HC Deb 06 March 1978 vol 945 cc1136-43

11.30 p.m.

The Minister of State, Northern Ireland Office (Mr. J. D. Concannon)

I beg to move, That the draft Industries Development (Northern Ireland) Order 1978, which was laid before this House on 7th February, be approved. The order will provide for the transfer of certain undertakings which were formerly the responsibility of the Northern Ireland Finance Corporation from the Northern Ireland Development Agency to the Department of Commerce. The undertakings actually transferred will be determined by the Department of Commerce with the consent of the Department of Finance in consultation with the Northern Ireland Development Agency.

The Agency was established in 1976 under the Industries Development (Northern Ireland) Order as the successor to the Finance Corporation, with the task of developing Northern Ireland industry and creating employment. It is required to act in a broadly commercial manner. However, under the terms of the 1976 order, the property, rights and liabilities of the Finance Corporation, including responsibility for all its undertakings, were vested in the Agency. The Agency examined these undertakings and categorised them as either commercial or non-commercial.

The non-commercial cases were then sub-divided into three groups: those which the Department of Commerce directed the Agency to support for social and political reasons; secondly, those which the Department of Commerce did not consider it was justified in directing the Agency to continue to support, and which are effectively in limbo; and, thirdly, those which are at present in receivership or liquidation. All these cases will be transferred to the Department of Commerce, while the Agency will retain responsibility for the commercial cases.

The non-commercial cases inherited from the Finance Corporation take up a great deal of the Agency's time on largely unproductive work and serve to deflect it from its main commercial functions. Once the Department assumes responsibility for them, the Agency will be able to concentrate on its commercial role. as do its counterparts, the Scottish and Welsh Development Agencies. There will be no additional public expenditure as a result of these proposals.

11.32 p.m.

Mr. Airey Neave (Abingdon)

I welcome the order, especially because the Development Agency will now be able to concentrate on its commercial role, as do its counterparts in Scotland and Wales. It is also welcome that there will be no additional cost to public funds as a result. I hope that after it has shed these encumbrances the Agency will be able to make the major contribution to the recovery of the Northern Ireland economy for which we all hope but which it has not so far been able to make.

Can the Minister say more about the extent and cost of the non-commercial functions which are being transferred? He said that they had been sub-divided into three, but I was not clear what amount was involved.

11.33 p.m.

Mr. Ian Gow (Eastbourne)

Our debates today have been characterised by a confession from the Under-Secretary about the unsatisfactory way in which we discuss Northern Ireland matters. Although accepting the Minister's reasons for expecting the previous debate on Northern Ireland Security to end at eight o'clock, I must say that discussions between the two Front Benches about the time for a debate on security in the Province are intensely unsatisfactory to other hon. Members.

Mr. J. Enoch Powell (Down, South)

In fairness to all concerned, I think that it should be made clear that there were discussions not only between the two Front Benches but also with Ulster Unionist Members and, so far as I know, with other hon. Members representing constituencies in Northern Ireland. If there was a mistake, it was in not having a business motion which would have safeguarded a minimum time for the Appropriation Order in any case. I did not think that I should allow the hon. Gentleman to put on the record what, inadvertently, he had supposed.

Mr. Gow

I entirely agree with the right hon. Gentleman. I think that he and I are at one in saying that the time which is allowed in the House for debating Northern Ireland matters and the way in which we debate orders are the reverse of satisfactory.

The Minister has not told the House—although, of course, this is clear in the 1976 order—exactly to which undertakings he was referring. But he divided the undertakings into three categories: the first, those which were being supported for social reasons; secondly those which were in limbo; and, thirdly those which are at present in receivership.

The manner in which we debate these subjects is highlighted by the Minister's speech. The Government have a duty to explain to the House in much greater detail than the Minister did. I know that he is as concerned as we all are about the restrictions of time, but I hope that he will tell us specifically which under takings are still supported for social reasons, which are in limbo and which are in receivership.

The Minister explained that there would be no additional cost to public funds as a result of approval of the order. Of course, we all accept what he says, but, where there are undertakings in receivership and where there are undertakings which, to use his own words, are in limbo, I hope that he will tell the House to what extent those undertakings may be a prospective charge upon the public purse.

11.36 p.m.

Mr. Robert J. Bradford (Belfast, South)

It is true that the Northern Ireland Development Agency welcomes this enabling legislation, but before we place ourselves alongside the Agency in that respect it must be said that we deplore the kind of past Government miscalculations which make this sort of enabling legislation necessary. As the Minister rightly said, the reasons for this legislation are that the Agency has various undertakings and responsibilities which deflect it from fulfilling its intended role.

To illustrate that, one looks at article 2 of the order dealing with the vesting of property in the Department of Commerce. I understand that the Agency is presently lumbered with the responsibility of man aging a warehouse here in London which formerly belonged to the Ben Sherman company, and that the costs of maintaining the warehouse, of meeting problems of dereliction and so on are such as to take a great toll of time and money.

When we move to article 4, dealing with loans, we again move into interesting waters, in that the Agency has assumed responsibility for some of those dreadful loans and commitments to, for example, Strathearn Audio. I do not know how any Government Department could possibly carry out its functions with that kind of albatross around its neck.

Therefore, we appreciate why the Agency welcomes this enabling legislation, which will divest it of the responsibiity for that kind of operation. But, while we certainly welcome the clearing-up operation which the order enables, we ask the Government not to get the Agency into that kind of trouble in future by resorting to social arguments which are seen really to be socio-political arguments when we look closely at the Strathearn Audio and Ben Sherman operations. We welcome the order, but we deplore the reasons for having to bring it into being.

11.40 p.m.

Rev. Ian Paisley (Antrim, North)

We are all interested in the activities of the Northern Ireland Development Agency, but some of us are not too happy about its predecessor, the Northern Ireland Finance Corporation. In this order an attempt is being made to sweep under the carpet some of the tragic happenings concerning the expenditure of finance by that Corporation. Will the Department take on and continue the liabilities which were entered into by that Corporation? Is that what this order means? Will the new Development Agency have a bailiwick of its own? The Minister nods in agreement.

In those circumstances, can the Minister help us about the operations which were not financially sound and which are still in his hands? What will he do about them? Will he continue to help ducks which are lame in both feet, or will he kill them off? Hon. Members laugh, but some of us had dealings with the Northern Ireland Finance Corporation. Some of us have no business acumen at all, but we know that some of the money put by that Corporation into certain ventures could have been better used.

For instance, I should like the Minister to tell us what will happen to Strathearn Audio and similar enterprises. Will there be a continuation? If so, large sums of money will have to be paid in bogus redundancy payments—and I use those words with consideration. In the event of the closure of a factory, there are golden handshakes to reduce the number of employed, and after a while the number must be reduced again, so there are other golden handshakes. I am told on good authority that the amount of contracts that Strathearn Audio has received is so low there it would be far better to pay the people to go home than to fulfil the contracts. Mr. Gordon Smith says from time to time that it was always bad, so it could not be worse than it is. That type of comment leads the people of Northern Ireland to despair that we are putting good money into operations which will not bring benefit.

Is the Development Agency prepared to consider service industry? Grants are not made to service industry and, as a result, many viable service industries in Northern Ireland are being closed, resulting in unemployment, whereas a helpful cash flow could save them. I know that the Minister is interested in keeping jobs in Northern Ireland and, therefore, I wonder whether he could help in this matter.

11.44 p.m.

Mr. Concannon

I thank the House for the general welcome that it has given to the order. The order is the result of negotiations between the Northern Ireland Development Agency and my Department and myself.

Hon. Members have wondered whether the new Agency will be left to pursue many of the albatrosses left by the former Corporation. The number of cases being transferred is 20, and the total amount of money involved is approximately £6,100,000, almost £800,000 of which is invested by way of equity, with the balance as loans. As soon as this order is passed, I become owner of a warehouse belonging to the Ben Sherman group.

Mr. Powell

Arising out of that, I hope that before we part with the order the right hon. Gentleman will explain what he is going to do with the albatrosses. We understand that the Agency is not very good at looking after them, but what grounds have we for supposing that the Department of Commerce is a natural and purpose-made albatross keeper? Seriously, is it the policy—and, if so, should it not now be stated—to dispose of these and accept whatever losses there might be but at any rate to get rid of these liabilities as soon as reasonably possible?

Mr. Concannon

The right hon. Gentleman is looking at the greatest keeper of albatrosses that Northern Ireland has had for a considerable time. It is not my intention to publish the names of these companies. I do not think that there would be strong objection to naming those in receivership or liquidation, but it is felt that publication of the names of the remaining companies could be detrimental to their future trading prospects.

As for the companies which are in receivership or liquidation, the Department will liaise with the receivers and liquidators to ensure an orderly winding-up. The Department does not propose automatically to provide additional assistance to the remaining companies, nor does it intend to apply pressure on them to wind up their affairs. The cases will be examined individually to assess their prospects and see whether there is any scope for the provision of additional assistance or for a financial restructuring which might effect a turn-around in their fortunes.

Out of 20, there are 14 in receivership—in other words, in the third category which I have explained. There are five which I and my Department will have to look at individually to assess whether we can save the jobs.

In the case of Strathearn Audio Limited, the Government have made it clear to the company that the current financial support cannot be continued indefinitely and that its performance and prospects will continue to be closely scrutinised. The Government wrote off losses and accumulated interest charges totalling £5.4 million at the beginning of 1977. However, the company has not prospered, and towards the end of 1977 NIDA, which owns the share capital of almost £1.7 million decided that it could not provide further funds.

Since then, the Department of Commerce has funded the company and the whole operation has been rationalised with the work force being cut from 300 to 160 by means of voluntary redundancies. The number of products being manufactured is now confined to one turntable and one mid-range unit for incorporation in loudspeakers. The company is continuing to make strenuous efforts to improve production and sales to a point where it will become self-supporting, and it is searching for a company or companies which will participate in the venture as manufacturing and/or marketing partners.

Rev. Ian Paisley

What controlling plan was there for the company? What contracts did it get in the last 12 months in hard cash terms?

Mr. Concannon

Hard cash would be helpful to me as the Minister who has become responsible for Strathearn Audio. I make it clear that it is still owned by NIDA. The Department of Commerce has been providing funds, and, of course, it is being very closely monitored until the end of this month, when I shall be reassessing the whole situation. All these things—finance, marketing and so on—are being closely monitored. We are doing this because we do not want another Strathearn Audio situation. It is vital, if we are to have operations such as this, which we need and which are part of the strategy, that we ensure that they are successful.

Mr. John Biggs-Davison (Epping Forest)

Are we to understand that Strathearn Audio is now manufacturing nothing but loudspeakers? Has the company a market for what it produces? Is it selling the product?

Mr. Concannon

It is making one style of turntable and loudspeaker instead of the various ranges. We have cut it down to what the company, the management and the work force said they could do best. There is a world market for these things. I have given them a particular time in which to prove to themselves that they can produce them and sell throughout the world. The performance is being very closely monitored.

Strathearn Audio is within one of my areas of highest unemployment, and if there is any loss of jobs in that area the workers cannot simply go down the road and get another job. There is no possibility at all of that. The unemployment figure in the area is between 40 and 45 per cent. It is vital that we should learn our lessons from such episodes as that of Strathearn Audio.

Mr. James Molyneaux (Antrim, South)

Will the Minister give the assurance that any such development in the future will be judged by its potential viability before it is embarked upon? Will he relate that to what is being proposed in the way of industrial development on the fringe of the Poleglass Estate? If that estate plan gets off the ground, will the Minister give the assurance that public money will not be poured into something which will be a non-starter?

Mr. Concannon

We have not only Strathearn Audio. There is the Viking factory in Londonderry and there is another factory in Strabane. In certain areas we have to proceed in this respect. We have to make sure that the public money we are spending is very tightly controlled and that we are making the best use of it. Certainly many people have been employed at Strathearn Audio who have never been employed before. We believe that we have learnt a lot of lessons from it.

Question put and agreed to.

Resolved, That the draft Industries Development (Northern Ireland) Order 1978, which was laid before this House on 7th February be approved.