to me factual that the two matters before the House today—the motion for £150 million and the Statutory Instrument covering £300 million—stand or fall together, whether they be right or wrong. I cannot see any logic or common sense in attempting to divide the two, either from the point of view of British Leyland or from the point of view of the National Enterprise Board.

As regards British Leyland, it is clear from passages in the NEB's report on British Leyland's corporate plan that the £450 million is a carefully considered sum put forward very deliberately by the chairman and his new team at British Leyland. Obviously, it has been argued out in great detail, and in no sense is it a bidding figure put forward by the chairman with any thought that he would get something rather less.

It seems to me that this is a sum which involves the future service of Mr. Michael Edwardes and his team, and my reading of the NEB's report is that, putting it in the nicest possible way, without appearing to shove a gun at the head of the House, if the £450 million or any part of it is refused tonight, Mr. Michael Edwardes and some of his team will not remain much longer in their key positions. If I am wrong in reading that into the NEB's report, I shall be glad to be told soon.

Mr. Hal Miller

Is it the hon. Gentleman's reading of the papers that the NEB cannot make its funds available for British Leyland without having the additional funds put in? That is not my reading.

Mr. Wainwright

The hon. Gentleman might have waited a moment, because I said that I should first approach these matters from the point of view of British Leyland and its need for all the £450 million and I should then turn to the National Enterprise Board's position. I now come to that, having apparently excited no opposition to my point about British Leyland's absolute need for £450 million.

As regards the National Enterprise Board, I was astonished that the right hon. Member for Leeds, North-East, whom we all acknowledge to have considerable financial experience and acumen in what, to me at any rate, is big business, should suppose that a body such as the NEB, charged by the House with heavy and continuous responsibilities, would be willing to face the immediate future with £575 million out of its present limit of £700 million absolutely committed. I cannot imagine anyone being willing, as it were, to run for much longer a merchant banking enterprise of the size of the NEB with only £125 million up its sleeve, especially since it has responsibilities to, I think, 36 client companies with which it is already heavily involved.

Mr. Grylls

Thirty-nine.

Mr. Wainwright

The hon. Gentleman says that there are 39, and that strengthens my argument. Furthermore, all of us in the House expect the NEB to behave as an ongoing enterprise. Is it suggested that it should hang notices in its premises at Grosvenor Gardens saying "Business temporarily suspended owing to over-commitment to British Leyland"?

I say categorically that, on my reading of these matters, a margin of £125 million for an entity such as the National Enterprise Board would be intolerably small, and I suspect that it is in fact less than the NEB's total of present responsibilities and projects. I am willing to give way if that can be confirmed, since it is important that the House should know.

The Minister of State, Department of Industry (Mr. Gerald Kaufman)

In fact, although he is very much on the right lines, the hon. Gentleman is understating the position. When he refers to £125 million over and above present expenditure, plus the commitments to British Leyland, he is not taking into account that the wholly owned subsidiaries of the NEB have approved borrowing facilities with banks at present unused amounting to £61 million.

If those facilities are utilised, they will count against the borrowing limit, and in all prudence the Board has to provide for those in case they are utilised. That means that the total is taken up to £636 million immediately, which leaves a balance of only £64 million, which is entirely insufficient to meet the forecast needs of the NEB group of companies, excluding British Leyland, for fixed and working capital over the next 12 months.

Mr. Wainwright

I am obliged to the Minister, and I shall therefore move on to the second matter of fact to which reference has been made.

Mr. Kenneth Clarke (Rushcliffe)

Will the hon. Gentleman recognise that the commitments of the NEB and the companies with which it is involved include some which are eminently realisable? Among the companies owned by the NEB are some which have been successfully turned round and which could at a suitable moment be put back on the market. Is the Liberal Party as committed as is the Labour Party to the concept that the NEB will never denationalise any of the companies which it acquires? Is the Liberal Party totally opposed, for instance, to any prospect of Ferranti being put back into private hands?

Mr. Wainwright

The hon. Gentleman knows perfectly well that the condition of the Liberal Party's support of the NEB, from the moment when it first appeared in the Industry Bill in 1975, was that, as we said on many occasions, it must be regarded as an in-and-out organisation which is prepared to dispose of companies at the right time with as much care and relish as in acquiring companies. But the governing phrase must be "at the right time". I am very surprised that the representative of business speaking from the Conservative Front Bench should suggest that publicly owned assets—assets acquired on behalf of the taxpayer—should be in danger of being flogged off to meet a situation caused by this House grudging the NEB a proper margin within which to operate as a civilised concern.

The second matter of fact, which is of equal importance, concerns the suggestion of the right hon. Member for Leeds, North-East as to the peculiarly inept business in the Ryder plan of doling out Government money only as long as there was a good report on industrial relations. Most Opposition Members condemned that ineptitude at the time. The right hon. Gentleman for Leeds, North-East was implying repeatedly that monitoring on behalf of the public would now be only an annual performance. But in the NEB's report on the British Leyland corporate plan, which has been available at the Vote Office for some days, there are repeated references on page 12 to the NEB's intention—indeed, its pledge—to monitor British Leyland, and especially its capital expenditure, continuously.

I shall content myself with two short quotations from paragraph 11.13 on page 12. The first is that: the NEB will continue to monitor the company's performance against budget during the year". A few lines later it is stated: Major programmes of capital expenditure will continue to require the approval of the NEB. I make it clear on behalf of the Liberal Party that we have always, from the outset of the British Leyland affair, maintained that monitoring by the NEB was much more likely to be satisfactory than was monitoring by politicians or even by over-pressed civil servants with many quite different concerns on their minds.

I turn now to possibly more controversial aspects. There has been a good deal of talk today, which I found very facile, about flogging off parts of British Leyland in order to try to reduce the sum on which we are being asked to vote tonight. I look forward very much to a time—I cannot say when it will come—when British Leyland, or parts of it, will be eagerly sought after by the market. I believe, without prejudging the issue, that there may come a time when the corporate health of British Leyland and its workers will be so robust that it can perfectly well do one or two very good deals with the market, with some parts of British Leyland, on behalf of the taxpayer. But that is years and years away.

To start flogging off at this moment one or two jewels in the Special Products crown would seem to me to be an appallingly stupid provocation in regard to industrial relations, just when people everywhere, including Opposition Members, are commending Mr. Michael Edwardes for slowly bringing a rather better spirit into the whole enterprise. Incidentally, as hon. Members know, Mr. Edwardes is also trying, quite rightly, to interest the whole country in the future of British Leyland and induce us all to become customers of it. To suggest, therefore, that the process of disintegration has begun would be a height of folly which would never enter Mr Edwardes' mind or that of the team around him.

There is also the further possibility that to do anything such as this would be an absolute gift to those who stand at the gates of British Leyland factories selling Socialist Worker and also the publications of the International Socialists. I ask hon. Members to consider this. Any price which could be found on the market for any part of Special Products Industries could most easily at the present time be represented by the extreme Left wing in its newspapers as a free gift by the British Parliament to certain financial interests.

The dealings of this House with British Leyland and the rescue operation have never put any price tag on the separate parts of British Leyland. It was an overall deal in which the public acquired the shares of British Leyland. It would therefore be the easiest thing in the world for the scribes of extreme Left-wing newspapers to misrepresent any sale at the present time as an appalling piece of financial jobbery in the interest of a privileged few.

I and my Liberal colleagues regard the new British Leyland plan as a very welcome piece of realism. It is stressed that the question is sheer survival. That is a very welcome change from the grandiosity of the Ryder plan. It also suggests that short-term considerations must at all points have priority over longer-term dreams and visions. That must also be right at the present time. It is extremely realistic—even though it is perhaps disappointing—that Mr. Edwardes proposes and intends a big shift in capital spending away from the volume part of the business into vehicles and special products. We welcome particularly from the Liberal Bench the smaller management units and profit centres which Mr Edwardes is already installing.

I hope that this policy will be taken further and that the financial results each year of each of the profit centres will be published to hon. Members of this House, and through us to the whole country, so that the public, which pays for this business, will know year by year how each part of the business is proceeding.

We also welcome the much more discreet attitude of the present management team towards industrial relations. There can be no hope of solving these delicate problems on the shop floor if they become part—as they seemed at one time to be in danger of doing—of the yahoo politics and matters of facile exchange in this House.

I have only one critical comment of the slightest importance to offer. That concerns the danger, which some of my colleagues sense, that Mr. Edwardes' admirable efforts to convey an image of British Leyland as a great British company, selling British products, if not managed with extreme skill and delicacy, may hamper what we regard as a very desirable European trend in the vehicle industry. I refer to the trend towards industrial partnership with our Common Market colleagues. I am advised, for instance, that in the very tricky matter of creating an all-aluminium engine for at least one volume car there might well be a great deal to be said for the early development of a close partnership with Renault, which has already taken the decision to have a huge aluminium foundry and to create an aluminium engine of the size which could be very useful for British Leyland.

I hope that the British public will not be misled by any publicity campaign into thinking that in this present age there can ever be such a thing as a 100 per cent. British car, or that, if there were, it would be desirable or offered at the right price.

I now turn to the Statutory Instrument about the NEB for what I regard as absolutely essential funds if the British Leyland case is regarded as sound. It seems to me that in recent months the NEB has taken a turn very much for the better. It is no longer behaving as a self-generating organisation appearing to go its own way under very headstrong leadership. It is now an obedient, imaginative and well-tuned instrument of the policy of the Government for the time being with, I suspect, a sensible and close eye on any possible future Government.

If we now have a consensus NEB—as I pray we have—this cannot fail to be for the good of the country. There are always those hon. Members, such as the right hon. Member for Leeds, North-East, who say "But there are many eager merchant banks and other finance institutions desperately anxious to lay out their money in the same areas as the NEB." If there are, they have not shown much signs of activity in some very important areas. I can understand why. I make no criticism of the merchant banks and finance houses.

I take just one example, the leather tanning industry. I cannot conceive that any merchant banker in his senses, with plenty of other opportunities for deploying his money and skill, would have such a masochist complex as to try to reorganise the British leather tanning industry, which is bound to be a bed of nails—if that is not a self-contradiction—for some years to come and has already landed the NEB in the very painful task of agreeing to redundancy notices for many hundreds of hard-working people in Beverley and other parts of North Humberside.

It is simply because only a public corporation can hope, with luck and great skill, to be tolerated in a role like that that the NEB has a unique role. If the people of Beverley were told that financiers of the City of London had insisted upon 700 of them getting the sack, there would have been a series of sit-ins which would have lasted from now until the summer holidays. But a public corporation—doing it admittedly with great regret—is at least able to say with a perfectly honest countenance that it is doing this in the public interest That is one of the virtues of the NEB.

I am glad that with regard to its particular guideline on promoting employment Sir Leslie Murphy and his team are taking an overall view and are not assuming by a narrow interpretation that a positive duty to promote employment means that they must go running around the country collecting every lame duck that is about to give people the push. They take a much broader view, and I am quite sure that they are right.

The fact is that in the present industrial climate, and with all the depressing factors—many of them not under our control—in the rest of the world we need a public body with relatively modest resources of this kind available to fill the gaps which in a mixed economy are inevitably left by perfectly enterprising finance houses and other organs of private enterprise.

If the Conservative segment of the Opposition does not like this particular form of NEB, it is incumbent upon it to tell the House what it would put in its place. Indeed, before the end of this debate I hope that we shall hear from the Conservative Front Bench what its plans are for the NEB if it falls to the Conservative Party to decide these matters in future.

In our view, the NEB has taken some splendid steps forward in the last few months, especially in negotiating with the Secretary of State its right to sell off up to £1 million in any one case of shareholdings without anything more than his formal consent. In my part of industrial West Yorkshire that has considerably increased industrial confidence in the role of the NEB.

With those reasons in mind I shall tonight recommend my right hon. and hon. Friends to support the Government on both the Statutory Instrument and on the order.

6.55 p.m.

Mr. Arthur Blenkinsop (South Shields)

This has been a fascinating debate because we have been confronted from the Conservative Opposition by what amounts to an unholy compromise which they have reached. The right hon. Member for Leeds, North-East (Sir K. Joseph), in delivering his vigorous attack upon the Government—and apparently assuming a holier-than-thou attitude about the whole procedure—clearly had been grudgingly won over to agree to one of these Statutory Instruments on the understanding that he would be able to get support from Conservative Members on the other. There was the world of difference between the attitude exhibited by the right hon. Member for Leeds. North-East and the attitude of the right hon. Member for Worcester (Mr. Walker), who at any rate appeared to be putting a fairly rational case in his brief but vigorous intervention.

I wish—at any rate on this subject and on the work of the NEB—that at least there was greater understanding of its overall role. For example, the hon. Member for Birmingham, Stechford (Mr. MacKay)—I hope I did not misunderstand him—apparently had the impression that NEB funds were being used for the shipbuilding industry. He said that quite specifically. But, of course, NEB funds are not used for that purpose. That is quite clear.

As someone who comes from the North and North-East, I want to raise specifically matters that were referred to by my right hon. Friend about some new avenues of work for the NEB, namely, the setting up at the beginning of the year of the new regional board in the North which is comparable with the board that has been set up in the North-West. It is true that the establishment of that body has not been greeted with overwhelming excitement in the North-East. I believe that is for two major reasons. First, in the North we are concerned about the number of bodies which already exist which appear to be in danger of overlapping in some of their work. We are concerned lest this new board should merely be seen as yet another body added to the existing number. We in the North are very eager to do some rationalisation in that sense in order to secure a clear voice for the whole region comparable with the strong voice that we believe Scotland can now express through its development agency.

Secondly, our judgment about the effectiveness of the work of the regional NEB will very much depend upon its success. It has been in existence for only a short time—a matter of about three months—and it would be unfair to judge it by that very short period. But I hope that we shall have a continuing look at the way in which it finds it possible to generate new activity, because I feel that it should not regard it as its job simply to wait for people to come to it. Rather I hope that it will adopt a more aggressive line and seek to find new avenues to development in the Northern region.

We are concerned that we have a number of different bodies in the North. We have, for example, the departmental Ministries already with some independent rights of decision making, especially in terms of the Industry Act and the decision under the Act. We have the Industrial Estates Corporation. We have on an advisory basis the Northern Economic Planning Council, and we have promotional bodies such as the North of England Development Council. There is a danger that proliferation of bodies of this sort can lead not to clarity of decision and action but to some confusion.

We are eager to work out ways in which we can get a better combination—without necessarily further legislative action but administratively—to secure the greater clarity which we think will be very much to the benefit of the region. In the meantime, naturally we welcome any efforts which the NEB can carry through on its new regional basis. We welcome that it has as a body modest independent rights of action of its own for authorising projects within the £500,000 figure which possibly is not all that much today but which gives it some independent rights of action. We are deeply concerned lest the Conservative Party should succeed in trying to deny the NEB overall the necessary resources not only for the Leyland project but for the many other promising projects which it has helped stimulate and in some cases to rescue. We are deeply concerned in the North that they should have the full backing of this House.

7.0 p.m.

Mr. Hal Miller (Bromsgrove and Redditch)

As one who voted for the Ryder Report in the first place, I do not think that we should be too apologetic today when we come to another crossroads in the history of Leyland, and I do not think that we should put on the hair shirt too publicly.

I should like to take this opportunity to pay tribute to those who have tried to bring that plan to fruition and who have laid the groundwork on which the new team will be able to base its drive for success. It would be very remiss to let this occasion pass 'without paying such a tribute to those who have worked so hard and laid strong foundations the reward of which others are now about to reap.

But we have again been brought face to face with a situation in which this House has great difficulty in deciding how to disburse such large sums of public money coupled with retaining some accountability to our own constituents for the use of their taxes. I thought that that difficulty was illustrated in the remarks of the hon. Member for Colne Valley (Mr. Wainwright), who showed no concern for the proper husbandry of public money but appeared to be willing to go along with whatever was suggested, without any reservation.

Mr. Richard Wainwright rose—

Mr. Hal Miller

Apparently we are to have some clarification.

Mr. Wainwright

It may be that the hon. Member was asleep when I cited the meticulous arrangements that the NEB was making to monitor both the current operations and the capital expenditure of British Leyland.

Mr. Miller

I distinctly heard the hon. Member characterise the Conservative Party as the party of business. I was merely pointing out that we were a little more careful of the taxpayers' money than he appeared to be suggesting that his party was.

The difficulty to which we should be addressing ourselves is how Parliament is to arrange itself and constitute the body for the purpose to ensure that public money disbursed in this way is suitably monitored. Obviously across the Floor of this House we are in no position to discuss the various details of models or uses of expenditure or, indeed, the confidential nature of some of these uses. But we need to consider some means whereby we can exercise our responsibilities for public expenditure.

In the debate on the Eighth Report of the Public Accounts Committee I drew attention to this and I was disappointed not to have any reply on that occasion. I hope that we shall hear some comment about it later tonight. I also made it clear on that occasion that it was no longer realistic to expect the Leyland operation to continue on the basis of drip feed. That is one major reason why I support the proposal before the House for an injection of equity.

Before I leave the Ryder plan, I ought to remind the House that that was based on over-optimistic assumptions. It was characterised as a blue skies forecast. However, it takes a very considerable time for attitudes to change, and even the great new broom has not managed to change all the attitudes, as was evidenced by the refusal of the productivity scheme by the work force at the end of last week. So do not let us go overboard in this direction, because some people, including myself, may have been too optimistic about the previous scheme. It takes a long time for attitudes to change and for results to be achieved in that direction.

Moving on from Parliament, I must remind right hon. and hon. Members that there is a severe limit to public funds, and the £850 million which is being made available to Leyland in the next 12 months and the funds which the Secretary of State has announced already for British Steel in round figures have effectively pre-empted one year of the gain from North Sea oil. There is therefore a real limit on the funds which can be made available.

It was for this reason that some of my right hon. and hon. Friends were encouraged to inquire whether some of the operations not directly connected with vehicle manufacture might not be able to satisfy their investment needs to the extent which they themselves would wish by being freed from the shackle of public investment and being allowed to seek their fortunes on the market. I cannot see how, for instance, the separation of commercial refrigeration or construction equipment would affect the morale of those working in the motor force. This is another respect with which I disagree with the hon. Member for Colne Valley.

I do not suggest that this could be done today, but it could and should be organised on such a basis that it ought to be possible, because there is a limit to the public funds which can be made available, and it may be that the growth of these companies is being inhibited unduly by the need to spread the limited amount of butter.

Moving on to British Leyland, it is difficult for the House to form an effective judgment when the detail before right hon. and hon. Members is necessarily scarce. We have no indication of how much of this money is to go for working capital and how much is for investment, and we are lacking various other information which an ordinary shareholder would expect in a prospectus from a company seeking to acquire additional finance.

Here is another area where I feel that we in Parliament are not living up to our responsibilities. But part of the lack of information which concerns me is that we do not know how much of this new investment may be going into competing with already existing industries. I have in mind components, for example. I know that this is a very real worry. Several large component makers have approached me in the past year, and there have been deputations to the NEB. I hope to be able to catch the ear of the Minister who is to reply so that we may have some information about whether any of this investment is to go into component manufacture and compete with existing firms. I shall resist any suggestion that part of any run-down in Leyland's work force should be mitigated by transferring workers to component manufacture. The only result of that would be to put people out of work in those factories with which they would be competing. That has been confirmed to me on a series of recent visits to our major component makers. We should like some assurance on that score.

We have not been able to identify from the figures before us the relative profitability of any of the operations. I would resent the perhaps facile assumption that all is well in Rover and Jaguar and that it is only Austin and Morris that are holding back the whole body corporate from success. That has not been proven to us. There is another area where adequate information has not been available.

The National Enterprise Board in its report has not considered adequately, as far as I can judge, British Leyland's position as a European car maker in the European car market. There is a serious danger of over-production of cars in Europe over the next five years. I am not convinced that British Leyland's production plans have been considered in that light. I, like the hon. Member for Colne Valley, would wish to go further and have some reassurance that there is a more positive move towards ensuring that British Leyland is an effective part of the European motor car industry. I do not believe that it will be able to survive long without having, as it were, at least two legs on which to stand.

One of the reasons for that is the colossal size of the investment that is now required to mount new technology. It is significant that Renault had to co-operate with Peugeot and Volvo to produce a new six-cylinder engine. It is likely that there will have to be further co-operative efforts of that sort, because the scale of investment that is now required is too much for any one company to find, even one backed with public funds. That does not appear to have been considered in the NEB report.

In speaking of the NEB report, I emphasise the remarks made by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) on productivity. It is an issue that has been brought to my attention recently by the works committee at Longbridge, which is most concerned that the productivity aim is not ambitious enough. The European productivity, with which comparisons are constantly being made, will have made further advances on the basis of investment and new technology even during the period of the Edwardes plan. That factor has not been considered sufficiently in the report let alone answered.

There are many queries and we are being asked to make an act of faith. The unfortunate probability is that we shall be asked to renew it at regular intervals. For example, next year we have an additional £400 million to provide in one form or another. How are we to fulfil our duty to our constituents and satisfy ourselves on some of the major points that I, with others, have been trying to make this evening?

From the fairly close observation that I try to keep on the operation of the company and of those who work in it, and the contacts that I have with them, I believe that real progress has been made, although the extent of it is not yet immediately apparent. Progress has been made especially in participation. One of the worries of the works committee was that the new management might mean going backwards in that regard when it felt that advances had been made. I was happy to receive assurances on that score.

We now have to face that further funds are needed for the enterprise to continue. It must be observed that an equivalent amount of investment is being required from dealers, who will have to revamp the whole of their dealership structure. Many of them will be required to make a considerable investment both in stock and in capital equipment. The employees of the dealers are equivalent to those who work in Leyland's manufacturing assembly plants. The same thing may be said for the component suppliers.

Therefore, we can assure ourselves that public money is being used in some sense as a seed corn. It is promoting a great deal of additional private complementary investment to go along with it both at the beginning and end of the manufacturing process.

It is fair to say that we have a duty to sustain the confidence of those involved in the whole chain from the supplier through the assembler through the dealer to the customer. We have a duty to sustain their confidence, and tonight we should show that we have an equal commitment.

7.16 p.m.

Mr. Peter Brooke (City of London and Westminster, South)

It is always a pleasure to follow my hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller) in debates on this subject. My hon. Friend's comments on the industry are always well informed. His frankness and candour in reminding the House of his support for the Ryder plan were commendable.

I have to declare an immediate interest as someone who has earned his living as a management consultant. Within the past five years my firm certainly served British Leyland, Ferranti and Rolls-Royce, and indirectly the National Enterprise Board, although I do not think that we are serving any of those clients at present.

Anyone taking part in the debate must do so in the profound hope that British Leyland will be restored to health. As many hon. Members, including my hon. Friends, have reminded us already, many jobs are at stake. For patriots the name British is attached to the company, and that is important, too. It should go without saying that British Leyland's best prospects of being restored to health depend on the company making things that world-wide consumers want and on the company selling them profitably at prices that world-wide consumers find attractive. Any other outcome is both temporary and agonising.

Labour Members may reasonably ask of us on the Opposition Benches our attitude to the manufacturing side of the public sector. My own view of when Governments should intervene in the private sector of industry coincides with that expressed recently by a distinguished industrialist speaking on this subject. I shall not give his name for the occasion was private, but his audience embraced both the private sector and the public sector. He said that Governments should intervene in industry when, and only when, the free market was either not achieving the results that were needed on objective criteria or was not achieving them fast enough. The Conservative Government's intervention in Rolls-Royce, given both the commercial and especially the defence clientele of that company, was a classic application of that theory. No doubt the present Government would argue that British Leyland is a similar case.

Before I leave the level of theory I add one other footnote, We hear a great deal from the Labour Benches about Government subsidies to the private sector. I hope that Labour Members will pause to remember when they contemplate the reverse—the consequences of the Government intervention in a free market—that in the majority of top public sector jobs we now have the private sector subsidising the public, with executives plucked from the private sector to chair Rolls-Royce, British Steel, British Airways, British Rail, the Post Office, Alfred Herbert and now British Leyland. They are either seconded directly by their companies or are able to take on the jobs at the relative pittances that the public sector offers because they have accumulated some degree of personal wealth in the private sectors before they cross over.

There are a number of reasons why Government intervention in industry should be as brief as possible. One of the most cogent is the commercial embarrassment having to do corporate planning under the searchlights of Parliament. The NEB statement, which forms one of the background papers to this debate, is a vivid illustration. It is concise, well-written and necessarily almost totally uninformative. The guts of the NEB's decision-making—indeed, the nature of the NEB's decisions beyond the reiterated statements of faith—have perforce to be omitted. We are asked to pass judgment blindly on facts that we cannot be permitted to see.

What follows, therefore, is inference from the visible elements of the iceberg to what lies below. The prime responsibility of the NEB, we are told in paragraph 1.1 of the statement, is "to promote" the company's "efficient management". In paragraph 1.2, we are given wider social and industrial objectives of the NEB. In neither paragraph does the word "profit" appear.

At the last election the present Secretary of State for Energy, who caught the Moses mode rather earlier than some of his friends, prowled round the gates of the public sector and, as Joshua at Jericho arranged for the sun to be stopped in its tracks, so the Secretary of State for Energy assured the workers in the public sector that they had been liberated by a Labour Government from the laws of profit and loss.

The management and workers of Rolls-Royce, on the basis of last week's results—I quote Rolls-Royce as the NEB's other major foster child—have fortunately paid more attention and heed to Adam Smith than to the right hon. Gentleman. But it is devoutly to be hoped that, though the NEB cannot bring itself to mention the word "profit" in the first two paragraphs, and even in paragraph 11.15 can only bring itself to refer to a "financial duty" and to a return on capital, what it is opaquely talking about is a return to profitability. We must hope that Mr. Edwardes is not so pusillanimous in his language.

The next crucial paragraphs in the NEB's statement occur in section 4—"Organisation". In paragraph 4.1 the NEB states: The new management considered that British Leyland's poblems were in part due to the structure of the oganisation. After expanding on that, it goes on in paragraph 4.2: These initial conclusions were the subject of detailed study by a special task force within the company. The outcome has been a decision to move during the course of the year to a new organisation with major consequences for Cars and for International. The apparent implication of this, the apparent sequitur, is that new management made a study and the outcome is a new organisation. My information is that the task force was in being and that more than one firm of consultants had been employed prior to the new management's arrival. My further information is that the task force had taken the view—as one would expect from knowledge of how the 10 car companies in the world which are larger than British Leyland, with the limited exception of General Motors which is large enough to be an exception in the way that it manages itself to any general rule, organise themselves that car manufacturing operations are so integrated one part with another that true decentralisation to genuinely independent units—the small is beautiful syndrome—is impossible. It was at that point that new management arrived.

In paragraph 4.2 of the NEB's statement the word "outcome" is the mot juste since it remains an accurate description of a new development while delicately concealing that the conclusions of the study were somewhat at variance with the evidence in it. As the NEB statement also remarks in a happy choice of words, the consequences of the new organisation for Cars and for International are major. As the No. 11 in world markets and much the smallest of the majors, British Leyland is seeking to prove that the smallest, like General Motors the largest, can make themselves exceptions to the general rule of organisation in this industry.

In fact, as always, appearances somewhat belie reality. Whereas British Leyland cried out for centralisation when the scatter of companies was originally put together and never got that centralisation in any proper sense, so now such decentralisation as is occurring is going to be severely restricted.

The break-up of British Leyland International as a marketing entity, with the potential obligation on a dealer in, say, Austria, to communicate and correspond in future with half a dozen people in the United Kingdom as against a single one, is nicely balanced by the news that a senior executive has been expensively brought in from outside to co-ordinate—I ask the House to note the word "co-ordinate"—franchises.

Product strategy and advanced engineering—I quote from paragraph 4.5 —are likewise reserved powers rather than devolved ones. Anyone who knows Mr. Edwardes' prior reputation as a strong chief executive would scarcely have expected otherwise, but it is legitimate to raise two questions.

First, is competition between rival car companies the best way of deploying scarce economic and engineering resources? Secondly, when manufacturing has been British Leyland's historic Achilles heel and when the reorganisation which has been set in motion has seen such a haemorrhage of what manufacturing talent the company had, are the Government and the NEB confident that there is enough manufacturing ability left in the company to staff these new decentralised units?

In section 6 of the statement we are understandably given only the most outline concepts of product strategy. But the inevitable concentration on the short term, given the critical position in the market place, causes one to wonder how far product development will look forward to the 1980s instead of simply seeking to remedy the deficiencies and what the product strategists would call the "me-too-isms" of the 1970s.

At the end of the day the NEB's and the Government's case comes down to backing a single individual. Unlike aerospace where the NEB employs Mr. Lickley, lately a senior executive from the higher echelons of Hawker Siddeley, the NEB's ranks do not include senior motor industry experience. Its recruit from motoring journalism, Mr. Ensor, has left, and its recruit from the industry, Mr. Calver, has gone back to British Leyland.

The NEB acknowledges that its case is one of faith. I do not subscribe to the theory that individuals cannot transfer successfully from one industry to another. There are frequently cases for making such a transfer. But what we lack if we do that—and the NEB's paucity of motor industry experience compounds this—is the instinct that comes of long years in the industry—the sort of instinct that made the Mustang so immensely profitable a model not only because it was a superb product but because Ford's management had the courage to lay down a second production line on the basis of only two days' sales.

I am not troubled by the potential confusions in Mr. Edwardes' plan of organisation unless Mr. Edwardes becomes confused by them himself. The fact that some of the organisational ice is thin is irrelevant if Mr. Edwardes puts it out of bounds to skaters. What he is doing—and it is the sign of a leader anywhere—is sending out signals throughout his organisation of the style in which he intends to run the company. Like many of my hon. Friends, I like the style. I am more surprised that Government Members, who I thought found leadership an unfashionable concept, are so enthusiastic about putting all their chips on a leader. That is what the NEB and the Government are asking the House to do.

Of course, it is risky. That is why there will be notices saying that the ice is thin. But the NEB and the Government are lucky that their earlier interventions such as those involving Rolls-Royce and Ferranti have come right at the right time. If Governments should intervene in industry when they are needed, so they should disengage when they are no longer needed, There can be no happier way of backing British Leyland, risks and all—and I should like to see the House backing British Leyland—than from the handsome return that the Government could now receive from having backed Rolls-Royce earlier. The coincidental success of Rolls-Royce Motors is an admirable augury for this procedure.

7.31 p.m.

Mr. Eric Ogden (Liverpool, West Derby)

I shall take two points from the cogent speech by the hon. Member for the City of London and Westminster, South (Mr. Brooke). He criticised the Government for poaching the private sector in order to provide management for the public sector. I agree with him on that, to a degree. I do not agree with him in his criticism of whom they take and for the reasons that they take them. But somewhere along the line my colleagues in the trade union movement have failed to use the movement to provide alternative managers. I do not know whether that is because in recent years members from the union side have already gone into lower management.

Something that we on this side of the House can do is to encourage the trade unions to provide management skills so that each time someone has to be appointed either to high or middle management my right hon. and hon. Friends on the Front Bench are not criticised for going to the private sector to provide management in nationalised industry.

The hon. Member for City of London and Westminster, South was a little unfair when he seemed to suggest that only an engineer, preferably a motor engineer, should be in charge of British Leyland or that only a chemist should be in charge of Distillers.

Mr. Brooke

I did not intend to give that impression. I intended to say that one of the disadvantages about the present situation is that the NEB does not have that type of experience within its own ranks.

Mr. Ogden

I agree that within the ranks of the NEB there should be the whole range of experience. I am glad that the hon. Member confirmed that it is not necessary to have an engineer in charge of an engineering company.

I proposed to quote to the hon. Member the advice of Sir Arnold Weinstock, who said on one occasion that he knew little about electrical engineering and that his purpose as managing director of the group was to provide the organisation. Regardless of what the product was, he claimed that if he got the organisation right and was able to employ those in the higher ranks of management who had the skills, he would provide the product that people wanted, at the time that people wanted it, at the price that people were prepared to pay, and, incidentally, profit would flow automatically. That was the advice that I was offered by somebody who is more likely to be in political sympathy with the hon. Member than he is with me.

In party politics only seldom does the shadow spokesman on the environment become the Minister when his party is in office. The same applies to a Shadow Foreign Secretary becoming Foreign Secretary. In the present circumstances, it will be a long time before the hon. Member for Kingston upon Thames (Mr. Lamont), who is shadowing on the Opposition Front Bench, will take over on the Government Front Bench. This is another argument. The argument in political parties seems to be the same as that of Sir Arnold Weinstock. The subject and product seem to be less important than a manager's organising and managerial capabilities.

The hon. Member for City of London and Westminster, South said that intervention by the Government in industry should be as temporary as possible. Some of his colleagues are always complaining about Government intervention in industry. Some industrialists complain about Government interference publicly, but they are often first in the queue at Government Departments asking for grants and help of one kind or another. I make those remarks to show the hon. Member that I was listening to his speech, although I was making some last-minute notes as he was speaking.

The Government's proposal seems to have approval on both sides of the House, for different reasons. I support the proposal to provide more capital for the National Enterprise Board and, through it, more capital for British Leyland.

I ask the Minister to confirm that the North-West regional board of the NEB will receive a major share of the funds available for direct investment on Merseyside and the North-West. I am not asking this directly in the usual way, or during an Adjournment debate, or over the telephone to his office. The Minister will recall the Adjournment debate in March and the information that he gave. I ask for confirmation that the funds will not be limited to manufacturing industry alone but that they can and should be made available to service industries in the North-West.

The hon. Member for Bromsgrove and Redditch (Mr. Miller) called the Government proposal an act of faith, not, he hoped, an auto de fe. It is a calculated risk. Some time ago we heard Mr. Michael Edwardes saying that when he came back to the Government, if the Secretary of State asked him what proof he had that taxpayers' money would produce the result that he wanted, British Leyland would have to say that it could give no such guarantee. Michael Edwardes was asking the Government to take that calculated risk. Perhaps in 12 months' time he would be able to say that it would or would not work. Now we have to make a choice. We either do nothing and let British Leyland sink or we exercise an act of faith, take a calculated risk, and the money must be provided. Unless we provide the funds, there is no hope of survival or success.

Not only British Leyland is involved. Subsidiary companies and other areas are involved. We also have to make it clear that providing capital is no guarantee that the company, management, unions, engineers, dealers and anyone else involved will be able to do the job. We can only make it possible for them to try to do the job. It will be done only if there is real effort, co-ordination and determination to work out a way of providing the cars, the motor vehicles, and the components that people want to buy, not because there is an embargo on other cars coming into the country, but because British cars and vehicles are the ones people want to buy. We have to ensure that people can buy these products when they want them, not in six or 12 months' time. We have to ensure that they are the colour and quality that people want to buy. Only when we can produce the vehicles at the price and quality and with the delivery date that people require will British Leyland be a success. That same principle applies to any other industry. That success can be achieved only by those outside the House, not by those inside. We are taking a calculated risk.

Mr. Nick Budgen (Wolverhampton, South-West) rose—

Mr. Deputy Speaker (Sir Myer Galpern)

Mr. Budgen.

Mr. Ogden

rose—

Mr. Deputy Speaker

I am sorry. I thought that the hon. Gentleman was concluding his speech. It sounded like his peroration. Was he giving way for an intervention?

Mr. Ogden

Four Opposition Members were nodding their heads as I was speaking, Mr. Deputy Speaker, and that does not happen too often. I thought that one of them was trying to help me by interrupting, so I was giving way to him. I shall not be too long, Mr. Deputy Speaker.

I hope that the House will accept that the support that I have expressed for British Leyland is in spite of the decision of British Leyland management to put forward a proposal to close the Speke No. 2 plant. This has been raised in the House not only once by my hon. Friend the Member for Liverpool, Garston (Mr. Loyden) today, but on a score of occasions, and has been hammered home time and again.

At first, when this proposal was made public, it seemed to be—as all the inferences of anyone outside the House, from reading the statement, would be—that it was proposed to close British Leyland Speke No. 2 plant because of its bad record of industrial relations. It was only after two meetings of Merseyside Members of Parliament, first with Mr. Pat Lowry and later, at some ungodly hour in the morning, with British Leyland's manager, Michael Edwardes, that it was made quite clear that industrial relations, productivity and all the other things that have been mentioned in the report had nothing to do with the decision to announce the proposed closure of Speke No. 2.

That British Leyland plant is the second most modern motor plant in the United Kingdom, built and intended to produce 2,000 cars per week of three varieties—the TR7 hard top, the TR7 soft top and the Lynx—and now, because of factors outside the Leyland company management control, it was proposed to produce only 700 cars per week. A plant for a market of 2,000 cars a week now has a market of 700 per week. The economics are there for anyone to read and the 700 cars can be produced by spare plant in the Midlands.

That is the reason for the proposal to close Speke No. 2. It has not been accepted on Merseyside. We are told that there are products from parts of the British Leyland network for which people are waiting six months, 12 months and 18 months—and not only for buses or the Land Rover. There is surely some way, inside the British Leyland organisation, in which British Leyland can use the most modern plant on Merseyside and the second most modern car plant in Europe to provide the production for British Leyland vehicles for which people are waiting.

There is discussion with the unions, and it is not the job of Members of Parliament to do the job of either management or the trade unions. We can help. We can carry messages. We can try to get a better understanding. But it is not for us to do the one job or the other. We are middle men and, as usual, we get clobbered from both sides. Certainly it is time that a great deal more information was provided by British Leyland managers to their people on Merseyside.

There are parts of British Leyland that cannot produce what is wanted. We are simply saying that here we have a plant of skilled people which should be used for production that is wanted by other parts of BLMC, and which they are not able to provide.

Coming from Merseyside, perhaps I could make one or two other comments about the use of NEB money. NEB money is invested in Merseyside not only through British Leyland. Will my hon. Friend again put on record the help that has come to Merseyside and the North-West through the Government and NEB, but not only for Cammell Laird, Shotton, the Mersey Docks and Harbour Board, Tate and Lyle and GEC, and many other companies?

I make one specific request. I am told that the Laird Group, which was saved in 1966 by Government intervention, is now going forward into the production of a bus—public transport buses. I am not certain whether it is the Metropolitan, but I am told that the group has a new model on the market. Perhaps my hon. Friend will have a word with the management. It might be possible to use part of the facilities of Speke No. 2 to provide the plant and the production of Laird buses, under whichever title they happen to go.

As the beginning of my peroration—perhaps that will help Opposition Members; they must have patience—let me say that my hon. Friend the Member for Garston reported directly to the Government Front Bench the feelings expressed at a Merseyside meeting yesterday morning. It was a conference of trade unionists, members of the Labour Party, representatives of district officials, councillors and many people from a whole range of walks of life—all involved with old concerned about employment on Merseyside. A senior shop steward from British Leyland at Longbridge suggested that it was time that the Government began to use some of their money from North Sea oil to put into British Leyland. We had to remind him of the £230 million made available a fortnight ago and the latest investment of £800 million over the next four years.

In other words, the Government are getting the blame for what goes wrong and they are getting none of the credit for what is going right. It will be little comfort for the Opposition, but it was recognised by everyone at the meeting that if the Conservative Party ever gets into power our difficulties will be a great deal worse, both in the short term and in the long term.

What efforts are being made to get free, voluntary planning agreements between a particular company, a particular industry or a particular sector on Merseyside and in the North-West and the Government? I cite the example of my own union. In the coal industry there has been a complete agreement among the Government, the National Coal Board and the unions, about investment, productivity and production over the next few years. If that kind of thing could be done with GEC, Plessey and Lucas, we would have many fewer of the problems that we have at present. I again ask the Minister to use all his endeavours to achieve better co-ordination between Ministers and the North-West, and to make even more certain that the money to be provided through these grants and orders is not restricted to manufacturing industries. My belief is that the hope of ending unemployment in the North-West will depend more on using the service industries than it does on the manufacturing industries.

We have problems. There is no need to rehearse them again because, as my hon. Friend the Member for Garston has said on more than one occasion, we Merseyside Labour Members have beaten a regular track to ministerial doors and will continue to do so. However, with this aid, there is some hope. Without it, there is no hope. With the hon. Member for Kingston upon Thames—this is no personal reflection—and the Conservative Party behind him, there would never be any hope for Merseyside.

7.47 p.m.

Mr. Nick Budgen (Wolverhampton, South-West)

I start by declaring an interest in that my brother is employed by British Leyland. I also declare an interest by saying that I have been amongst the first of my party to vote against the increasing subsidies that have been accorded to British Leyland.

Adapting a phrase, I believe that subsidies are twice cursed. They are cursed by he who takes and cursed by he who gives. For he who takes—namely, British Leyland—subsidies have caused British Leyland to avoid those harsh decisions that it ought to have taken. Subsidies have eroded the relationship between men and management. They have caused men to go for decisions not to their management but to Members of Parliament. They have caused men and management not to consider how they might better use their assets but to see how better they could lobby Parliament.

I believe that continual subsidies to British Leyland or to any other sector of the economy will be bad for those sectors that receive it and very bad for the country as a whole in giving those subsidies.

As my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) said, the subsidies have to be raised by taxation—and, God knows, there is a big enough cry for the reduction of taxation at present—or by borrowing—and, God knows, there is a big enough cry for lower interest rates so as to encourage more investment—or, worst of all, by printing money—and, God knows, we have a high enough rate of inflation and we have in prospect, as the editor of The Times says, a 15 per cent. rate of inflation next year.

Therefore, what are Opposition Members to do in thinking about these two matters and in supporting what Mr. Edwardes himself describes as an act of faith? Of course, the fact is that we know that as the custodians of taxpayers' money we are being asked to take a tremendous gamble. If it were not a tremendous gamble, the money could be raised in the City and from private investors. In my opinion, therefore, the position of the Tory Party is both illogical and necessary. It is illogical because we draw a distinction which in theory cannot properly be drawn between the NEB order and the Section 8 order.

I entirely agree with the analysis by my right hon. Friend the Member for Leeds, North-East of the unnecessary quality of the proposal to increase the funds for the NEB. It is plain that, first, it is based on a false philosophy. If there is a philosophy for the NEB, it should be based on the proposition that companies may temporarily fail and need support and should be given a crutch—but only for a short time. There should be no long-term or dramatic proposals for a continuing role for the NEB. So I wholly reject the Secretary of State's longterm philosophy.

But even if one concedes the NEB this short-term resuscitating role, the £300 million is unnecessary and the basis of the application must be that more money is wanted for other industries. Even if that is not so, some firms and industries in the NEB stable could be sold off. It is not for us to say which, and it is dangerous for politicians to be too precise about management decisions. But even Ferranti could be sold off. I agree with my right hon. Friend about that.

Illogically, my right hon. Friend takes a different view about the Section 8 application. One can describe British Leyland as a conglomerate or holding company like the NEB itself. It has its Special Products Division, its division dealing with buses and trucks, and Jaguar and Land Rover. It also has substantial capacity to manufacture components, and it has foundries. It is not for politicians to say how they should be disposed of, but money could be raised by hiving off parts of British Leyland.

I was therefore concerned about how to vote on the Section 8 order. Illogical though I regard it, I shall abstain. The very illogicality of our position shows what the position will be under the next Tory Administration. There is a danger of our being misrepresented. One misrepresentation favoured by the Prime Minister is that, if the Tory Party wins the next General Election, subsidies and support will be cut off, the West Midlands will be an industrial wasteland and its inhabitants will be put on the dole queue.

The subsidies and support given by the present Government are very high. Table 6 of "The Government's Expenditure Plans", Cmnd. 6721, Volume I, shows that, at 1976 survey prices, expenditure under this item is running at about £3 billion a year, or about 6 per cent. of Government expenditure. If that whole programme were cut back on the day of the General Election, the industrial West Midlands would indeed become a wasteland. That is not the intention. On the other side of the argument, some who broadly share my liberal economic views might fear that, after the vote tonight, the Tory Party would do nothing about cutting the subsidies and supports which are distorting our economy.

But the reality is different—an illogical compromise like that which we shall make tonight. Whether we like it or not, the subsidies have been given. British Leyland has been effectively nationalised and we have to deal with the situation as it is and not as we would wish it to be.

Therefore, I hope that the message which goes out tonight is that the Tory Party may be acting illogically but also, as practical politicians should, that we shall be planning a phased, determined withdrawal from the public sector, and that we shall not cut off the subsidies overnight. Nor shall we say that it will be done immediately only to reverse our programme and adopt a different philosophy only six months later, when the barons of the TUC and the CBI line up at No. 10 Downing Street to put the pressure on.

The difficult, compassionate and honest answer is that we shall have to disengage slowly. British Leyland, Alfred Herbert and all the clients of the NEB are drug addicts and they have had a great deal of the drug of the taxpayers' money. One cannot take the drug from the addict immediately, but in his interests and the interests of those pushing the drug the thing must be stopped, firmly and slowly.

The Under-Secretary of State for Industry (Mr. Les Huckfield)

The hon. Gentleman is making a coherent and logical exposition and I am sure that we are all following it with fascination. What then, in the end, having taken away the drugs and proposed to remove the source of the drugs, would he do with the NEB?

Mr. Budgen

I hope that it will be a very small concern. I hope that it will exist, because there will always be people in my party who believe in its limited and temporary resuscitating role. I am a reluctant supporter even of that role, but my party, like the Minister's party, is a coalition and there will always be those who vehemently disagree with my perhaps over-purist view of the economy. Therefore, I dare say that the NEB will exist for some time. I want to ensure that it has a very limited and declining role.

I want it to be known throughout the West Midlands that the Tory Party understands that component manufacturers, dealers, a whole host of persons, have contractual relationships with Albert Herbert, with British Leyland, with other clients of the Government. Plainly, others who are in contractual relationship with or who work for those enterprises must taken account of a changed climate. There can be no question of immediately turning the West Midlands—in the dramatic phrase of the Prime Minister—into an industrial wasteland Equally, there can be no question of doing nothing. We shall have to conduct a skilled, phased and sometimes illogical withdrawal. This is the beginning of it.

8.1 p.m.

Mr. Michael Grylls (Surrey, North-West)

So much has been said about Leyland during the debate that I shall say very little about it but concentrate, instead, on the National Enterprise Board.

I believe that there is, rightly, an aura of optimism about Leyland. Mr. Edwardes is to be congratulated on having been largely responsible for getting that aura going and inducing a feeling of optimism within the organisation. I believe that if he continues to make the right decisions, British Leyland can succeed into the 1980s.

Our role today as Members of Parliament is difficult, because there is relatively little that we can do. We have two choices. Either we turn the tap on of more taxpayers' money for British Leyland or we can decide not to turn it on. That is a very clear choice for us. We Tories believe, having supported Mr. Edwardes in his plan so far, that the time will come when he will need more money.

It is right to record that the Ryder plan is firmly dead and buried. Ryder is dead, long live Edwardes.

Today we are asked to vote £300 million of taxpayers' money to the National Enterprise Board. £150 million of it under Section 8 of the Industry Act. There are only two Members on the Labour Back Benches. That, perhaps, is an indication of the arrogance with which Government Members treat the House and their constituents whom they are supposed to be here to represent. There is supposed to be scrutiny in the granting of these vast sums of money.

Mr. Ioan Evans (Aberdare)

Although the Opposition are mounting a massive campaign, there are only half a dozen Opposition Members present. Perhaps that should be put on the record.

Mr. Grylls

That is a 300 per cent. improvement on the attendance of Labour Members. I will not dwell on this matter. I will merely say that it is odd that more Members are not present in the House for this very important debate.

When one talks, as I have talked, about the Ryder plan being dead and buried and our now having the Edwardes plan, it is necessary to recognise that this is a complete U-turn by the Government. This has not been made quite as clear as it might have been during the debate. In 1975, when the then Prime Minister, the right hon. Member for Huyton (Sir H. Wilson), introduced the matter of the NEB, he said: I would like to make it clear from the outset that following the initial injection of equity capital in 1975, the release of further stages of Government funding will be determined in the light of the contribution being made to the improvements in the performance of British Leyland by better industrial relations and higher productivity. This is a condition to which the Government attach great importance."—[Official Report, 24th Apil, 1975; Vol. 890, c. 1746.] That was the basis of what the Government then put to the House about the Ryder plan, what was popularly called thereafter "the benchmark approach". As each benchmark was apparently reached, further sums of money were to be released. We were very sceptical about that, as indeed we were about the whole Ryder plan, because we did not believe that it was right or possible to turn investment on and off like a tap. Equally, we were in the difficulty that we believed that taxpayers' money should be controlled.

We now have a totally new scheme which was announced by the Secretary of State for Industry just before Easter—that a large sum of money will be injected and that a pistol will be levelled at us. It is in fact a pistol which is being levelled at the House tonight; it is being said to us "Either you agree to this large sum of money or you are not backing Mr. Edwardes." It puts us in a very difficult position.

I want to make my position quite clear. I believe, with the vast majority of hon. Members who have spoken, that Mr. Edwardes has made a promising start. However, it will be difficult to bring about a permanent improvement in British Leyland's market share. Paragraph 6.6 of the report of the National Enterprise Board says that the market will not be easily won back. We rejoice that British Leyland has had one good set of figures for a six-month period. However, that is not getting back to the market level which was visualised in the Ryder Report and which Mr. Edwardes himself rightly recognises will have to be achieved.

The total number of vehicles produced by British Leyland in 1976 and 1977 was 780,000. In those two years British Leyland achieved the lowest production figures over a period of 10 years. The figures for 1977 were exactly the same as those for 1976. In 1977, 250,000 vehicles were lost through bad industrial relations, strikes, stoppages, and the total failure to maintain continuity of production.

It may be that the corner has been turned by a miracle worker, and we are all sitting here today hoping that that is the case. We are all sitting here hoping as an act of faith that Mr. Edwardes will be able to increase productivity from the dismal figure of five vehicles per man year as compared with 30 in Europe and nearly 45 in Japan. There is a long way to go and the target set in the NEB report is on the low side.

It may be said "As you believe that Mr. Edwardes has made a good start, do you not think that he should have the money?" As I said earlier, this is the position in which we find ourselves. It is too soon to make a judgment on Mr. Edwardes after three months. He has produced a plan and a structure. He has had one set of figures. Based on the figures that the Secretary of State quoted today it is not proved that we have to vote this money at present.

On 3rd April the Secretary of State made this announcement: In future the financial provision will be looked at annually, starting next November, the light of progress made and of future prospects." [Official Report, 3rd April 1978; Vol. 947, c. 3.] That was an eminently reasonable position for the Secretary of State to have set out. If we had waited until November we would have had one year of the Edwardes regime. I should be happy to come here then, see what had happened to production and productivity, see whether in the year there had been very few strikes and, therefore, very few vehicles lost, and then made the act of faith. Tonight it is too soon to make the act of faith. It is unfair on Mr. Edwardes tonight and almost irresponsible for us as Members of Parliament to believe that we can do it. If we do so, we shall be mesmerised by what has happened over a few months only.

I want now to refer briefly to what my hon. Friend the Member for Kingston upon Thames (Mr. Lamont) said about the rate of return on Leyland. On 3rd April the Secretary of State, in the same Written Answer to which I have referred, set the return for British Leyland as 10 per cent. return on capital to be earned by 1981. Something odd has happened, because in the 1975 scheme of arrangement the figure of 19.6 per cent. was set for 1981. Why has this target suddenly been lowered? The scheme of arrangement was a legal document signed in the High Court. It was a legal document on which the independent shareholders, of whom there are 100,000 still left, had to decide whether to take up the offer or hang on to their shares. One hundred thousand of them decided to hang on to their shares. That was very creditable of them. However, they did so on the basis of this document signed in the High Court. This afternoon, three years later, the Secretary of State said casually words to the effect that it will be not 19.6 per cent. but 10 per cent. The House of Commons appears to take it, and I think that it is very odd.

Unfortunately, the Secretary of State is not here, but his hon. Friend will no doubt take the message to him that this is something that he should study carefully because this scheme of arrangement is a legal document, and it and other matters in it refer to outside independent shareholders. The Minister is getting anxious. He is looking down the Chamber in the hope that help might be coming to him. He is lucky because he is surrounded by help and advice that can come to him easily. The independent shareholders who decided their future on the basis of a document do not have such advice. I hope that when the Minister winds up the debate he will give some real answers about the position of the independent shareholders. Not only is there a question of the rate of return but the actual monitoring referred to in the Prime Minister's statement of 24th April 1975, which I have read out, is in the scheme of arrangement, and therefore again those shareholders went into the scheme believing that it would be on a benchmark approach.

Thirdly, the point about the independent shareholders is that at that time there was on expected increase in the capital during the first part of the Ryder plan, so they will have their shares even further diluted. The House of Commons is always proud to look after minorities, and this is a sizeable minority, consisting as it does of 100,000 people. I hope that we shall have some sensible, answers from the Minister this evening about exactly how the Government see the position.

The Government may say that the NEB is proposing to buy out the shareholders. That would be a pity because, as my right hon. Friend the Member for Worcester (Mr. Walker) said in his excellent speech at the beginning of the debate, it is important that they should be independent shareholders still and that the company should be quoted on the Stock Exchange. It is a 11 right for us in the Chamber tonight to say that, but we in this House have a duty to look after these people from the point of view of their financial position. They are mostly small shareholders, not large ones, and they put their savings into the company. I hope that the point that I have raised will be answered.

I come now to the question of the National Enterprise Board itself. As my right hon. Friend the Member for Leeds, North-East said, there is no argument whatsoever for increasing the borrowing limit from £700 million to £1,000 million. If one reads the NEB's report one is given the impression—and I am sure that this is not intended—that the only choice is to have £700 million or £1,000 million, and that if there is to be a change, it has to go in one jump to £1,000 million. That is not the position. Under the 1975 Act it could be increased by any figure between £700 million and a maximum of £1,000 million. The Secretary of State earlier this afternoon said—though we knew it because we have the order here—that the figure was to be increased to £1,000 million, but he gave no reason for doing that, and my right hon. Friend was right to pin him hard on this.

We are all accustomed to using these ridiculous figures of hundreds of millions and thousands of millions of pounds, and it is so easy for Ministers to come here and say that the borrowing limit is now £700 million and we shall make it £1,000 million. They will say, "That gives us lots of leeway, that is easy, and it is good, and we do not have to come back to the House of Commons again".

The way in which the Secretary of State dealt with this matter this afternoon was nothing short of scandalous. Apart from any other matter to which I shall come, for the right hon. Gentleman to come here and say "I shall have the higher figure. That will sort it all out and give the NEB the absolute maximum to be able to get on with the job" is extraordinary. We have been given no explanation at all of why that should be done.

I think that if a body such as the NEB asks for an extra £300 million borrowing limit, we in the House of Commons are entitled to look with a rather cool eye at what the Board has been doing over the last few years. It is not a cheap Board, with half a dozen people, a man and a dog and a girl secretary. It is a rather extravagant organisation. It has cost £1.7 million this year simply to run and administer. It has pleasant offices in Grosvenor Gardens. They are all beautifully done up. The Board cost £1.4 million in the first year, and £1.7 million in the second year. What will it cost next year? We should be neglectful if we did not look at what it was doing.

We have discussed what it has been trying to do for British Leyland. Earlier I tried to ask the Secretary of State what the Board had done for Rolls-Royce, but he did not answer my question. He simply said that those concerned all got on rather well together. The NEB gave the Rolls-Royce board advice and gave nice lunches and that sort of thing. It probably even gave dinners in the evening. The NEB then came along and discussed matters with the Government, and there was a marvellous three-tier system. It is the most wonderful jobs-for-the-boys outfit that one has ever seen in all one's life. It is all quite extraordinary. The right hon. Gentleman did not actually say what the NEB had done for Rolls-Royce.

I thought the right hon. Gentleman might have said that the NEB got the order for the RB211 engine for Pan Am, but he would not. Apparently, it was Sir Kenneth Keith who got that order. If Sir Kenneth Keith is able to get orders of that sort with his assistants, why do we want the NEB? Why do we need Grosvenor—Gardens—this wonderful address? What has the NEB done? What has it done for British Leyland as the other star in this debate?

If one looks at the number of reports from the NEB on Leyland over the last few months to try to see what it has done to help British Leyland, one sees that the Board has done nothing. I believe that the wrong decision for British Leyland would probably have been taken without the NEB and the right decisions would have been taken, if they are the right decisions now, and exactly the same applies to Rolls-Royce. The intervention of this extravagant bureaucratic layer between the company and the Government is absolutely unnecessary.

One has to see what else the NEB has been doing, because it cannot exist on giving lunches and dinners to Rolls-Royce and British Leyland. It has done one or two other things, and the Secretary of State did at least tell us that. It has gone into 39 different companies. Its productivity is not bad. If British Leyland's productivity was as good as that of the NEB in nationalising various things, British Leyland would not be doing badly. On 3rd April, in the trailer to the NEB's report, the Board reported that it was in 33 companies. Now it is apparently in 39 companies. I think that a better name for it would be the Nationalising Enterprise Board, rather than the National Enterprise Board, because that is just what it has been doing.

Let us look at the Barrow Hepburn deal, a very strange one. It was mentioned by the hon. Member for Colne Valley (Mr. Wainwright), and I shall come back to it in a moment. The Board took over the tanning interests of the Barrow Hepburn group, all of which were losing money and which were a total disaster area. The Board paid about £11 million into Barrow Hepburn for taking over these interests, many of which should have been closed down.

When the hon. Gentleman says that these difficult decisions could be taken—I think he said this—only within a public sector corporation, I find that impossible to understand, because what he is saying, if one reduces it ad absurdum, is that if there are too many corner sweetshops in a certain part of London not making money the situation can be improved only if the NEB or some other body buys up two or three sweetshops and pays them to go into retirement. It cannot be done by the market, according to the hon. Member for Colne Valley This is the most ludicrous situation and he should know—and if he does not I shall tell him now—that within the tanning industry there was already a natural contraction of excess capacity.

What happened was that the NEB kept open many of these tanneries for longer than they should have been—for about a year—and even now this one has been forced to close down. But in doing this the Board got into some pretty odd company, because if we are to analyse what the NEB has been up to over these years I think we should see what happened with Barrow Hepburn.

There was a quote a few weeks ago of serious irregularities of the Barrow Hepburn group among some of its subsidiaries. The Daily Express said on 23rd March: One result of the discovery is that the proposed dividend 2.299p a share is being deferred. The news is sufficient to lop 12p off the Barrow Hepburn shares. The writer says: This is an embarrassing blow to the NEB's investment reputation. Only a month ago it bought a million shares in Barrow and Hepburn at 45p each. So there is already a paper loss of £110,000 and a possible loss of dividends totalling another £23,000. That is one of the commanding heights to which the NEB has been reaching out.

Let us look at the United Medical Enterprises. This organisation was backed by two City banks, which were not prepared, probably rightly, to put any more money into it. The NEB did so. Strangely enough, the United Medical Enterprises owns the British Nursing Association, the biggest supplier of nurses in the country, and a very successful organisation. It is an extraordinary thing for the NEB to go into. We do not know quite what will happen to it.

The NEB went into Twaites and Reed, a massive company at St. Leonard's on Sea with 12 employees altogether. That was highly unsuccessful. It lost £300,000 when it was taken over, and is still, I believe, losing large sums of money. Nobody else in the clock-making business wanted this company. Why should the NEB be landed with it? It seemed quite extraordinary.

Fairey Marine, building £80,000 gin palaces in Cowes and Fairey Marine marinas and so on, was taken oyer. That was quite unnecessary, because there was a perfectly good offer for the Fairey group through the receiver from Trafalgar House, but the NEB, through ambition or something else, came along and gobbled it up over the head of Trafalgar House.

We had another loss—Hivent Ltd., in Washington New Town on the Tyne and Wear, into which the NEB put £54,000 some few weeks ago. That company has already gone bust. This is the sort of thing that the NEB is doing and it is costing £7 million a year.

I want always to be fair. Having been moderately critical of the NEB's activities so far, let me say this in its defence. There is a theory called the gap theory, which sounds like an army manoeuvre from the First World War. The investment gap theory is that only the NEB can go into certain areas because the market will not respond to them. My right hon. Friend the Member for Leeds, North-East referred to this in his speech. However, there is no hard evidence. We cannot prove that there is no gap occasionally in the investment scene. But equally I do not believe that the NEB has succeeded in proving that there is anything much of a gap.

I rest on two pieces of evidence. One is that the Treasury in its evidence to the Wilson Committee talked about this gap theory and the fact that there were certain areas of investment in which the City and financial institutions were not playing their proper part, but came to no conclusion and left it to the NEB. The big five joint stock banks also said that there was no real evidence.

There is a plurality of financial institutions throughout the country from the banks of the FFI and all sorts of other bodies with plenty of money for successful ventures, for ventures that are likely to go well.

I believe that the parliamentary control of the NEB is highly unsatisfactory. During 1977, while the NEB had been spending all this money, Parliament, through the PAC, spent six hours studying the NEB. I do not blame the Public Accounts Committee because it has the whole area of public expenditure to look at. Only six hours was spent during the whole of that year in studying the NEB.

I believe that until we come into power again, while the NEB is still in being, there is a strong case for having a special Sub-Committee of the PAC that can permanently monitor and keep an eye on what the NEB is doing.

I would like to raise, too, the question why the Comptroller and Auditor General is not allowed in to look at the NEB's books. He goes into every other area, but by some strange quirk he does not go into this. The PAC has commented on this. I hope that something can be done about it.

Mr. LesHuckfield

Talking about parliamentary accountability, may I remind the hon. Gentleman of the occasion when we had a whole day's debate in this place about the NEB when the hon. Gentleman failed to turn up? May I also press him to the logical conclusion of what he is saying? He has been going through all the industries and the things in which he thinks the NEB need not be involved. Is he saying that he would like to do away with the NEB?

Mr. Grylls

The hon. Gentleman must not anticipate me, but I shall not keep him hanging on the end of a string for more than a few minutes longer. I shall be as quick as I can. I intend to deal with that perfectly openly.

The Minister knows that this one-day debate was arranged at very short notice on a Friday. I had commitments in my own constituency on that Friday, but—and this was commented on at the time—having debates in Private Members' time on a Friday morning or afternoon is not the way to deal with massive sums of public expenditure. The Minister knows that perfectly well. It was not a very successful intervention.

I hope that when the Minister of State winds up the debate he will tell us what is to happen to the dividend on the public dividend capital of £120 million sunk into the NEB at present. When will there be a dividend on that? It is a very strange body that does not pay a dividend on the money in it already and then asks for another £300 million of taxpayers' money and does not even apologise for not paying a dividend or explain why. It certainly does not say whether it will pay a dividend in future. I do not know whether the Minister of State has any information for us. I hope that he will be able to include that in his speech.

The Liberal Party's role in this matter is very odd. Only the other day the Liberal Party was doing a review of the first year of the Lib-Lab pact and said that during this year one of the benefits that it had brought was that there had been no more nationalisation. It said that 12 months had passed without any nationalisation. No nationalisation my foot!

Twenty-two companies—nearly two a month—were taken into the NEB during the last year. Now it is asking for another £300 million. How many more companies will it take in during 1978? What has the Liberal Party been doing about it?

I warned the hon. Member for Colne Valley that I would say this, but I believe he has had to go. I believe that the Liberal Party should say why in a pusillanimous way it is allowing this creeping nationalisation through the NEB to go on week after week when nobody appears to notice it.

I can only assume that the Liberals agree with the Prime Minister when he says that nationalisation is never off the agenda. It certainly appears to be very firmly on the agenda at present. Let me make my position quite clear. I want nothing more to do with it, nor does the taxpayer. The taxpayer understands the problems of Leyland and of Rolls-Royce. I do not believe that the hard-pressed taxpayers could understand, if they knew—as perhaps they will know as a result of this debate—why their money is being frittered away in many useless companies, or if the companies are not useless they are companies which could well remain within the private sector, which shows no need for the NEB to come along.

I believe that we were quite right, as the Opposition, to say in "The Right Approach" that we would abolish the NEB. I believe that we were quite right to say in the campaign guide that we would abolish the NEB and stop it going on its expensive shopping spree around British industry. The NEB is an instrument of nationalisation. When the Conservative Party comes into power. I believe that it will be stopped in its tracks.

As for the NEB's self-appointed role of looking after a number of lame ducks, if one examines which we do not have time to do in such a debate—what is done for any of these lame ducks in the National Enterprise Board's stable we see that it has totally failed even to justify that role Therefore, it will be absolutely right for one of the first actions of a Conservative Government to be to tell the NEB to stop spending money in this way, to take over no more companies, and as soon as it can to return those companies that it holds today to the market whence they came. The remaining difficult ones may have to remain for a time within the Department of Industry, operating under the constraints of the 1972 Conservative Industry Act, which gave any Government all the power they needed to do a rescue operation if in the last resort that had to be.

There is no need for this expensive body. I hope that as soon as possible it will be put to sleep.

8.29 p.m.

Mr. Ian Lloyd (Havant and Waterloo)

I think that it is a long time since the House heard any comments of that great veteran President of the United States, President Truman, who I think will go down in history if only for one saying—"The buck stops here." I could not help thinking, as we debate the subject of British Leyland, that wherever the buck was stopping it was not here. In fact, it was moving around almost at the speed of one of those little solid black objects that ice hockey players use. It is moving so fast that we can hardly define where the responsibility stops.

We have heard a great deal this evening about confidence. The word has been shifted around the House. I think that the hon. Member for Coventry, North-West (Mr. Robinson) criticised my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) for showing insufficient confidence in British Leyland. The National Enterprise Board has a remarkable statement on page 7 of its report: Both British Leyland and the NEB believe that lack of confidence, engendered to a substantial measure by the public attention to the company's problems, has been a very large factor in the recent decline. The company's weaknesses have been exaggerated and its strengths largely ignored. That seems to me a rather strange statement, because if anything it is passing the buck of confidence to the public and laying British Leyland's position to a substantial degree on lack of public confidence.

But is that really the case? Is it the public confidence that has caused the present situation, or is the lack of public confidence a consequence of the complex state of affairs that the public now understand by the term "British Leyland"? Is it in fact the result of a lack of public confidence in the general management, the manning procedures, the productivity, the situation which has developed at Speke, which most people in my constituency, whenever we have discussed it, have found astonishing? Is not this lack of confidence a direct result of decisions taken not only by the board of British Leyland but by the British Leyland work force—from the board right down to the bottom of the worker hierarchy?

The report said that some disputes in the company had been outside the company's control and some of them within the company's control. I wonder what precisely the NEB meant by disputes outside the company's control. It is a vast company, employing tens of thousands of people. The astonishing figures for strike performance last year are as follows: 14 million man-hours were lost in the whole of 1977; 192,000 vehicles were lost in the same period.

If we do some simple sums, taking with overheads the average engineering man-hour at £5 an hour, we find that we are talking of vast sums of money—about £70 million. The cheapest vehicle that British Leyland makes is the Mini, at £2,000. A total of 192,000 vehicles at that lowest figure means that one is talking about vast sums—hundreds of millions of pounds. Yet the report asks us to blame the British public for a lack of confidence in British Leyland. It seems to me that it has stood the whole matter on its head. If they have no confidence in this organisation, the British public certainty had a great deal of evidence and many unfortunate situations on which to base that lack of confidence.

One Labour Member suggested that we should turn to the example of France and Renault. I have heard this argument put elsewhere, not least in British Leyland. We were told that because Renault now employs 70,000 people more and has over a period of about 25 years produced £44 million of profit, this is an answer and that the French Government's attitude to Renault is an example that should be followed by the British Government in relation to British Leyland.

I do not believe that that follows at all. The answer for France and Britain is exactly the same. It is to be found in the form of a question: what return would the nation have achieved from an investment of these sums in all the alternative possibilities of capital investment across the whole spectrum of industrial investment in France or the United Kingdom? The answer is that we do not know, simply because those questions are very seldom asked, and one is always asked to assume that the investment takes place and there will therefore be beneficial consequences, or it does not and there will be disaster.

The hon. Gentleman turned then to the subject of labour relations and suggested that we should not endeavour to achieve beneficial results in British Leyland by—I think that this was his phrase—threats and whip cracking. But how can British Leyland be extracted from the situation in which it finds itself? The NEB report has been modestly frank on the question of the world market. In my view, it certainly cannot be extracted by threats and whip cracking. It can be extracted only by a general and voluntary understanding throughout the organisation of the nature of the challenge confronting it.

One of the surprising features of the NEB document is that, although it gives the productivity increases in vehicles per man-hour which the National Enterprise Board hopes British Leyland will achieve, nowhere does it set out the appalling comparisons between productivity per man-hour in British Leyland and in Ford for instance, to go no further than the confines of the United Kingdom. Certainly, when one crosses the Channel or turns to what is happening in the United States or Japan, one sees productivity figures which leave no room either for threats or whip cracking or for any overconfidence on the part of Mr. Michael Edwardes—who, I am sure, does not have it—or anyone else throughout the British Leyland work force.

It was my good fortune some months ago to visit the Datsun plant in Tokyo, and I saw there the completely automated production line, using Kawasaki units, with completely automated welding units operated by microprocessors, and hardly a man in sight. When I asked the individual who was showing us round whether he and his colleagues believed that they achieved the same productivity levels as were achieved in Detroit, he laughed and said "We are well beyond the productivity levels of Detroit." Moreover, not only is Datsun beyond those levels but it is increasing its rate of productivity at about 10 per cent. or 15 per cent. per annum.

One hon. Member on the Government Benches said earlier that we were in a moving situation. He was perfectly right. But why have the Japanese, with the rising value of their yen, nevertheless managed to continue to increase their balance of trade positively and managed to continue to export? The answer is that the productivity represented by the yen, however much more expensive it may be to buy, continues to rise. I believe that the same situation prevails in the West German motor car industry.

That is what our employees, our managers, our shop stewards and our trade union leaders are up against. When will they realise it?

I turn now to the question of monitoring. Naturally, the House is reluctant, if I may so put it, to breathe down Mr. Edwardes' neck. We feel that that would be a mistake, and we go back to all the philosophy which lay behind the original nationalisation Acts, when we said that once we had nationalised an industry we should leave it to management to get on with the job. So we ask ourselves these questions. Who monitors this organisation? Who monitors British Leyland? Why do we monitor? How often do we monitor?

I believe that if British Leyland is to join the vast non-monitored sector of public capital investment in this country, we shall be heading for a disaster. Private capital inevitably involves—it must involve—private monitoring, but that is no guarantee of its success. Public capital must involve public monitoring, and that is no guarantee of its success. But if there is no monitoring in either case, it seems to me we are entering a strange situation. At least for private capital the individual who chooses not to monitor is risking only his own resources, but in the case of public capital it is not open to the individuals who make the resources available to decide to monitor or not to monitor. We have to do it for them.

In this situation, in my view, there is no real equity capital but there is a grey sector which lies unhappily and inefficiently between the two. Monitoring is a function of scale. It is probably not necessary for £1,000, and it may not be necessary in certain cases even for £100,000, but when one is talking about £1,000 million of public money, realising that that money is found virtually entirely by the taxpayer or, if not by the taxpayer, it is borrowed on his behalf and has to be financed by him, it seems to me that for any hon. Member to argue that we should not monitor—and continuously monitor—the performance of British Leyland is to argue on a very strange basis. The public investor can do nothing about it.

Why do I argue thus? What are the sums? We are talking about £1,000 million of investors' money. There are 20 million taxpayers in this country. That is £50 per taxpayer if every taxpayer makes his contribution. If we were to speak simply of taxpayers with spare resources—the report of the Inland Revenue would give us the sort of figure which we should choose—we are talking about 2 million taxpayers, so that is £500 per taxpayer with investable resources. If only half of those were to make a different judgment and say that British Leyland was not for them, we should be talking about £1,000 per taxpayer able and willing to invest in British Leyland.

That is for the total sum. If we are talking only about the sum being asked for next year, the £450 million, we are talking about £22.50 per taxpayer, or £450 per taxpayer able and willing to make such an investment. That does not permit of a non-monitoring situation. It does not permit of the NEB talking, as it has done here, of the desirability of letting British Leyland get on with the job and then looking at it once a year to see what has happened before deciding whether to give more money and to come back to Parliament.

No major public company in the private sector could possibly expect to get away with a degree of non-surveillance similar to that which the NEB now asks for British Leyland. One has only to cross the Atlantic to see the situation which exists in the United States where major public companies such as du Pont and General Motors and all the major motor car companies are reviewed quarterly and publish quarterly profit and loss accounts, which are very closely monitored by the whole of the investing system in the United States and elsewhere. I see no reason whatsoever why the imposition of such a requirement on British Leyland should in any way inhibit its capacity to recover and to equal the performance which it has to equal, that is, of its major competitors.

I now refer to the question of equity capital. This is one of the major misdescriptions of the year, because nothing that is being supplied to British Leyland by the NEB is equity capital. Equity capital involves a voluntary decision by the individual or the institution to make funds available. There is nothing voluntary about this. It is a compulsory levy on the taxpayer. We are told, therefore, that the British Leyland board must have—page 12 of the report—"an assured level of funds". It must be assured, and if it has that assured level, then, of course, it can succeed. Every firm in the world, given an assured level of capital on this sort of basis, could succeed. There is no reason why it should not. It is very nice to have an assured level of funds virtually guaranteeing thousands of pounds of capital for investment or for any other purpose, and the purpose is comparatively ill-defined in the report.

Let us, then, ask these questions. Because the market could not obtain the type of guarantee which it would require before it would begin to contemplate putting forward £100 million, never mind £1,000 million, it has not come forward. What are these guarantees? They are that the funds would be invested in productive equipment. There is very little to suggest, other than statements in the report, that it is to be invested in productive equipment. We are simply given global sums. We could ask for a guarantee that the rewards which British Leyland employees award themselves—and we have heard a great deal about this in recent months—should bear some intelligent relationship to the general overall economics of the company's performance.

Whatever the company did in Speke it bore no such relationship to the position in which that unit of British Leyland found itself. When the people there discovered that the car was not selling and that there was a waiting list for the vehicle in some places where its reputation still survived, did they say "Let us get down to it and make sure that the production line is reformed and that the vehicle is meeting the standards expected of a sports car"? No, they went on strike for two months, and on this basis the public is supposed to have confidence in British Leyland. I find it absolutely astonishing.

We should ask for the guarantee that there should be some return paid on the capital invested. I do not think that there is any guarantee in that document, or in any of the situations which we have been asked to discuss this evening, that there will be a return on the capital of any kind.

I ask the Minister: would the staff and directors of the NEB invest their personal funds in this new, revised British Leyland? Would the Secretary of State put up £10,000 of his own money in British Leyland? Would the directors of British Leyland put up some of their own personal funds in the new British Leyland? Would members of the Tribune group put some of their own money into British Leyland? Would trade union pension funds be prepared to put their money into British Leyland? The answer in every case is clearly "No". Yet the Government have the effrontery, despite all that, to say on behalf of the great British pub-tic. "We are going to put £1,000 million of your money into British Leyland—heigh-ho", when we know that by every test of the market, other than employment maintenance, it is a false prospectus.

If that is the test of confidence, I find it astonishing that we should be asked to make an investment on the basis of such a statement. Page 5 of the NEB report says: It is the hope of the management that the new organisation structure and the creation of new management teams will also contribute positively". That is the hope. But no firm would go to the market on the basis of such a hope. On page 8 we are told in the context of the productivity crisis—and crisis it is throughout our motor car industry—that British Leyland has … adopted a cautious approach to the timing any extent of productivity improvements". At this time, when the Japanese car makers are virtually striding through world markets and knocking us off one market after the other, British Leyland adopts a cautious approach. On this basis we are asked to vote £1,000 million and are told that the board of British Leyland understands the situation and that the NEB is pleased to see that it is giving this aspect of its performance a very great deal of attention". How nice of the NEB.

I would not put £1 of my own money, let alone £10,000 or my share of the £1,000 million of public money, into British Leyland on the basis of such a prospectus. But we are told on pages 10 and 11, in an astonishing statement, that Cash provision in the form of equity is sought by the British Leyland Board in order to restore the strength of the balance sheet. How extraordinary. The concept of risk-free capital is transformed to enable the British Leyland board to borrow from the market what it could not get from equity. In another astonishing statement in the report, we are told that the NEB will want to receive a commercial return on its major investment in the company. But we are given no indication of what that return is likely to be in any positive or reassuring way.

At the end of this analysis, the question, which I have not liked to ask the British Leyland board, as it offers its stock option scheme, is whether British Leyland itself would take it up, if ever. Would the workers and managers of British Leyland themselves, with their own money, back an arrangement of this kind? The answer is "No". Surely Parliament and the public are entitled to know which segments of the NEB are succeeding and which segments are failing. The market would close down the failures. The Government will not close them down.

When the aircraft industry on the West Coast of the United States went through a critical period it was apparent that the Boeing aeroplane company was able to reduce its employment force by about 30,000 people in a short time. Some hon. Members would argue that that was a terrible thing. They would argue that it should not be allowed to happen in any circumstances. But the result was that the Boeing aeroplane company survived and recovered and is today without a doubt the world's strongest aircraft company, supplying about 93 per cent. of the civil airlines of the world.

Had there been an NEB in California at that time, what would have happened? Vast sums of public money would doubtless have been poured into Boeing and employment would have been kept at a very much higher level. All the incentives to reduce its work force and streamline its operations in order to place itself in a position from which it could recover would not have worked.

I come to the key question. Are we to improve the mobility of resources in the United Kingdom or are we not? If we go about it in this way, the answer is that we have no intention of improving the mobility of resources in the United Kingdom. If we fail to improve the mobility of industrial and economic resources in the United Kingdom, nothing that the Government can do will save us. As I see it, that is the essential argument which we have to consider tonight when we vote.

I may be asked for a specific example in the motor car industry where resources should now be invested. If one reads a small fraction of the energy papers that have been made available to hon. Members, the answer would be probably the development of electric propulsion vehicles. How much are we spending in that regard? Is it a matter of millions of pounds, or tens of thousands of pounds? It is certainly under £10 million. If we are talking in the order of putting up public money of £3 million or £4 million, I would suggest that in the energy situation in which we find ourselves this is the sort of area into which new investment should be going.

My conclusion is that no Government of either party can save British Leyland. No Government of either party, by coming to the taxpayer for hundreds of millions of pounds, can save British Leyland for more than two or three years at the very outside. British Leyland's salvation depends on its own employees. The House of Commons and the taxpayers must be given much more convincing and persuasive evidence that the employees of British Leyland realise that their destiny lies in their own hands.

I believe that, regrettably, the evidence which has reached the taxpayer over the last two or three years, if not longer, going right back to the end of the war, is that this realisation just does not exist. If there is a challenge to the management of British Leyland it is to bring that realisation directly and wholly home to the employees of British Leyland. Then the firm might survive. Then there might be a recovery.

If that happens, I would suggest in all humility that the amount of public money involved would be nowhere near £1,000 million. It would be seed corn capital which would be required for much more limited areas and for a much more limited time. Those concerned, who had sought, obtained and made effective their own recovery, would cheerfully leave the situation at where the House of Commons, Ministers, Shadow Ministers, the National Enterprise Board and other organisations of that kind would be constantly breathing down their necks. The remedy for that deplorable state of affairs lies entirely in their own hands.

8.55 p.m.

Mr. Ioan Evans (Aberdare)

Opening the debate my right hon. Friend the Secretary of State said that in its vote today the House would be directly influencing the livelihood of hundreds of thousands of the electorate and their families and that the total employment in companies in which the National Enterprise Board had a stake was more than 330,000. Listening to Opposition Members addressing the House, one would not think that that was the case.

In British Leyland we have a company which has been taken over and supported by the NEB, and of all the actions that this Goveriment have taken one of the most important has been the setting up of the NEB.

It is regrettable that the Opposition threaten the existence of the NEB. It is true that they have not been universal in their condemnation of it, because there seems to be some division about it. However, we know from "The Right Approach" that it is their intention to wind up the NEB, and it is important that the electorate should realise that that is the intention of the Conservative Party, bearing in mind especially that there are 13 principal subsidiaries, 17 associated companies and 330,000 people employed in British Leyland.

For a long time in this country we have experienced the problem of the failure of successive Governments to invest in manufacturing industry. When he was Prime Minister, the right hon. Member for Sidcup (Mr. Heath) spoke about the unacceptable face of capitalism. But, although he made appeal after appeal and although his Government made tax changes to try to attract investment into the private sector of industry, it was the Tory Government in their 13 years in office between 1951 and 1964 and again between 1970 and 1974 who failed to get investment. When they went into Opposition they became extremely doctrinaire, and we are told now that if ever they are returned to power they will embark upon a programme of denationalisation. However, when they have been in power they have not done so.

It must not be forgotten that the last Tory Government took Rolls-Royce into public ownership, with the support of the then Opposition. If market forces had been allowed to have their way the Rolls-Royce organisation—that tremendous name in British engineering—would have gone out of existence. Despite their dogma and doctrinaire theories, it was the Tory Government who took Rolls-Royce into public ownership, and of course their action has been justified. But if it had been a Labour Government who had taken over Rolls-Royce, the Conservatives would have been making the sort of speeches that they have made today about British Leyland.

The hon. Member for Havant and Waterloo (Mr. Lloyd) attacked British Leyland, despite its new management and despite a work force which is working well together. The motor agents are striving to persuade people in this country and elsewhere to buy British Leyland. We have all received a document from the Society of Motor Manufacturers and Traders showing the 10 top sellers in Britain today, and British cars occupy nine of the top 10 places. In the top five we see the Leyland Mini, the Morris Marina and the Austin Allegro.

Cannot we persuade the Opposition to put aside their doctrinaire theories and pay tribute to British Leyland? Whereas in January it had only 21 per cent, of the market in Britain, in February it achieved 31 per cent. That represented a 10 per cent, increase in one month. If only the Opposition would stop knocking the NEB and British Leyland, we might be able to get matters into a better perspective.

The need in the country is to get more investment into manufacturing industry, and I believe that the way to achieve that is through the NEB. That is the method we should adopt. The Opposition do not complain when Ministers say that £1,700 million has been given to private enterprise. That is public expenditure. If the Opposition deplore public expenditure going into the public sector, I cannot understand why they do not deplore it going into the private sector as well.

A large number of companies in the private sector are benefiting because of the Government's action. Are we then to say that we should not put public money into the public sector? Is the right hon. Member for Leeds, North-East (Sir K. Joseph) nodding in agreement? No, it seems that the right hon. Gentleman is shaking his head. At least the Opposition Front Bench is not with the Opposition Back Benchers. There is £1,000 million being given to the manufacturing sector of the public sector. That is fully justified. Equally, in the present economic circumstances it is fully justified for £1,700 million to go into the private sector. However, in the years ahead the Government must think about using the NEB to a greater extent. We must have planning agreements with the private sector.

Opposition Members talk about the money that is going into the NEB and control of it. The fact remains that there is far more public control of money going into the private sector. I hope that in future we shall not be talking only of channelling money into the NEB but channelling all the funds that go into the private sector.

The Conservative Party decided to maintain the name of Rolls-Royce. It put aside its doctrinal theories and took Rolls-Royce into public ownership. So, too, the Government have saved the names of Rover, Triumph, Austin, Jaguar and Morris. I believe that in the years ahead those names will play a major part in the export drive as well as supplying the home market.

I, too, believe that there are greater things to come from British Leyland. The company is exporting about £2½ million worth of its products every day. That is a major contribution to our national finances. It has rightly been said—the company has advertised the fact—that the benefit of British Leyland exports are equal to the benefits of North Sea oil. That should be said frequently in the Chamber. A great deal has been said about the benefits that we derive from North Sea oil, but the benefits from British Leyland exports are as great.

If the Conservative Front Bench is saying that if a Conservative Government were in power they would have allowed this major car-manufacturing industry to go out of business, it must remember that that is what would have happened to Rolls-Royce if the Conservative Government had not taken it over. Are Conservatives saying that they would have acted on their present theories and allowed British Leyland to go to the wall?

We must remember that there are about 7,000 companies supplying components to British Leyland. My right hon. Friend the Secretary of State talks about 330,000 employees in the NEB who would be affected, and mainly those in British Leyland. However, there are hundreds of thousands of employees outside British Leyland who would have been affected if the company had been allowed to go out of existence. My right hon. Friend is modest when he says that there are 90 Members of Parliament directly affected by the NEB. Surely there are many more hon. Members who are so affected. It is probable, for example, that I am not in the list of 90, but I would be affected if British Leyland were allowed to collapse.

Mr. Bruce George (Walsall, South)

As one of the 90, I reiterate that if British Leyland were allowed to collapse, Walsall would be decimated industrially. That is only one of the many arguments against such an event being allowed to take place. I totally applaud the Government's efforts to maintain this vital and viable industry.

Mr. Evans

I absolutely agree. However, my hon. Friend knows my locality as well as I do, and I must disagree with him if he confines his remarks to Walsall. When we talk of British Leyland, there are some who think that only the Midlands are involved. In my constituency there is a company in the private sector named Helliwelds, a partner in Tube Investments. It supplies exhaust tubes to British Leyland. I visited the company when there were changes taking place at British Leyland. I was told that if British Leyland collapsed, a large section of the work force of that private company would collapse with it. The probability is that if that company did not supply components to British Leyland it would not be a viable proposition for it to supply components to Vauxhalls, Fords, Chryslers or other motor manufacturers. If British Leyland had collapsed, it would have gone out of business.

Another firm in the private sector in my constituency that is in a similar position is A. B. Electronics. It supplies locks and electrical equipment to the car industry. Dunlop, for instance, supplies the foam filling for the seats. There is Cambrian Castings. I could go on.

I think that the Government are acting rightly. I hope that they will stand firm and expose the divisive attitude taken by the Opposition on this matter. I am sure that, if they were in power, they would not be so stupid as they pretend to be in discussion in the House of Commons. They are being doctrinaire because they want to show to the Conservative Party outside the House that they stand for something different. But, just as they were prepared to put the national interest first and to take Rolls-Royce into public ownership, so, too, at the end of the day I am convinced that they will realise that the National Enterprise Board has a real part to play in getting investment into manufacturing industry and that in the years ahead British Leyland will play an important part in the export drive get this country out of its economic difficulties.

9.6 p.m.

Mr. Tim Renton (Mid-Sussex)

The hon. Member for Aberdare (Mr. Evans) trotted out the old saw about the failure of successive Governments to invest in manufacturing industry. How much better it would have been if he had talked about the failure of successive Governments to create the conditions in which investment in manufacturing industry can take place. The hon. Gentleman should look at West Germany, Japan and the United States to see the industrial investment which has taken place there over the last 20 years. It has been not because there have been National Enterprise Boards in those countries but because they have had low tax rates, the possibilities for companies to make large and growing profits, stable employment conditions and little changing intervention from Government. Those are the conditions which cause investment manufacturing industry to take place, not NEBs.

I should like to talk about the order relating to the NEB and to remind the House of what the chairman of the NEB said recently when giving oral evidence to the Wilson Committee. As reported in The Times of 15th March, he said that the National Enterprise Board was not clever enough to beat the whole of manufacturing industry.

I fear that the NEB, from its record over the last two years, is trying to do precisely that. We have heard during the course of the afternoon, not from the Secretary of State who was suspiciously quiet about specific investments made recently by the NEB, but from various hon. Members, that the NEB has in recent months gone into tanning, electronics, hydraulic tube and pipe bending, engineering and medical equipment. Recently it overbid Trafalgar for the purchase of the diversified Fairey Engineering Division. It appears to be setting itself up, despite these words from the chairman of the NEB, as a conglomerate without any industrial logic behind it whatsoever.

Every business man in recent years has learned that life in the business world is very complicated and that it is possible to make the right business or investment decisions only when those involved in taking such decisions have some practical experience of what they are to invest in or to manufacture. This need for practical experience is certainly true of politicians. It is because many of us do not have it that we are such bad judges of industry. It is also true of business men themselves. It is particularly true of the NEB, because it is inevitable that, in its position, it is not offered the best investments. The triple-A companies which want to raise more money do not go to the NEB for it. They can get that money from the clearing banks, the merchant banks or the Stock Exchange. There is a host of places to which they can go for money.

The formation of this muddled conglomerate which the NEB appears to be becoming is such that the companies which go to it for help are inevitably those described by the chairman as companies in the poverty trap. Why are they in the poverty trap? It is because they have had a bad profit record. As a result of that bad profit record or failure to design good new products, good management has left them. They do not have strong management teams. Yet it is precisely these companies, drawn from an infinite range of activities, for which the NEB is now setting out to provide finance.

No one can say that the record of the NEB over the last two years has been successful. Hivent, one of the companies in which it invested, is already in liquidation. British Tanners was formed by the NEB. The NEB is being sued because the other tanning companies do not believe that it is possible for British Tanners to make a profit. In this they feel that the NEB is in contradiction to its statutory obligation to seek a reasonable financial return on its investments.

Cambridge Instruments, another investment which NEB inherited, has just reported an increased loss. The result is that in the abbreviated accounts that were made available last week we find that the subsidiaries of the NEB apart from its main investments lost £1.1 million in the last year and that its other associated companies lost £1.9 million. That is no great encouragement to the House when it is asked to provide another £300 million for the NEB for the purpose of making other investments of this kind.

I hope that the Minister of State will now answer the question of mine that he failed to answer at Question Time today. What is the investment policy of the NEB? How, out of that policy, does he see any chance of the NEB reaching an overall return on its investment in the years ahead of 15 per cent, to 20 per cent.? That is the target that the chairman of the NEB set himself. I believe that this is a Herculean task for the chairman. For the reasons that I have mentioned, because so many of the companies are in financial difficulties, and because they are so widely spread over many diverse sectors, I do not believe that the NEB has a hope in hell of achieving this target.

I do not believe that the cleverest merchant bank or the best clearing bank in the world could achieve the return that has been set by the NEB chairman. In those circumstances I have no doubt that when we are asked in years to come to provide more money for the NEB, should this Socialist Government by any disaster still be in power, we shall be told that the expected rate of return has been substantially reduced once again.

My hon. Friend the Member for Surrey, North-West (Mr. Grylls) mentioned the degree to which the NEB is accountable to Parliament. The Chairman of the Public Accounts Committee has already expressed concern at this and at the fact that the Comptroller and Auditor General cannot look at the books of either British Leyland or Rolls-Royce, which are two of NEB's main subsidiaries. A further £850 million is now being requested by British Leyland. Once all that money is in British Leyland, £1,200 million will have been advanced by the taxpayer to British Leyland. Yet the House will have only a marginal degree of control over British Leyland. The National Enterprise Board falls between several Select Committees at present. There is no clear decision about which Select Committee is responsible for surveillance of the NEB.

I declare an interest in this respect. I hope that the House will agree that the NEB should be added to the remit of the Select Committee on Nationalised Industries. It is not within that Select Committee's remit at present. In the light of the larger sums that will be given to it if the Government win the vote tonight, I am sure that it should be.

As my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) said, the preliminary figures submitted by the NEB last week were disgraceful. They were not the type of figures on which any private company would have dared to seek even £500,000. In those figures there are a number of discrepancies from the figures that were reported in the annual report and accounts last year. I hope that the Minister of State will enlighten the House on this matter. I shall mention just one of those discrepancies.

In the profit and loss account, which appears on the first page of the NEB figures, the NEB and its subsidiaries are reported to be earning 7.5 per cent, return on capital employed this year, compared with 9.6 per cent, return last year. Excluding British Leyland and Rolls-Royce, the figure for NEB and its subsidiaries, in place of 7.5 per cent., becomes 11.5 per cent. The comparison with last year is even then better, because we are told that last year the figure was only 7.3 per cent. On the last figure, therefore, a 7.3 per cent, return has risen to 11.5 per cent. The obvious conclusion is that the NEB is doing rather well.

However, when one looks back at the NEB's report and accounts of last year, one sees on page 20 that the return on capital employed last year is very different. According to these figures, the 7.3 per cent, is actually 14.7 per cent., and the 9.6 per cent, of NEB and all its subsidiaries was 11.8 per cent, last year. On the first one of these I mentioned, the figure now quoted for 1976 is half the figure quoted in the NEB's annual report and accounts. The only explanation that there can be is that the NEB has decided to change the basis of its accounting. That is not generally considered a very prudent practice. If the change has taken place, at least the Government should have made it abundantly plain to us in the preliminary accounts that were made available last week.

In summary, I have no doubt that the Secretary of State has sought to throw dust in the eyes of the House of Commons. By concentrating upon British Leyland and technically linking the British Leyland motion with the order increasing the capital available to the NEB, he has sought to avoid a full discussion of the role of the NEB, or to imply that if we voted against the extension of capital for the NEB, we should be voting against further funds for British Leyland.

My right hon. Friend the Member for Leeds, North-East made that ruse abundantly obvious. The £300 million on which we are asked to vote tonight is for the NEB's pursuit of its own empire building. There is nothing necessarily in that sum for Leyland. We have been told nothing about new jobs being created in companies in which the NEB has invested. No justification has been advanced to show that the NEB in its new investments is doing a job that could not be done better, with no addition to staff, by other providers of risk capital.

It is no coincidence, perhaps, that "NEB" spells "Ben" in reverse. When one looks at that other great creation of the Secretary of State for Energy, the British National Oil Corporation, one must inevitably agree with the gentleman from Chevron who said that there was nothing that the BNOC was doing for the oil industry of this country that could not have been done more cheaply and more quickly for the State without the BNOC. Exactly the same is true of the NEB. Like the other madcap schemes of the Secretary of State for Energy, the NEB will end up by costing the taxpayer a great deal of money without creating any new jobs in manufacturing industry.

9.19 p.m.

Mr. Stan Thorne (Preston, South)

As Opposition Members have had 81 of the last 92 minutes in this debate and as the Opposition Front-Bench spokesman wishes to begin his speech at 20 minutes past nine and it is now 19 minutes past nine, it would obviously be beneficial if I said nothing at all.

9.19 p.m.

Mr. James Prior (Lowestoft)

I should hate the hon. Member for Preston, South (Mr. Thorne) to feel that I was trying to keep him out of the debate. Actually, the debate does not have to end at 10 o'clock. If the hon. Gentleman had wished to make a few comments, although the House would not want to be long delayed, I am certain that it would have been very ready to listen to him for a little while. Therefore, I am quite prepared to give way to the hon. Member now, if that is in order, for him to make a few comments.

Mr. Speaker

Order. Everything happens in this place. The hon. Member for Preston, South (Mr. Thorne) obviously does not want only a few minutes.

Mr. Prior

In view of that, Mr. Speaker, I shall continue with my speech.

We have had a much quieter debate than one might have expected from some of the remarks over the past few days. It is a pity that, on such an important matter as we have been discussing, more hon. Members have not been present.

When my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) was speaking, I sensed a certain disappointment on the Government Benches. They were hoping that he would provide them with some ammunition that they could use, as they have been trying desperately to use it in the last few weeks, in constituencies like Oxford and those in the West Midlands. My right hon. Friend supplied them with no ammunition of any sort. I could go further and say that I agreed with almost every word he spoke—which is almost a record for this Parliament. My right hon. Friend made a very good opening speech and the efforts by Labour Members to put words into his mouth were not successful.

My hon. Friend the Member for City of London and Westminster, South (Mr. Brooke) summed up matters very well when he said that we were dealing not only with a great British industry but with British Leyland and that any company bearing the name "British" is of exceptional concern to all of us. With the implications for employment that this company has, the issue has a special importance for everyone in the House. Incidentally, I have seen no Minister from the Department of Employment in the Chamber all day. That is something which should be noted. It is because of the implications for employment that I have been asked to reply. Those implications concern not just British Leyland, not just those who might be dependent on it, but, according to them, the car component companies in Britain, too. They would be in a serious position if anything happened to British Leyland. So we have to have regard to the whole car industry, particularly the car component industry.

The hon. Member for Coventry, North-West (Mr. Robinson) made a passing reference to the Ryder plan when he said that we had been going down the wrong track for two and a half years. He was right, but that was the Ryder plan. We voted against the plan and against the Financial Resolution. Everything that has happened in the two and a half years since justifies our decision.

I have been worried during the debate that there is a feeling in the House that the new plan published by the National Enterprise Board and put forward by Mr. Michael Edwardes in some very able speeches means that all our problems are behind us. That would be a false sense of optimism. We should certainly view the future with some fears and worries, although we must give British Leyland all possible confidence.

We should not underestimate the many people who have in the past few years become thoroughly disillusioned with the motor industry. Constituents in my area and elsewhere ask, "Why should we work hard and do our stuff for our family and our country when some people are prepared to go on strike at the drop of a hat, when management perhaps is not all that it should be? We are asked to bail them out time after time." That is the attitude that a great number of people in Britain are adopting and have adopted. We should take that into account and should not be frightened of saying so in the House, although at the end of the day our views may be very different from that.

My right hon. Friend the Member for Worcester (Mr. Walker), in an excellent speech, stressed the importance of continuity. Continuity as between changes in Government and between what we say now and what we may have to say in a year or two years' time is vital if we are to give to management, unions and employees in this and many other industries the confidence which is necessary. Hon. Members on both sides must accept that, if we are to get the investment which is needed in British industry, we shall have to develop over the next few years a degree of continuity and bipartisanship on matters of industrial policy which we have not had up till now.

That may be difficult to secure, but we must aim to secure it, because the lifetime of one Government—four or five years, however long it may be, with all the worries about when an election may take place—is not sufficiently long for an industry which must plan its investment much further ahead. Five years is the minimum time for investment to be approved by the board room and to take effect. In many industries, such as the coal industry, the period may be 10 or 15 years.

Mr. Ogden

Is the right hon. Gentleman saying that, if the Secretary of State and the management of British Leyland and the unions involved—either through the National Enterprise Board or without it—are able to decide upon an agreed programme of investment, and if that plan can be approved by the Opposition, they will guarantee the investment?

Mr. Prior

I hope to come to that later in my speech. If I have not answered the question by the time I sit down, I hope that the hon. Gentleman will rise again.

I believe that the tough approach of the newly constituted British Leyland board is an excellent augury for the future. I go so far as to congratulate the Secretary of State and the Minister of State on adopting so many of the good standards of private enterprise in selecting people to sit on their boards, in paying some regard to the selection of companies, and in the help which they are prepared to give to various industries.

I think that the right hon. Gentleman is doing a good job now in many respects. I hope that that will help him as much as the praise that the Opposition lavish on me sometimes helps me. Who would have thought three or four years ago that the Minister of State would be adopting this tough and realistic approach to the problems of private enterprise and State enterprise? Stories are leaked from the Department of Industry to the effect that, although the Secretary of State is tough, his toughness is nothing compared with that of the Minister of State who stands behind the Secretary of State to ensure that he takes the right decisions. I admire the Minister of State for it. Long may he continue to do so.

Mr. Edwardes has said that he regards the placing of further money in British Leyland as very much an act of faith. That is the basis on which the House must agree to the £150 million which it is being asked to vote tonight. I hope that this will be faith backed by solid progress, because it is the duty of the House to have regard all the time to the way in which taxpayers' money is spent.

My hon. Friend the Member for Birmingham, Stechford (Mr. MacKay) drew attention to the need for new models. My hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller) talked about the over-production of cars and the need for further European integration. To that can be added the fact that there will have to be new outlets for the traditional skills as perhaps the passenger car side becomes—or, perhaps, remains—less profitable as time passes.

My hon. Friend the Member for City of London and Westminster, South raised some ominous points in what I thought was an excellent speech. He, with his experience, pointed out the commercial embarrassment of trying to carry out a corporate plan in public, and that really the plan put forward by the NEB on the subject of British Leyland concealed more than it revealed. We in this House are asked to pass judgment blindly on facts that we cannot be permitted to see. It is asking a great deal of this House to be put in that sort of position.

My hon. Friend the Member for Havant and Waterloo (Mr. Lloyd) pointed out that public monitoring is unsatisfactory, but what else can be done in these circumstances? He asked for quarterly accounting reports, and I believe that in this situation such reports would be entirely justified.

Having listened to my hon. Friend the Member for City of London and Westminster, South, and having heard a good many views outside the House, I think that we have to look at the position very soberly indeed. We have supported British Leyland. We shall do so tonight, and let there be no doubt about our support. It is not blind, unswerving support, but it is support of management and the labour force to give them the confidence that they need to get on with the job. My right hon. Friend the Member for Worcester pointed out that we shall not get good management unless we can show some continuity, and that continuity must be forthcoming if the management is to be recruited.

The same applies for distributors and customers overseas. They have to know that the change of Government that they and all of us expect will not lead to a change in British Leyland's future, provided that British Leyland achieves the targets that it has set itself and that we in this House and the National Enterprise Board approve. I think that it is immensely important for the country and for people in export markets to realise that there will be continuity and a future for British Leyland that goes beyond the lifetime of this Government. It is of some significance that the real question that is being asked is not what the present Government are doing about British Leyland but what the next Government will do about the company.

What has to be done if this confidence is to be provided? First, we have to get productivity up. But productivity in itself is not enough, because it will be no use producing more cars of a type, quality and styling that we cannot sell. Therefore, we have to get the investment into the new models, and we have to make certain that that investment is used efficiently.

The great difference between this country and almost any other country is that in recent years we have simply not kept our production lines going. I should like to quote from a note that I was sent on British Leyland. It says: Productivity needs to be substantially increased. A report prepared by a sub-committee of the Cars Council appears to suggest that even after making allowance for different levels of investment productivity compares badly with British Leyland's European competitors (productivity of between 45 per cent, to 65 per cent, of European levels). We all know that European levels come nowhere near Japanese levels, let alone what the South Koreans and other countries will do in the next few years. The great difference, as I see it, has been the inability over the past few years to keep production lines running the whole time. I might return to that in a minute.

Having dealt with productivity and investment, which I think are the keys to the future, I come to the whole problem of industrial relations. Whether we blame unions or management, whomever we blame, the outcome of industrial relations at British Leyland over the past few years has been absolutely shocking. I would say, particularly to Labour Members and particularly to the hon. Member for Liverpool, Garston (Mr. Loyden) that I believe that hon. Members have a part to play in bringing about an improvement in industrial relations. That is particularly true perhaps on Merseyside. I believe that the remarks of the hon. Member for Garston, however strongly he may feel about the Speke No. 2 works, will do nothing to help industrial relations in British Leyland.

Although it is a tough and hard policy to close down any factory and reduce the number of people employed, we are now concerned about trying to save the jobs of literally hundreds of thousands of people who will lose jobs if we do not get this company right again.

Labour Members, with the influence that they can bring to bear on the problems of the trade unions and the problems of industrial relations, have a very important and responsible part to play. I do not believe that over the last few years they have done anything like enough to try to control the activities of the extremists in these factories, who are still and have always been a very small proportion of the total work force.

Mr. Loyden

Is the right hon. Gentleman aware that the point raised this afternoon was not only in relation to Leyland, although obviously that played a major part in my motivation, but concerned the whole effect that this decision has had, in my view, upon Merseyside? If at this stage workers on Merseyside are seeing a cut-back in capacity of one of the major car-producing industries in the country, followed by cut-backs in private enterprise, there ought to be little surprise when that is met with the hostility with which it is being met at the moment on Merseyside.

Mr. Prior

The hon. Gentleman has once more got his timing wrong. We have had a number of problems in the past few years on Merseyside, and the problem with Speke is a culmination of the troubles. It is no good one saying that because of the problem of Speke there may be more trouble in private enterprise. If Labour Members of Parliament in the Merseyside area had been more careful in trying to promote good industrial relations, I believe that there would be a much better position there now than there is.

Mr. Eric S. Heffer (Liverpool, Walton)

Does the right hon. Gentleman know that he is, as usual, talking absolute and utter rubbish? [HON. MEMBERS: "Oh."] I shall repeat it. The right hon. Gentleman is talking absolute and utter rubbish. Over the years Labour Members from Merseyside have played a positive role in industrial relations on Merseyside. They have played a much more positive role than Conservative Members have ever played or will play, first, because the Conservatives know nothing about it. The right hon. Gentleman has talked about industrial relations on Merseyside. We have not had a strike, for example, in the docks for four years. We have hardly had a strike in 99 per cent, of industry on Merseyside. The right hon. Gentleman should be ashamed of the statement that he has made today.

Mr. Prior

That is the sort of reaction from the hon. Gentleman which is entirely predictable. If he had heard his hon. Friend the Member for Garston, he would have better understood what I meant. Perhaps he will read his hon. Friend's speech tomorrow morning and see exactly why I made those remarks. [An HON. MEMBER: "Will it be printed?"] He probably will not read it tomorrow morning, but I should like him to read it because I am as concerned as he is about the state of employment on Merseyside and I want to see it put right, but statements such as those made by his hon. Friend in the Chamber today do nothing whatever to help. There is a great deal which could be done to help, because there is some jolly good labour on Merseyside, as I know as well as the hon. Gentleman himself does.

I believe also that the more we can have a self-imposed silence on the industrial relations problems of British Leyland, the more likely will it be that we shall get some sense into the situation. I must say that my heart sank when I heard on the news on Friday night that the new pay scheme had been turned down. I do not believe that the new pay scheme is of vital consequence to the future productivity or production of British Leyland, but once more the impression was given by the media that this was a great defeat for management. I believe that that is a totally false impression to have given, and I greatly hope that the media will now leave British Leyland alone to get on with its job.

Mr. Heffer

That goes for the Opposition, too.

Mr. Prior

Also, if I may say so, I believe that what we have to seek is not a scheme which is piece-work and not a scheme which is measured day-work. I think that one trade union official said that we had to let the donkey see the carrot, and I believe that that is right if we are to have some success in British Leyland's industrial relations.

I endorse what was said by my right hon. Friend the Member for Worcester. I believe that a share ownership scheme for the employees of British Leyland could have a beneficial effect on their attitudes towards greater productivity.

I turn briefly to the Opposition attitude to the National Enterprise Board. I can put it quite simply. We believe that there is a case for some form of casualty clearing station—a board which deals with companies which for the time being run into trouble but which, once they are restored to health, should be restored again to private enterprise. None of us on this side believes that there is a place for a National Enterprise Board which is seeking to invest in profitable British industry.

That is amply borne out by some comments in the Financial Times on Friday in an article by Mr. Anthony Moreton who discussed the attitude of the National Enterprise Board. In that article he quoted some words of members of the NEB in the regions, and one of them was a comment by Mr. Gerald Connolly, the NEB's North-East director, to this effect: Many companies are not so much a pressure vessel for generating profits as a colander. We are looking for the former. It is not the job of the National Enterprise Board, with taxpayers' money, to be seeking to invest in successful industry. Nor do I believe that at the moment there is any difficulty in finding private resources in place of the NEB's resources. In this connection I quote from the same article in the Financial Times the words of Mr. Arthur Ward of the NEB: This is why we have had such difficulty in finding a home for our resources. At present the National Enterprise Board has a home for its resources. That home is British Leyland and Rolls-Royce.

I understand the attitude and the zeal of those who work in the NEB to try to enlarge their scope of operations, and I have a high regard for Sir Leslie Murphy, who, I think, is doing a first-class job as a public servant trying to interpret the wishes of Parliament. All I am telling him is that the wishes of Parliament will be changed with regard to his role in the not too distant future.

It is not the duty of the National Enterprise Board to support every lame duck, as the hon. Member for Garston seemed to suggest it was. In so far as firms are profitable, they have no need for cash. In so far as they are not profitable, the NEB and the Government have to decide whether they should be supported. But each time cash is invested there is less for private enterprise, more has to be paid by the taxpayer, and, of course, there is less also for British Leyland, Rolls-Royce and the rest.

I come now to the specific order before us. We are asked to pass an order increasing the National Enterprise Board's cash by £300 million. We are being asked to do this about a month before the NEB publishes its annual report and without any proper prospectus. I cannot conceive of any other company in Britain being able to raise vast sums of money from the public, let alone the taxpayer, without any of the necessary information being given.

Why have we got this order tonight when everyone knows that the NEB's annual report will be published in about a month's time? There is no immediate need for cash. There is £64 million in the control of the NEB at the moment—that is enough at least for six months, even if it has to go on investing in other companies in the way that it is. If the NEB were confined, as we would wish to confine it, to what is necessary for British Leyland, or Rolls-Royce, or other firms that come into the category I have mentioned, there would be no need for that extra cash for some time to come.

Of course, the Government have sought to mix the two things up together. We know the reason for that. They have sought to brand us as being against British Leyland. That is the sole purpose of the Government's activities in putting these two orders together tonight. I have read reports in the Oxford and West Midlands newspapers, and it is clear that the Government hope that, by branding us as being against British Leyland, they will gain some short-term party political advantage. They are willing to damage British Leyland in the short term because they think that there is party political advantage in so doing. Yet at the same time they put their hands on their hearts and say that they want Leyland to have long-term confidence for the future. The Government cannot have it both ways. We shall seek to surb the activities of the NEB. The case for its use of public funds on profitable ventures has not been made out.

There is, however, at this moment a case, as I have said, for strongly supporting British Leyland. I have reiterated what my right hon. Friend said—that we believe that we have to give this confidence to British Leyland. We believe that it is right to do so. We have confidence in what Mr. Edwardes is seeking to do and we shall support British Leyland in every possible way. I hope that I shall not have to read in the Oxford or West Midlands newspapers more of the tripe that has been dished out in recent months by Labour Members.

In view of what has been said today, I urge my right hon, and hon. Friends to give a fair wind to British Leyland by not dividing the House. I also ask them to show their views of the activities of the National Enterprise Board by voting in the Lobby tonight against the motion relating to it.

9.49 p.m.

The Minister of State, Department of Industry (Mr. Gerald Kaufman)

If it would not offend my hon. Friend the Member for Liverpool, Walton (Mr. Heifer), I would say that the right hon. Member for Lowestoft (Mr. Prior) has wound up the debate for the Conservative Opposition by showing us the acceptable face of Toryism. Certainly his speech was much different from those made by some of his hon. Friends earlier in the debate. That has been demonstrated in the way in which they have approached the problems of the National Enterprise Board.

The hon. Member for Surrey, North-West (Mr. Grylls), echoing "The Right Approach", said that the NEB should be abolished. But then, of course, the hon. Member for Surrey, North-West still carries the snow of Selsdon on his boots. The right hon. Member for Lowestoft now says that the role of the NEB should be confined to that of a casualty clearing station. But he has changed his attitude. It is not long ago that he said, in one of these many Labour papers which seem to proliferate up and down the country completely unknown to Labour Members of Parliament—it was, in fact, in the Birmingham Post—about the NEB: We are committed to holding the firms now owned by the NEB until any hope of recovery is abandoned. But what we must always look for is the prospect of long-term commercial success. That does not sound to me very much like a casualty clearing station. We shall be coming fairly soon to the question of curing the patient.

The fact is that, little more than two years after it was set up, the NEB is now accepted as an indispensable feature of the industrial landscape. I suspect that even some Conservative Members believe that if the NEB did not exist it would be necessary to invent it. It is carrying out a varied range of activities. Some of them were envisaged when the Board was originally planned. What is significant is that others have been added as the Board has gathered momentum and discovered for itself an even wider role than we originally envisaged.

The NEB acts as an industrial consultant, examining problems and recommending solutions, even when it is not itself involved in either the problem or the solution. Both the private and public industry are increasingly coming to us in the Department and asking for the NEB's services in this way.

The NEB acts as an industrial doctor, seeking to cure the ills of companies—often small companies—which have management or cash problems but which have potential worth exploiting if these problems can be cured. Sometimes they cannot be cured, and critics of the Board in the debate today have seized on these. But it would be a very strange doctor who accepted patients only if they offered him a written guarantee that they would recover.

The Board has an increasingly important regional role. When the Industry Act 1975 was passing through this House, we promised that there would be NEB offices in the North-West and the North-East. Now, on its own initiative, the NEB has set up boards in these regions, with power to invest on their own initiative, and they have begun to use their power. The only criticisms of those activities that we have heard today have been from my hon. Friends in the North-West and the North-East, who want the boards to be even more active.

The Board has begun to act not only as an industrial broker but as the link partner in industrial consortia. Overseas Governments, looking to Britain for investment and specialised services, see the participation of the NEB as meaning stability and reliability. Large companies in Britain know it, and welcome and, indeed, seek out the NEB as a partner.

The most successful of these consortia has been the United Medical Services, where the NEB's partners are Commercial Union Assurance, London Trust and Orion Bank. They have just won a contract to provide services for two hospitals in Saudi Arabia at a value of £31 million.

The NEB is playing its part in the industrial strategy. It is intervening actively in a number of growth sectors. My right hon. Friend referred to its work in the computer and electronics sector.

More and more small businesses are looking to the NEB for advice and finance When the institutions turn their backs the NEB is ready to listen. Many of its most interesting and challenging investments have been in small businesses making unglamorous but useful products—spark erosion machinery, mixer valves, packaging equipment, corrugated paper machinery. Sometimes these companies are little known. Sometimes they have famous names. Without the intervention of the NEB, Twinlock products would have disappeared from the nation's offices.

The NEB investment which has particularly captured imaginations is in Sinclair Radionics. This company is enterprising and imaginative not only in its products but in their superb design. When the company got into difficulties, nobody would listen—except the NEB. Today, Sinclair Radionics, as an NEB subsidiary, is turning out 4,000 a month of its unique pocket television sets. They are a vogue on the United States market and the toys of Arab oil sheikhs. Sinclair Radionics is fighting back for Britain in an industrial field which larger and wealthier countries had abandoned to the Japanese without a fight. Without the NEB, Sinclair Radionics would have gone under. Today it is back in profit. That is a remarkable example of what Conservative Members decry as the dead hand of State intervention.

As it gathers momentum, the NEB is now more actively intervening to acquire larger and more important companies such as the Fairey group. I am not surprised that Opposition Members are very critical of these activities, but their ritual denunciations are more tan outweighed by the applause of the workers, who are more and more looking to the NEB as a guardian of their interests. I was bombarded with letters from workers at Fairey asking for the NEB to take it over. I know that I was not the only hon. Member, because several Tory hon. Members passed on such letters to me. I was pleased to be able to send them a favourable response.

But the biggest NEB job is still to act as a holding company for the major rescue cases. We have been absolutely impartial. When we came into office we stumbled on the doorstep over a foundling left to us by the Tory Government—the nationalised Rolls-Royce. We put it under the capable guardianship of the NEB, and last week Rolls-Royce was able to announce not only a profit but one of the most important orders that its outstanding technical qualities, its independent initiative and enterprise, have ever won—the Pan Am deal.

The right hon. Member for Leeds, North-East (Sir K. Joseph) has a nerve when he accuses us of punting with the taxpayers' money, when he was a member of the Cabinet that set the trend—Rolls-Royce, £87½ million just to buy the assets Upper Clyde Shipbuilders and Cammell Laird; Norton-Villiers-Triumph, nearly £5 million; ICL, with £40 million of taxpayers' money committed there—and often with minimal information to Parliament.

The right hon. Gentleman said that on the matter we are discussing today the Government should have put much more information before the House. Coming from him, that is astounding. The House was asked to nationalise Rolls-Royce with no notice whatever, other than the announcement of the company's failure and the Government's intentions, all made on the same day. As for information, the House was provided with none. We had to make do with an oral statement, and on that flimsy basis Parliament nationalised Rolls-Royce in 17 hours flat.

We had a chorus from the Opposition today, with one refrain: if money is needed for Leyland, sell off its Special Products division. [HON. MEMBERS: "Who said that?"] Every Conservative Member who spoke said it—the right hon. Member for Leeds. North-East, the hon. Members for Rushcliffe (Mr. Clarke) and Bromsgrove and Redditch (Mr. Miller)—and many other hon. Members.

The hon. Member for Birmingham, Stechford (Mr. MacKay) said that Special Products had nothing to do with vehicles and that was why it should be sold off. That is very interesting. Special Products includes Coventry Climax industrial trucks, Aveling Barford trucks. Aveling Marshall tractors and Barford forklift trucks. Even the Scorpion tank has a Jaguar engine. In any case, if Leyland were made to sell off its assets to fund investment, a forced sale would mean buyers snapping up valuable property at bargain prices, and that would be cheating the taxpayer.

This is a very strange time for the Tory Party to seek to deny further finance for the NEB, because, apart from Leyland, Rolls-Royce will make the biggest call on the NEB for funding in the coming months. It is typically irresponsible of the Tories to seek to trip up Rolls-Royce at its moment of triumph. I warn them that if they succeed tonight in voting down the order they will be sabotaging one of the nation's greatest assets.

Then there is Leyland itself. We have heard a great deal from the Tory Opposition today about Mr. Michael Edwardes. They tell us that he is a fine fellow, a sterling chap. We are told that he always says the most sensible things. But the true Tory line on Michael Edwardes is that he should be given every possible assistance short of actual help. The Tories are voting against the order tonight when Mr. Edwardes himself has made it clear that for the good of Leyland there should be no vote at all. This is what Mr. Edwardes told the Foreign Press Association last month: If Parliament will give us real support—I do not just mean Government support or a narrow vote or something; I mean real support from all political parties—I believe this will have a tremendous effect on morale and good will and relations between management and workforce. Divisions can start at the level of Parliament. Given that support, it would be entirely up to management and the workforce to ' get it right ', and there would be no excuses. Without that support, the finger could be pointed at Parliament ". That is what Mr. Edwardes said.

The finger is pointed not at Parliament but at the reckless and irresponsible Tory Opposition. And where is the Scottish National Party tonight? It has boasted in Garscadden about how it cares about jobs. But when jobs in Albion Motors across the road from Garscadden are at stake the SNP does not come to the Chamber and does not speak up. The SNP boasts about it devotion to jobs. But there are 8,000 jobs at stake at Rolls-Royce Hillington in Kilbride and the Tories are seeking to vote them down tonight. Where have the Scottish Nationals been?

As for the Tories, not only are they disregarding Mr. Edwardes' words, they are disregarding their own words.

Mr. Prior

Does the Minister think that he is doing a service to the future confidence and ability of British Leyland to survive by saying words which he knows are totally untrue about the Tory Party's attitude?

Mr. Kaufman

The right hon. Gentleman was on record at the time of the Ladywood by-election as being in support of Leyland. He said: We are committed to finding a way to success for British Leyland". As the hon. Member for Colne Valley (Mr. Wainwright) pointed out, that success depends on passing the order and the resolution as a package. That is what Mr. Edwardes has said. That is what the National Enterprise Board has said. The Tories say weasel words in favour of Leyland, yet they vote against it. They are even disregarding the words of their own leader. The right hon. Lady the Leader of the Opposition said this about British Leyland: I do not think it is up to politicians to say what can be done. It is for the management to say how they are going about it. It is then up to the Government to decide how much money they want to put in. That is what the Leader of the Opposition said when she was grubbing votes in Cowley, Oxford. But tonight her hon. Friends are voting against that and against the judgment of the NEB. They are voting against the judgment of Mr. Michael Edwardes. By voting against this order the Tories are voting against a future for Leyland just as surely as if they voted against the resolution. They will be driving Britain out of the volume car market.

Last week the right hon. Lady said: We must not settle for a future in which the nation of Lord Nuffield drives Japanese or German cars". Yet the right hon. Lady and her Friends are voting against this order and are voting for the people only to have Japanese or German cars.

Mr. Norman Lamont (Kingston upon Thames)

Will the Minister of State answer the point which has been made that the NEB has now got within its resources the £300 million that it needs for British Leyland and that it is quite unnecessary to have the financial limits extended, except that the Government wish to extend the marauding activities of the NEB?

Mr. Kaufman

The hon. Gentleman is quite wrong about that. If the NEB were to do what the hon. Gentleman has said, it would not be able to fund Rolls-Royce, which is the most important call upon it, together with its other continuing commitments.

Sir K. Joseph

But that was not the case put by the Secretary of State or the Government. The Government are seeking, under the guise of Leyland, to gain from the taxpayer £300 million without making any case for it. This is not a Leyland case at all.

Mr. Kaufman

The right hon. Gentleman is trying to get out of it because he knows what he is doing to Rolls-Royce and he is dodging it by attacking the NEB. We are voting for Leyland. We are voting for Rolls-Royce. We are voting for jobs. We shall beat the Conservative Opposition.

Question put:—

The House divided: Ayes 279, Noes 252.

Division No. 164]	AYES	[10.05 p.m.
Abse, Leo	Ewing, Harry (Stirling)	MacFarquhar, Roderick
Allaun, Frank	Faulds, Andrew	McGuire, Michael (Ince)
Anderson, Donald	Fernyhough, Rt Hon E.	MacKenzie, Rt Hon Gregor
Archer, Rt Hon Peter	Flannery, Martin	Mackintosh, John P.
Armstrong, Ernest	Fletcher, L. R. (Ilkeston)	Maclennan, Robert
Ashley, Jack	Fletcher, Ted (Darlington)	McMillan, Tom (Glasgow C)
Ashton, Joe	Foot, Rt Hon Michael	McNamara, Kevin
Atkins, Ronald (Preston N)	Ford, Ben	Madden, Max
Atkinson, Norman	Forrester, John	Magee, Bryan
Bain, Mrs Margaret	Fowler, Gerald (The Wrekin)	Mahon, Simon
Barnett, Guy (Greenwich)	Fraser, John (Lambeth, N'w'd)	Mallalieu, J. P. W.
Barnett, Rt Hon Joel (Heywood)	Freeson, Rt Hon Reginald	Marks, Kenneth
Bates, Alf	Freud, Clement	Marshall, Dr Edmund (Goole)
Bean, R. E.	Garrett, John (Norwich S)	Marshall, Jim (Leicester S)
Beith, A. J.	Garrett, W. E. (Wallsend)	Maynard, Miss Joan
Benn, Rt Hon Anthony Wedgwood	George, Bruce	Meacher, Michael
Bennett, Andrew (Stockport N)	Gilbert, Dr John	Mellish, Rt Hon Robert
Bidwell, Sydney	Ginsburg, David	Mendelson, John
Bishop, Rt Hon Edward	Golding, John	Mikardo, Ian
Blenkinsop, Arthur	Gould, Bryan	Millan, Rt Hon Bruce
Boardman, H.	Gourlay, Harry	Miller, Dr M. S. (E Kilbride)
Booth, Rt Hon Albert	Graham, Ted	Mitchell, Austin
Boothroyd, Miss Betty	Grant, George (Morpeth)	Molloy, William
Bottomley, Rt Hon Arthur	Grant, John (Islington C)	Moonman, Eric
Boyden, James (Bish Auck)	Grocott, Bruce	Morris, Alfred (Wythenshawe)
Bradley, Tom	Hardy, Peter	Morris, Charles R. (Openshaw)
Bray, Dr Jeremy	Harrison, Rt Hon Walter	Morris, Rt Hon J. (Aberavon)
Brown, Hugh D. (Provan)	Hart, Rt Hon Judith	Moyle, Roland
Brown, Robert C. (Newcastle W)	Hattersley, Rt Hon Roy	Mulley, Rt Hon Frederick
Buchan, Norman	Hayman, Mrs Helene	Murray, Rt Hon Ronald King
Buchanan, Richard	Healey, Rt Hon Denis	Newens, Stanley
Butler, Mrs Joyce (Wood Green)	Heffer, Eric S.	Noble, Mike
Callaghan, Rt Hon J. (Cardiff SE)	Hooley. Frank	Oakes, Gordon
Callaghan, Jim (Middleton & P)	Hooson, Emlyn	Ogden, Eric
Campbell, Ian	Horam, John	O'Halloran, Michael
Canavan, Dennis	Howell, Rt Hon Denis (B'ham, Sm H)	Orbach, Maurice
Cant, R. B.	Howells, Geraint (Cardigan)	Orme, Rt Hon Stanley
Carmichael, Neil	Hoyle, Doug (Nelson)	Ovenden, John
Carter, Ray	Huckfield, Les	Padley, Walter
Carter-Jones, Lewis	Hughes, Rt Hon C. (Anglesey)	Palmer, Arthur
Cartwright, John	Hughes, Robert (Aberdeen N)	Park, George
Castle, Rt Hon Barbara	Hughes, Roy (Newport)	Parker, John
Clemitson, Ivor	Hunter, Adam	Parry, Robert
Cocks, Rt Hon Michael (Bristol S)	Irving, Rt Hon Sir A. (Edge Hill)	Pavitt, Laurie
Cohen, Stanley	Irving, Rt Hon S. (Dartford)	Pendry, Tom
Coleman, Donald	Jackson, Colin (Brighouse)	Penhaligon, David
Conlan, Bernard	Jackson, Miss Margaret (Lincoln)	Perry, Ernest
Corbett, Robin	Janner, Greville	Price, C. (Lewisham W)
Cowans, Harry	Jay, Rt Hon Douglas	Price, William (Rugby)
Cox, Thomas (Tooting)	Jeger, Mrs Lena	Radice, Giles
Craigen, Jim (Maryhill)	Jenkins, Hugh (Putney)	Rees, Rt Hon Merlyn (Leeds S)
Crawshaw, Richard	Johnson, James (Hull West)	Richardson, Miss Jo
Cronin, John	Johnson, Walter (Derby S)	Roberts, Albert (Normanton)
Crowther, Stan (Rotherham)	Jones, Alec (Rhondda)	Roberts, Gwilym (Cannock)
Cryer, Bob	Jones, Barry (East Flint)	Robinson, Geoffrey
Cunningham, Dr J. (Whiten)	Jones, Dan (Burnley)	Roderick, Caerwyn
Davidson, Arthur	Judd, Frank	Rodgers, George (Chorley)
Davies, Bryan (Enfield N)	Kaufman, Gerald	Roqers, Rt Hon William (Stockton)
Davies, Denzil (Llanelli)	Kelley, Richard	Rooker, J. W.
Davies, Ifor (Gower)	Kerr, Russell	Roper, John
Davis, Clinton (Hackney C)	Kilroy-Silk, Robert	Rose, Paul B.
Deakins, Eric	Kinnock, Neil	Ross, Stephen (Isle of Wight)
Dean, Joseph (Leeds West)	Lambie, David	Ross, Rt Hon W. (Kilmarnock)
Dell, Rl Hon Edmund	Lamborn, Harry	Rowlands, Ted
Dempsey, James	Lamond, James	Ryman, John
Doig, Peter	Leadbitter, Ted	Sandelson, Neville
Dormand, J. D.	Lee, John	Sedgemore, Brian
Douglas-Mann, Bruce	Lestor, Miss Joan (Eton & Slough)	Selby, Harry
Duffy, A. E. P.	Lever, Rt Hon Harold	Shaw, Arnold (Ilford South)
Dunn, James A.	Lewis, Ron (Carlisle)	Sheldon, Rt Hon Robert
Dunnett, Jack	Litterick, Tom	Shore, Rt Hon Peter
Eadie, Alex	Lomas, Kenneth	Short, Mrs Renée (Wolv NE)
Edge, Geoff	Loyden, Eddie	Silkin, Rt Hon John (Deptford)
Ellis, John (Brigg & Scun)	Luard, Evan	Silkin, Rt Hon S. C. (Dulwich)
English, Michael	Lyons, Edward (Badlord W)	Silverman, Julius
Ennals, Rt Hon David	Mabon, Rt Hon Dr J. Dickson	Skinner, Dennis
Evans, Fred (Caerphilly)	McCartney, Hugh	Smith, John (N Lanarkshire)
Evans, Ioan (Aberdare)	McDonald, Dr Oonagh	Snape, Peter
Evans, John (Newton)	McElhone, Frank	Spearing, Nigel
Spriggs, Leslie	Torney, Tom	Whitlock, William
Stallard, A. W.	Tuck, Raphael	Williams, Rt Hon Alan (Swansea W)
Steel, Rt Hon David	Varley, Rt Hon Eric G.	Williams, Alan Lee (Hornch'ch)
Stewart, Rt Hon M. (Fulham)	Wainwright, Edwin (Dearne V)	Williams, Rt Hon Shirley (Hertford)
Stoddart, David	Wainwright, Richard (Colne V)	Wilson, Rt Hon Sir Harold (Huyton)
Stott, Roger	Walker, Harold (Doncaster)	Wilson, William (Coventry SE)
Strang, Gavin	Walker, Terry (Kingswood)	Wise, Mrs Audrey
Strauss, Rt Hon G. R.	Ward, Michael	Woodall, Alec
Summerskill, Hon Dr Shirley	Watklns, David	Woof, Robert
Swain, Thomas	Watkinson, John	Wrigglesworth, Ian
Thomas, Jeffrey (Abertillery)	Weetch, Ken	Young, David (Bolton E)
Thomas, Mike (Newcastle E)	Weitzman, David
Thomas, Ron (Bristol NW)	Wellbeloved, James	TELLERS FOR THE AYES:
Thorne, Stan (Preston South)	White, Frank R. (Bury)	Mr. James Hamilton and
Tierney, Sydney	White, James (Pollok)	Mr. Joseph Harper.
Tinn, James
NOES
Adley, Robert	Fookes, Miss Janet	Lloyd, Ian
Aitken, Jonathan	Forman, Nigel	Loveridge, John
Alison, Michael	Fowler, Norman (Sutton C'f'd)	Luce, Richard
Arnold, Tom	Fox, Marcus	McAdden, Sir Stephen
Atkins, Rt Hon H. (Spelthorne)	Fraser, Rt Hon H. (Stafford & St)	McCrindle, Robert
Atkinson, David (Bournemouth, East)	Fry, Peter	McCusker, H.
Awdry, Daniel	Gardiner, George (Reigate)	Macfarlane, Neil
Baker, Kenneth	Gardner, Edward (S Fylde)	MacGregor, John
Banks, Robert	Gilmour, Rt Hon Ian (Chesham)	MacKay, Andrew (Stechford)
Bendall, Vivian (Ilford North)	Gilmour, Sir John (East Fife)	Macmillan, Rt Hon M. (Farnham)
Bennett, Dr Reginald (Fareham)	Glyn. Dr Alan	McNair-Wilson, M. (Newbury)
Benyon, W.	Goodhart, Philip	McNair-Wilson, P. (New Forest)
Biffen, John	Goodhew, Victor	Madel, David
Biggs-Davison, John	Goodlad, Alastair	Marshall, Michael (Arundel)
Body, Richard	Gorst, John	Marten, Neil
Boscawen, Hon Robert	Gow, Ian (Eastbourne)	Mates, Michael
Bottomley, Peter	Gower, Sir Raymond (Barry)	Mather, Carol
Bowden, A. (Brighton, Kemptown)	Grant, Anthony (Harrow C)	Maude, Angus
Boyson, Dr Rhodes (Brent)	Gray, Hamlsh	Maudling, Rt Hon Reginald
Braine, Sir Bernard	Griffiths, Eldon	Mawby, Ray
Brittan, Leon	Grist, Ian	Maxwell-Hyslop, Robin
Brocklebank-Fowler, c.	Grylls, Michael	Mayhew, Patrick
Brooke, Peter	Hall-Davis, A. G. F.	Meyer, Sir Anthony
Brotherton, Michael	Hamilton, Michael (Salisbury)	Miller, Hal (Bromsgrove)
Brown, Sir Edward (Bath)	Hampson, Dr Keith	Mills, Peter
Bryan, Sir Paul	Hannam, John	Miscampbell, Norman
Buchanan-Smith, Alick	Harrison, Col Sir Harwood (Eye)	Mitchell, David (Basingstoke)
Buck, Antony	Harvie Anderson, Rt Hon Miss	Moate, Roger
Budgen, Nick	Haselhurst, Alan	Molyneaux, James
Bulmer, Esmond	Hastings, Stephen	Monro, Hector
Burden, F. A.	Havers, Rt Hon Sir Michael	Montgomery, Fergus
Butler, Adam (Bosworth)	Hayhoe, Barney	Moore, John (Croydon C)
Carson, John	Heath, Rt Hon Edward	More, Jasper (Ludlow)
Chalker, Mrs Lynda	Heseltine, Michael	Morgan, Geraint
Churchill, W S.	Hicks, Robert	Morgan-Giles, Rear-Admiral
Clark, Alan (Plymouth, Sutton)	Higgins, Terence L.	Morris, Michael (Northampton S)
Clark, William (Croydon S)	Hodgson, Robin	Morrison, Hon Peter (Chester)
Clarke, Kenneth (Rushcliffe)	Holland, Philip	Mudd, David
Clegg, Walter	Hordern, Peter	Neave, Airey
Cockcroft, John	Howe, Rt Hon Sir Geoffrey	Nelson, Anthony
Cooke, Robert (Bristol W)	Howell, David (Guildford)	Neubert, Michael
Cope, John	Hunt, David (Wirral)	Newton, Tony
Cormack, Patrick	Hunt, John (Ravensbourne)	Nott, John
Costain, A. P.	Hurd, Douglas	Onslow, Cranley
Craig, Rt Hon W. (Belfast E)	Hutchison, Michael Clark	Oppenheim, Mrs Sally
Crouch, David	Irving, Charles (Cheltenham)	Page, John (Harrow West)
Crowder, F. P.	James, David	Page, Rt Hon R. Graham (Crosby)
Dean, Paul (N Somerset)	Johnson Smith, G. (E Grinstead)	Page, Richard (Workington)
Dodsworth, Geoffrey	Jones, Arthur (Daventry)	Parkinson, Cecil
Douglas-Hamilton, Lord James	Jopling, Michael	Pattle, Geoffrey
Drayson, Burnaby	Joseph, Rt Hon Sir Keith	Percival, Ian
du Cann, Rt Hon Edward	Kaberry, Sir Donald	Peyton, Rt Hon John
Durant, Tony	Kimball, Marcus	Pink, R. Bonner
Dykes, Hugh	King, Evelyn (South Dorset)	Powell, Rt Hon J. Enoch
Eden, Rt Hon Sir John	King, Tom (Bridgwater)	Prentice, Rt Hon Reg
Edwards, Nicholas (Pembroke)	Kitson, Sir Timothy	Price, David (Eastleigh)
Elliott, Sir William	Knight, Mrs Jill	Prior, Rt Hon James
Emery, Peter	Knox, David	Pym, Rt Hon Francis
Eyre, Reginald	Lamont, Norman	Raison, Timothy
Fairbairn, Nicholas	Langford-Holt, Sir John	Rathbone, Tim
Fairgrieve, Russell	Latham, Michael (Melton)	Rees, Peter (Dover & Deal)
Farr, John	Lawrence, Ivan	Rees-Davies, W. R.
Fell, Anthony
Finsberg, Geoffrey	Lawson, Nigel	Renton, Rt Hon Sir D. (Hunts)
Fisher, Sir Nigel	Lester, Jim (Beeston)	Renton, Tim (Mid-Sussex)
Fletcher, Alex (Edinburgh N)	Lewis, Kenneth (Rutland)	Rhodes, James R

Ridley, Han Nicholas	Smith, Timothy John (Ashfield)	van Straubenzee, W. R.
Ridsdale, Julian	Speed, Keith	Vaughan, Dr Gerard
Rifkind, Malcolm	Spence, John	Viggers, Peter
Roberts, Wyn (Conway)	Spicer, Michael (S Worcester)	Wakeham, John
Ross, William (Londonderry)	Sproat, Iain	Walder, David (Clitheroe)
Rossi, Hugh (Hornsey)	Stainton, Keith	Walker, Rt Kon P. (Worcester)
Rost, Peter (SE Derbyshire)	Stanbrook, Ivor	Wall, Patrick
Royle, Sir Anthony	Stanley, John	Walters, Dennis
Sainsbury, Tim	Steen, Anthony (Wavertree)	Weatherill, Bernard
St. John-Stevas, Norman	Stewart, Ian (Hitchin)	Wells, John
Scott, Nicholas	Stokes, John	Whitelaw, Rt Hon William
Shaw, Giles (Pudsey)	Stradling Thomas, J.	Wiggin, Jerry
Shelton, William (Streatham)	Tapsell, Peter	Winterton, Nicholas
Shepherd, Colin	Taylor, R. (Croydon NW)	Wood, Rt Hon Richard
Shersby, Michael	Tebbitt, Norman	Young, Sir G. (Ealing, Acton)
Silvester, Fred	Temple Morris, Peter	Younger, Hon George
Sims, Roger	Thatcher, Rt Hon Margaret
Sinclair, Sir George	Thomas, Rt Hon P. (Hendon S)	TELLERS FOR THE NOES:
Skeet, T. H. H.	Townsend, Cyril D.	Mr, Spencer Le Marchant and
Smith, Dudley (Warwick)	Trotter, Neville	Mr. Anthony Berry

Question accordingly agreed to.

Resolved. That the draft National Enterprise Board (Financial Limit) Order 1978, which was laid before this House on 3rd April, be approved.