HC Deb 22 May 1978 vol 950 cc1259-95

10.17 p.m.

The Minister of State, Department of Industry (Mr. Alan Williams)

I beg to move, That the draft Financial Assistance for Industry (Increase of Limit) Order 1978, which was laid before this House on 28th April, be approved. This order will have the effect of increasing the limit under Section 8 of the Industry Act from the present figure of £850 million to £1,100 million. Hon. Members will recollect that under that Act the initial tranche of grant was raised to £600 million, with the possibility of four further grants each of £250 million. On 27th June last year the House approved the first such tranche. Therefore, since June we have had £850 million available.

I wish first to repeat the explanation which the House has had before, since this is relevant to the assessment of the need for this order. In arriving at our aggregate under the Act we take into account not only the sums paid but liabilities such as guarantees which have been entered into and which may become future calls on the finance available. But we deduct from this the payment of loans or principal sums in relation to guarantees. It follows that since the guarantees are merely possible calls on resources and since loans and grants are phased over the period of the development of the project, commitments would at any time normally run substantially ahead of and above the level of actual payments. Payments under the legislation at the moment amount to £330 million but commitments amount to £775 million. Therefore, at this stage we have £75 million of the current tranche available. I shall explain to the House why the extra amount is needed.

Of the commitments that have already been entered into about half relate to individual companies and nearly £390 million is attributed to various Section 8 schemes, namely, the off-shore scheme, accelerated projects, selective investment and the 15 sectoral industry schemes. I think that I owe it to the House to explain what has happened in terms of commitments within the last 11 months since the approval was given to the last tranche. The new commitments during this period amount to £275 million. Of this, £150 million went towards Leyland's capital reconstruction, which was approved by the House without a Division. Under the sectoral schemes, £90 million has been further committed, £20 million under the selective investment scheme and £15 million on the offshore investment scheme.

I apologise for the fact that my speech will be fairly statistical. When the matter was previously debated the House showed an almost masochistic wish for facts and statistics. I shall impose the suffering at this stage and trust that we shall get down to the political hurly-burly later.

As hon. Members will be aware, the sectoral schemes are intended, first, to deal with historic weaknesses in certain sectors of industry, such as textiles and footwear, emergent weaknesses such as those appearing in instrumentation and automation, and in the electronics sector, when we see what is happening in competitor nations overseas. The sectoral schemes are also intended to meet the requirements of the EEC and to provide adjustment finance. This is the case with the poultry scheme and with the red meat scheme, both of which are to help to meet the hygiene standards which have to be conformed to under the EEC regulations. The sectoral schemes are also intended to encourage the use of indigenous resources. This is the thesis behind the paper and board scheme, which is intended to encourage the use of domestic waste paper.

Under the sectoral schemes, £141 million has been offered to companies for 1,300 projects and these projects are worth £675 million. So virtually five times the project value has arisen from the offer that has been made by the Government. We still have over 1,000 applications in consideration under the various sectoral headings, and seven of these schemes remain open.

I shall give the House an up-to-date report on a few of the schemes. I shall not go through every one of them. The ferrous foundry industry, as hon. Members from industrial constituencies will know, was grossly under-capitalised and had very out-of-date equipment yet played a key role in supplying components to other industries which are essential if we are to attain our marketing objectives under the industrial strategy. By the completion £78 million was offered under the ferrous foundries scheme, generating £360 million worth of investment, which will lead to the modernisation of 350 foundries in this country. This has been one of the most successful of all the schemes and one of the most important in its strategic role in relation to other industries to which it is a feeder industry.

Similarly, after a disappointingly slow start, the machine tool industry scheme has become another major success. A total of £16 million has been committed so far in support of 150 projects which will give rise to £80 million worth of investment in the industry. It is particularly encouraging that one-third of these projects are in support of new products. I am sure that this will be encouraging to hon. Members who have been aware of the shortcomings of our machine tool industry in bringing on new products over decades.

We still have a further 230 schemes under consideration in the machine tool industry and the result is that the industry now has a higher projected investment for the current year than it has had for any of the last eight years. That is a notable achievement in a sector where we would all wish to see further investment.

Mr. Kenneth Clarke (Rushcliffe)

I had hoped that the Minister had finished touching on one or two of the sectoral schemes, but was still anxious to give us some factual information. Could he take the opportunity to correct the impression he gave at Question Time today, that, as a result of the various schemes he is describing, the level of investment in industry in this country is higher now than it was under the Conservative Government?

The Minister obviously had in mind the trough year of 1973, but would he not agree that in 1977, the last full year, gross fixed investment in manufacturing industry in this country was substantially below the levels of 1974, 1971 and 1970, so that the schemes of investment assistance that he is outlining have not had a very encouraging effect upon the level of investment in industry as a whole?

Mr. Williams

The hon. Gentleman seems completely to misunderstand the situation in relation to investment. In 1970, when the then Chancellor made, unfortunately, one of his last speeches from this Dispatch Box, almost the first announcement of the incoming Conservative Administration was that investment grants would be abandoned. That decision could not have come at a worse time. It looked as though investment might have been reaching a plateau anyway and the switch to an allowance system, which was dependent on high profits, when the country was faced with the possibility of a downturn in investment, was an incredible error of judgment.

Investment under the Conservative Government never equalled the level it attained, in real terms, in 1970. It slipped in 1971 and 1972 and was much the same in 1973. Far from my having misled the House, I reiterate what I said earlier. In 1972 and 1973, when the then Chancellor of the Exchequer had indulged in a catastrophic policy of taking off all credit controls, which drew in all the imports and destroyed our balance of payments and when the Government were going for growth and world economy was buoyant, the level of investment in those last two full years of the Conservative Government was lower than the level of last year. I accept that it was only marginally lower, but it was lower in a context of buoyant world trade, compared with last year's context of the worst recession since the 1930s. Whatever the hon. Member for Rushcliffe (Mr. Clarke) does, he should not lecture us on investment, because our record is far better than that of the Conservatives.

I apologise for diverging somewhat, and I now return to the order before us. Seven of the schemes are still open, and certain of them are due to conclude—I say "due to", but there are always possibilities that some of them may need to be extended—in June and July of this year.

We are pleased that the paper and board scheme, which is one of the schemes still open, to ensure use of indigenous waste materials, has already attracted considerable support, and £12 million has been offered under it. Forty projects are under support, and the import saving from projects already in hand will amount to £100 million a year. Regardless of one's view—I know their views on industry schemes—I should have thought that the Opposition would welcome the contribution which is being made by this scheme to the positive side of our balance of payments.

The recent schemes—instrumentation and automation, drop forging and footwear—have all made encouraging starts. I am sure that the House will accept that we are at an early stage in the sense that what tends to happen is that it takes companies several months to evaluate the possibilities for themselves under a scheme, they then submit their proposals, and we usually get a surge of proposals towards the closing date of a scheme.

Mr. Stephen Ross (Isle of Wight)

Do the Government intend to lower the limit of £500,000 which, I think, applies to Section 8 schemes? I have in mind an electronics components firm in my constituency where I saw only today a very worthwhile export project. Manufacture can be done in America and the company in this country would merely get royalties, but it would rather manufacture here. But the scheme is worth only £70,000 to £100,000.

Mr. Williams

If the hon. Gentleman would care to telephone my office tomorrow morning with the details, I shall look at it, because the £500,000 applies to only one of the schemes in operation. The threshold in each sectoral scheme is pitched at a level which is relevant to the individual industry sector. For example, in the case of clothing—I am speaking from memory here—I think that it is down around the £10,000 mark, because one is dealing with very small firms which will be putting forward relatively small projects.

A further point which is not always realised is that companies do not have to put forward a single project to meet the threshold. They can roll together a programme for the next two or three years and, as long as that meets the threshold level, they will qualify for support. But I shall gladly look at the proposition if the hon. Gentleman will telephone my office.

Mr. Max Madden (Sowerby)

My right hon. Friend mentioned the clothing scheme. As he rightly said, the original scheme made a most disappointing start and the threshold was lowered. Can he say what the response to the scheme is now, because it has been in operation for quite some time?

Mr. Williams

I know of the interest in my hon. Friend's constituency in just this scheme, and I can tell him that 425 projects have now been approved under this sector scheme. The Government have offered £7½ million, giving rise to £31 million of investment in a sector of the industry which desperately needed extra investment. There are 550 more projects under consideration, so that virtually 1,000 companies stand to benefit under this scheme.

I am sure that that will be welcome news to my hon. Friend, and welcome to the House also, perhaps, will be the fact that many of the projects are from small firms for consultancy support. This is a facility which has not in the past always been available to them, and our assessment of those projects currently approved is that there will be not only substantial new investment in this section but higher productivity.

If I may revert for a moment to the scheme to which the hon. Member for Isle of Wight (Mr. Ross) referred, there are several schemes within the electronics sector, and the threshold of those would be way below the £500,000, but the scheme which has the threshold of £500,000 is the selective investment scheme. This is for major projects which will have significant economic benefit for the country, and these projects have to be on a different time scale or on a different investment scale or of a different nature from what they would have been had the scheme not been in operation.

The allocation has had to be increased from £100 million to £125 million to meet the prospective demand. Already £34 million has been approved under the scheme, including the £20 million in the past 11 months to which I referred, and 66 projects have been supported which will give rise to £340 million-worth of investment.

Therefore, although there is still much more to come, the scheme is already a major generator of new nationally important investment. Indeed, there are another 154 schemes under consideration and if they are all approved—I would not suggest that they will; a substantial number are turned down because they may not meet the criterion of additionality—they will give rise to another £1,600 million worth of investment. With that has been approved and what is under consideration, there is £2,000 million-worth of investment projects arising from the scheme and more projects are expected to appear in the future, because we are not yet at the closing date. Those already approved will have a positive balance of payments benefit of £200 million a year.

I turn finally, because I know that this matter is of interest and concern to hon. Members on both sides of the House, to the employment and investment benefits of Section 8 schemes. I must emphasise that, as I pointed out at Question Time, they are not in themselves linked to job creation. Job creation is incidental rather than the prime purpose, which is to achieve higher efficiency and higher productivity, and in some sectors and on some individual investments this may actually work against employment levels.

It is important to stress that in applying these schemes and in making firms more competitive and improving their productivity we therefore secure the jobs of those who remain in the industry. Far from having a negative effect on total employment, the schemes have given rise, though they are not specifically intended to do so, to 22,000 prospective new jobs. They will also preserve or give rise to jobs in those supplying industries from which the firms will order their plant, equipment and buildings. The departmental estimate is that 170,000 man-years of work will arise from the orders that will be placed with suppliers in the United Kingdom to meet the needs of those receiving the grants under the scheme.

Mr. Giles Shaw (Pudsey)

Will the right hon. Gentleman comment on how far he is satisfied that, with schemes under the section proceeding, his colleagues in the Department of Trade are seized of the important consequences? Does he not agree that in many instances, certainly in wool textiles, for example, industry schemes have been enacted but problems have arisen in trading arrangements which may make the investment abortive?

Mr. Williams

I am sure that the hon. Gentleman will have noted with pleasure the success of the Governments of the Common Market in the recently agreed Multi-Fibre Arrangement. He will know that the industry, both on the employers' and the trade union side, has gone out of its way publicly to express thanks and congratulations to the Government and to the EEC negotiators for the form of that agreement. They feel that the MFA as now negotiated gives them the breathing space in which they can begin to exploit the competitive edge which their investments under the wool textile scheme, mark I and mark II, have given. Therefore, I think that the hon. Gentleman can be assured that we are well apprised of these needs and have already acted upon them, particularly at the request of a sector working party under the industrial strategy, which for some reason is so disparaged by Conservative Members.

I re-emphasise the point that, despite the world recession, these schemes have given rise to £1½ billion worth of investment. Yet Conservative Members, purporting to care about investment, clearly intend to vote against this legislation tonight. This level of investment means that, for example, last year, when we deduct iron and steel, investment in the United Kingdom, in the depths of international depression, rose by 14 per cent. Manufacturing investment is expected to rise by between 10 per cent. and 13 per cent. during the current year.

It seems that the Opposition are absolutely intent on repeating the follies of 1970. I listen to the comments of the Opposition Front Bench spokesmen and it seems that, like us, they do not wish to support firms which cannot be viable. On the other hand, however, they say that if a firm is viable they do not want to give it support. I find it difficult to understand the logic of their analysis. Their policy is never fully spelled out.

Industrialists in this country and abroad frequently ask me what on earth is the policy of the alternative Government and I have to tell them that I have no idea. I only know that if the thinking which is expressed from the Opposition Front Bench were carried through, the Ford development would now be taking place in Southern Ireland and not in this country.

Under the legislation we have commitments of £775 million, which leaves only £75 million under the present tranche. Potential commitments under the existing selective investment scheme and the sectoral schemes—that is, taking account of those applications which are in, but not yet fully processed—amount to about £225 million. We are likely to be £150 million short of requirements, even assuming that there is no further demand on the off-shore supply scheme—and I would have thought that it is highly likely that there will be some—and assuming that there are no extensions of these schemes or that thereis no requirement for funds outside purposes such as, for example, substantial rescue cases.

I hope that the House will appreciate that we are going through a ritualistic process involving the Conservatives in which they blindly seek to destroy one of the most successful instruments of policy, an instrument which has worked despite the efforts of those who introduced it. The Industry Act was introduced by a Conservative Government. Having introduced it, the Conservatives have the impudence to boast from their Front Bench that by the time they left office they had spent only £10 million under the Section 8 powers. That, perhaps, explains why investment collapsed under the Conservative Administration.

10.43 p.m.

Mr. Kenneth Clarke (Rushcliffe)

I agree with the Minister that the Government are spending money under Section 8 of the Industry Act so quickly that we are in danger of getting into an annual ritual with these orders, with the Government coming back for more money. Although the Minister has updated the contents of his speech, the style remains the same in that there is a series of statistical claims updated for the various sector schemes which the Government are sponsoring under Section 8.

The Minister then concluded with the same peroration as last year by affecting to express disbelief at our voting against the order. He says that somehow we are seeking to damage the level of investment of successful industry. The Minister knows that that is not the case. He knows why we are against this order. We oppose it because of the amount of taxpayers' money involved, which is being fed directly into industry. We are in no way opposed, at all times and in all circumstances on principle, to the application of public funds for investment in industry. We feel, however, that the need for grants of taxpayers' money to industry of any kind will arise only in rare and special cases. We believe that if the economic climate were put right, the need would dwindle almost to vanishing point, because the market would satisfy the needs of successful industry.

We are certainly opposed—[Interruption.] With respect, the Under-Secretary of State does not know his figures as well as the Minister does. He does not know that the Minister consistently leaves out the year 1974, when the Conservatives left office. When the present Government get back to the levels of investment achieved during the year we left office, he will be more entitled to sit there and laugh.

In our opinion it is right to oppose the profligate pouring of taxpayers' money into sectors of industry chosen by Ministers and civil servants to the tune of £250 million each year. That is what this order represents. We believe that what industry needs above all else is not ever-greater expenditure on grants of this kind, but a reduction in its tax burden. That is the main way to stimulate industry and stimulate investment in industry. Unnecessary spending and borrowing by Government, even on Industry Act aids under the so-called industrial strategy, actually prevent that stimulus.

This year we have additional reasons for voting against the order. There has been a change of policy since last year, which was not even remotely touched on by the Minister. We are particularly hostile to the way in which the Government propose to disburse these Industry Act funds from now on, because grants to projects which otherwise would qualify under all the criteria laid down in the 1972 Act are now being refused where applicants will not accept the pay policy conditions which the Government lay down. So the amount the House is being asked to approve of this year will not only be expended in large quantities under Section 8 but will be disbursed on conditions which are quite possibly illegal and which are certainly, in our view, arbitrary and unfair and an improper use of Industry Act powers.

I begin with the scale of Government expenditure, but I shall not take too long because otherwise the Front Benches will have taken too much time in the debate and I shall have fallen into the trap that the Minister fell into—that of repeating last year's speech.

Mr. Leslie Spriggs (St. Helens)


Mr. Clarke

I shall not give way to the hon. Gentleman now, but a bit later on. This debate lasts only one and a half hours and the Minister took 25 minutes.

The Government have transformed our 1972 Act completely. We have no regrets about the authorship of the Act. We have no intention of seeking to repeal the Section 8 powers. But the use of these powers has been quite transformed by the Government. As the Minister has reminded us, by 1974 we had expended £6.3 million only under the powers that we had taken under Section 8, although there were, of course, commitments in addition to that.

Since that time the Act has been used as a way of pouring totally different sums of money into industry by way of direct grant. The Industry (Amendment) Act 1976 changed the overall financial limits of our 1972 Act from a total contemplated of £559 million to one of £1,900 million, and the powers that the Government took were for £600 million straight away, followed by four increases of up to £250 million each.

This is the second successive year that application has been made to the House for £250 million. So the level of expenditure involved is beyond anything contemplated by the Conservative Government, and beyond anything contemplated by the House, when the 1972 Act was passed. The Government say that it is all very valuable and necessary, and the Minister justifies this expenditure by producing dull but worthy lists of the expenditure under various projects which he hopes are calculated to appeal to the constituency interests of such Members as are in the Chamber.

We face up, of course, to the prospects of what would happen to investment if these grants were substantially reduced and the scale of expenditure were taken back to where it was contemplated. It remains our firm belief, when the Minister is talking about worthwhile investment in industry, that the overwhelming majority of the projects he has described would go ahead with financial aid from the market. The fact that the change in expenditure under Section 8 has produced no significant difference in the overall level of investment in manufacturing industry, which remains below that of 1970–71 and 1974, supports that case. We believe that there are very few projects with good commercial prospects of success that cannot raise finance in the market.

Whenever I meet industrialists who are in companies which obtain grants under Section 8 of the Industry Act, I ask them in confidence what the future would have been for the project for which they received assistance had they not received the Government grant. That is a perfectly legitimate question for an Opposition spokesman. So far I have not met a solitary industrialist who has not told me that his project would have gone ahead in any event, even without the Government investment.

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

Who are they? Name them.

Mr. Clarke

Some may have deceived me, of course, and I quite accept that the rules of the scheme are supposed to be—

Mr. Alan Williams

The hon. Member has made a very serious allegation. He is alleging dishonesty with public funds by an apparently large number of firms which he has consulted. He has a responsibility to the taxpayer. Will he elaborate in greater detail how many such companies have indicated this to him out of the hundreds that have received support under the scheme? Also, what does he intend to do to ensure that abuses of the type that he alleges—of course we have no way of checking them, because he will not give us the names—are dealt with appropriately? Otherwise, he surely is conspiring in an illegal act.

Mr. Clarke

If the Government would follow their own criteria for assistance under the Industry Act with any accuracy, there might be more justification for making a request of that kind. The Minister is using his own discretion in an arbitrary way, not authorised by Parliament at all on pay policy conditions. We have consistently made this point throughout, and we believe that if he made a serious investigation into the investment policies of industry, the Minister would discover that scarcely a project exists that would not have gone ahead anyway and that is conditioned solely by the grant.

I shall try to justify what I have said by asking hon. Members opposite to contemplate the basis upon which they think investment decisions are made by investors in industry. There is not an investor alive—or if there is, he will not make much money—who makes an investment because a Government grant is available for that particular project.

The idea that investors see the existence of the ferrous foundry scheme and think that because of that scheme they will now look for ways of investing in the modernisation of their ferrous foundry plant is a Mickey Mouse concept of how investment is made. The position is that an investor will not invest, whatever party is in office and whatever is being done through the Department of Industry, unless he first assesses his market and can see that there is a proper market for his product.

He then assesses the return on his capital and looks at the likely return to his investors in relation to the risk. He sees whether he will have satisfactory industrial relations in his firm with the new scheme that he is undertaking. He sees what improvements in his productivity he might achieve and the competitive position of his company. He looks at the economic and political climate, because any investor needs a stable and encouraging economic and political environment for investment.

Those are the criteria that any sensible investor applies to a project in his company. It is only if the answer on all those grounds is "Yes", and it is a wise decision to make the investment, that he then looks around to see whether there is any Government grant available which he can claim as a contribution towards his investment. That goes on on a considerable scale at present.

I accept that the existence of grants of one kind or another may on occasions influence the timing of an investment project and may influence the location of a project. But that is more likely to happen under Section 1 or Section 7 of the Industry Act on regional policy, not Section 8, which is all-embracing and national.

That is the essence of the process, and it means that the figures produced by the Minister, the so-called millions of pounds of investment provoked by his grants, the number of jobs created and the figures he puts upon them, are totally myth-making. It is investment that would have gone on anyway. They are jobs that would have been created anyway.

Some industrialists selected by the right hon. Gentleman's Department and his civil servants are getting a contribution from the taxpayer towards an investment that would otherwise have been financed solely from the market. If a few investments would not have gone ahead in those circumstances, we beg leave to doubt whether they are reasonable investments. If that is not so, it means that there has to be a Section 8 scheme before such investment will go ahead.

Mr. Rooker

I only want to help the hon. Gentleman. It is within the knowledge of the House that from time to time the Front Benches correspond in private. That is supposed to be kept confidential. That is how things work in this place. I invite the hon. Gentleman to write to my right hon. Friend in confidence naming the firms that he has alleged have lied and cheated to get their hands on public money.

Mr. Clarke

The Minister in confidence, without telling me or the House, refuses grants to companies that will not abide by his pay policy conditions. They are not even allowed to know the conditions that apply. They are asked to sign blank undertakings before they get grants. There is no kind of confidential correspondence of the sort to which the hon. Gentleman refers in which I propose to indulge.

If the point of the Labour attacks is to suggest that there is some investment which would not go ahead but for the sectoral schemes under Section 8, I doubt the wisdom of that investment. Investment in itself is not an end in itself. It is not the sheer quantity of investment in industry that matters but the use of that investment in improving the position of industry.

The Government's emphasis—it was brought out again in the Minister's speech with his list of figures—on the quantity of investment regardless of the return on it has reached absurd lengths. Investment in projects that are not economically viable will not benefit the economy in the long run.

Most of the investment projects we are considering tonight are economically viable and, we hope, desirable. We need investment that will increase efficiency, productivity and the competitiveness of our industry. That is the sort of investment that we need. However, we cannot believe that there are many industrialists who cannot finance that sort of investment from the market.

Why are we so anxious to vote against the order and thereby reduce public expenditure, to reduce to some extent—the extent of £250 million is not to be sneezed at—the Government's borrowing requirement and, I hope, to pave the way for reducing taxation? We are aiming to achieve that effect so as to regenerate British industry and to fulfil the purposes that the Minister has set out.

Sometimes a false choice is set out by Labour Members from the Prime Minister downwards, and occasionally even the Press outside, about the alternative facing Britain. The alternative is most often posed when we come to consider the use that we should make of North Sea oil revenue. The choice is meant to be whether we use the revenues to put them into industry or indulge in tax cuts. Those who pose the alternative in that way make it sound as though tax cuts will lead to some guilty squandering of the money that is available and that putting money directly into industry is a more worthwhile use to make of it.

We do not see the latter approach as an alternative in that sense if the purpose is to use what resources we have for the benefit of industry. Investment in industry and tax cuts are not alternatives in our opinion. Investment in industry will come if the climate for investment is created that is needed, and reducing taxation is one of the greatest single factors that will have to be achieved if we are to produce a climate for investment. If the climate is made right, the private investment will come forward, as it was when the Labour Government took over in 1974. The money poured directly into investment is inimical to the main purpose that the Government profess in so far as it adds to their borrowings, public expenditure and, thereby, taxation.

My final point may commend itself to Labour Members and make them worry about voting for the order. The additional feature this year is that large sums are to be disbursed in an extremely arbitrary and unfair fashion because pay policy conditions are being attached to Industry Act grants. This was outside Parliament's contemplation when the Industry Act was passed. I can imagine the outcry if in 1972, the then Conservative Government had stated to the then Labour Opposition that it was proposed to use the discretion set out in the 1972 Act as part of a instrument of pay policy—and a covert instrument at that.

I am not concerned tonight with the merits of pay policy. I do not argue that the Government should not take a view on pay. But I argue strongly that the Industry Act was never designed for this purpose. A pay policy backed by secret sanctions is wholly undesirable and will not serve its purpose.

Industrialists who apply for assistance under the 1972 Act are supposed to turn to the criteria for assistance under that Act published in December 1975, which is available to all hon. Members. That is a comprehensive list of criteria for assistance to industry which has not been amended. It contains not a word nor hint of any use of ministerial discretion over and above that of assessing viability and the worthwhile nature of the proposed investment in order to enforce whatever might be the pay policy at that time.

Only gradually, over the past few months, have we extracted from the Government any acknowledgement of the existence of pay policy conditions when making grants to industry under Section 8. The Government began by saying that compliance with pay policy would be a factor in exercising their discretion. By that they were understood to mean that where a company had not complied with existing pay policies and was already in dispute with the Department of Employment, that would be a factor in deciding whether to make a grant. But the Government have gone far beyond that. They have never declared their policy to the House.

Now, when offers of grants under the Industry Act are being made, it is policy to attach conditions. Those conditions do not refer to compliance with past or existing pay policies. Those conditions seek an understaking that the applicant will comply with such future pay guidelines as any Government might issue. But the nature of those guidelines is of course unknown to the applicant when he makes his application.

Conditions are being attached that not only will the applicant comply, but he will take such steps as the Government direct to ensure that any sub-contractors are also brought into line with Government pay policies in the future. Those who will benefit from the £250 million for which the Government are asking this year should know that they will be expected to give a blanket understanding that they will adhere to any future pay policy. Therefore, they will have to launch into a project knowing that the grant might be stopped at any stage because the Secretary of State has decided that they are no longer complying with the pay policy. Unknown conditions are being applied to each grant.

I should have thought that hon. Members who express such concern for the clothing industry would be interested to know what conditions affecting the pay of their constituents are being attached to the grants for which they are so grateful. They might ask about the form of these conditions. They might think that there is a set form which someone can see. But there is no such form. The form of conditions is open to negotiation in each case.

Negotiations are going on as a result of an application by Schreibers under Section 7 of the Industry Act. In reply to a Question which I tabled the Under-Secretary of State said of Industry Act grants The precise terms of individual offers are negotiated in each case with the applicant company and are not disclosed."—[Official Report, 18th May 1978; Vol. 950, c. 268.] The position of an applicant company under this policy depends entirely upon its clout and negotiating position with the Government. Sir Arnold Weinstock, through Schreibers, which is owned by GEC, was prepared to argue about the conditions, and negotiations are proceeding. That firm made a public fuss about the conditions that it was being asked to accept. But for every giant company like GEC that is prepared to do battle there are countless small firms that will not because they fear reprisals from the Government, who are making use of their discretionary powers in such an arbitrary way, and because they may wish to apply for grant, public contracts or other Government largesse.

Mr. Kenneth Warren (Hastings)

Is my hon. Friend aware that the situation is far worse than he has described? American or any other foreign companies are in no way subject to these guidelines, whether they are sub-contractors or direct contractors to the Government.

Mr. Clarke

I am sure that the situation could be far worse than I described and even far worse than my hon. Friend the Member for Hastings (Mr. Warren) knows, but I am certain that the Minister will not tell us very much about it. Large sums are now being disbursed subject to these conditions. Most firms are signing on the dotted line, but the precise nature of the conditions is not being dislcosed to anyone. That is a grossly arbitrary way of operating the distribution of largesse under the Industry Act.

This sums up for us the dangers of a Government taking upon themselves the disbursement of considerable sums under the 1972 Act on a scale that was never contemplated. They realise that it provides for their machine a power and supervision over the practices of companies which they would otherwise lack. Not only are they disbursing money lavishly, about which we have complained in the past, but they are disbursing it unfairly and subject to secret conditions.

In those circumstances the burden of my case about excessive and unnecessary expenditure to stimulate investment remains the same as last year. But, unlike the Minister, I have a different peroration, because in the last year he has made his policy worse. This year we certainly have no intention of allowing £250 million of taxpayers' money to be spent not only unnecessarily but in a disgraceful manner by Ministers who are misusing their legal powers under the Act.

11.7 p.m.

Mr. Douglas Crawford (Perth and East Perthshire)

The Opposition Front Bench said it would take no more time than the Minister. The Minister took 24 minutes, and the hon. Member for Rushcliffe (Mr. Clarke) took 24 minutes.

There are many misapprehensions about what creates new jobs, which are what we are discussing tonight. There was a survey in the late 1960s by the Scottish Council (Development and Industry) which laid out criteria for the creation and attraction of new jobs in Scotland. These were the availability of skilled labour, amenities, ease of transportation, telecommunications, grants and a thing called a common language. I can assure hon. Members that we certainly speak the common language in Scotland.

I agree with the hon. Member for Rushcliffe that grants are very low in the list of priorities. Therefore, the availability of money does not create—I emphasise that word—new jobs. It is important that the Government, the development agencies and, perhaps, the NEB realise that. It is important to realise, too, that the days of footloose industry are over. The Honeywells, the Burroughs, the NCRs, the General Motors and the IBMs will not come to the South-East or the North-West of England, to Scotland, Wales or Northern Ireland any more.

The important lesson may be learnt from the Republic of Ireland, which has discovered that industrial expansion and the creation of new jobs come from existing industries, whether they be indigenous or whether they were attracted during the 1950s and 1960s from overseas.

The availability of State money, however, may—this is why my party will vote with the Government tonight—keep existing jobs. In the short term, the job creation programme has helped to keep existing jobs.

On a second point—this refers to the Conservative Party—the existence of regional employment premium has helped to keep existing jobs, because industrialists in Scotland—I can speak only for Scotland—regarded REP as part of their current cash flow. That was very important. Perhaps the Government Front Bench will tell us tonight whether they have any alternative to REP to offer in development areas such as Scotland, and the North-East, the North-West and the West of England.

In Scotland, money does not create jobs, but it helps to keep jobs. I speak for a country called Scotland. I am delighted with the laughter of hon. Members behind me. The country for which I happen to be speaking has a higher unemployment percentage than any other country within the British Isles, apart from Northern Ireland—if Northern Ireland is a country.

Mr. Madden

Did the hon. Member hear a BBC "World at One" programme on Sunday, in which a number of leading Scottish industrialists said that a separate Scotland would be a serious deterrent to new investment and the creation of jobs in Scotland?

Mr. Crawford

I am delighted to hear the hon. Member speak on the side of senior Scottish industrialist members of the CBI. I am very glad that the hon. Member is now taking the side of the CBI.

Mr. Robert Adley (Christchurch and Lymington)

Answer the point.

Mr. Crawford

I am answering the hon. Member for Sowerby (Mr. Madden). Once again, I am glad to have the unanimity of the Conservative and Labour Parties on Scottish self-government.

If the hon. Member for Sowerby and the House will let me proceed, I should like to say that I agree with the hon. Member on this point. Scotland has an unemployment rate of between 8 per cent. and 9 per cent.—200,000 people. It is larger than the unemployment percentage in England. I believe that it is very important for Scottish investment and employment that the Government be allowed the powers that they are seeking.

However, only with self-government shall we be able to create the long-lasting and rewarding new jobs that we need. In the short term, for Scotland—I wish the hon. Member for Glasgow, Cathcart (Mr. Taylor) would hold his horses for a minute, because, although he does not appreciate it, my party is in favour of the Government on this issue. If the hon. Member wishes to say how the Conservatives are in favour of jobs in Chrysler and British Leyland, I should be delighted to hear it.

Mr. Teddy Taylor (Glasgow, Cathcart)

The hon. Member must know that when the Conservatives are in power the outlook for jobs in Scotland is always better.

Mr. Crawford

In that case, why did the Conservatives vote against additional money for Chrysler? If that had not gone through, there would have been no jobs in Linwood tonight.

Mr. Taylor


Mr. Crawford

No, it is too late, It is for the sake of existing jobs, not for new jobs—

Mr. Taylor


Mr. Crawford

No, I am sorry. I like the hon. Member very much, but he has only just come in.

It is for the sake of existing Scottish jobs that my party will be voting for the Government motion tonight.

Mr. Adley

Margo has got the message.

Mr. Crawford

She will soon be with the hon. Member.

In his 1974 election manifesto, the hon. Member for Cathcart actually wished for a Scottish Assembly with economic powers.

We can afford the extension of the powers of the Secretary of State for Industry in the Scottish context. As I say, these powers would be even greater in the context of a Scottish Government.

11.14 p.m.

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

I shall speak briefly, simply because there is not a great deal of time left. I should like to make two points.

The first concerns the issue of the conditions attached to this money. There are not enough conditions attached to it. My right hon. and hon. Friends the Ministers will know that. I should like to see attached to this money the condition that it could go only to factories that carry out good safety policies and factories that employ only competent management and not to some of the old boys from public schools who run many sectors of manufacturing industry. I should like the Government to use the money as an impetus for changing these aspects of industry. There would be no complaint from me if there were a problem in a factory, even if it were in my constituency in the West Midlands, because the pressure on the Government using that policy would bring about a change in the companies concerned.

Mr. Robert Kilroy-Silk (Ormskirk)

Does my hon. Friend also accept that a very good condition, which the hon. Member for Rushcliffe (Mr. Clarke) did not mention, was that the amount of money going to each company should be made public? He is very concerned about the so-called "secret" clauses which companies have to sign which are not publicly known and debatable, but he makes no complaint at all about the amount of taxpayers' money going to each company and the companies themselves refusing—though the Government do not—to make those sums publicly known.

Mr. Kenneth Clarke

It is known.

Mr. Rooker

I am grateful to my hon. Friend. The hon. Member for Rushcliffe (Mr. Clarke) says that it is known. But it never was when the Conservatives were in power. It is only since this Government have been in power that details of assistance to industry have been published if it is above £25,000—which is a small sum compared with these figures. The Opposition kept secret all the money they gave to industry, with no intention of publishing it. One presumes that if they were returned to power they would still disburse some money to industry. Will they publish the amounts on a company-by-company basis?

Mr. Kilroy-Silk

They have not said so.

Mr. Rooker

Of course they have not said so. This is an invitation to them to let us know.

Monstrous allegations were made by the hon. Member for Rushcliffe about abuse, fraud, cheating and lying by manufacturing industry to get their hands on grants. Hansard will show that he said that companies that he has visited as an official Opposition spokesman admitted to him in confidence that the projects concerned would have gone ahead anyway and that the timing was not influenced in any way by Government grants.

The hon. Gentleman did not accept my invitation, but on the basis that the diary of an Opposition spokesman should not be a State secret, I invite the hon. Member—or I shall write and ask him or his chief, the right hon. Member for Leeds, North-East (Sir K. Joseph), who has now left—to publish a list of his industrial visits over the last 12 months. If he does not do it, I shall ask Tory Central Office to publish it.

Mr. Kenneth Clarke


Mr. Rooker

Is the hon. Gentleman seeking to intervene? It took him a long while to give way to me earlier in the debate.

Mr. Clarke

First, I assure the hon. Member that we shall continue to publish the names of companies which receive grants. But there was a different atmosphere when we were in power and disbursing 12 grants a year at the most, and in one year no grants at all, from that which obtains when we are talking about £250 million. There is no intention at all to publish my diary. I invite the hon. Member, when he next visits a firm which has had a grant under the Industry Act, to make some inquiries, as I have done, and to discover whether he can adhere to his belief that they are making investment solely because they have had a section 8 grant—investment which would not have happened but for that grant.

Mr. Rooker

When I speak to members of companies, those are the kinds of questions I ask, anyway. If I found a management which said "We lied and cheated the taxpayer", I would report it to the Department of Industry. Members of the Tory Party laugh—

Mr. Brian Sedgemore (Luton, West)

The party of organised fraud.

Mr. Kilroy-Silk

It is all right if it is a Tory fiddle.

Mr. Rooker

That is a typical reaction of them, because they are the party that protects big business when it wants to cheat the taxpayer. They laughed last week when we discussed tax abuse on Scotch whisky and they are laughing again tonight.

I stand by what I said—I would report it if anyone cheated. For that reason, of course, managements would not tell me the truth. It is only because they know that the Tory Party is in their pockets and that the Opposition will not report these companies to the Ministers responsible for making sure that taxpayers' money is spent wisely that they make these statements to them.

I do not see why there should be any secrecy about the diary of an Opposition spokesman who makes the claim that he goes around industry as an Opposition spokesman. I shall invite Tory Central Office to make it public. Certainly the rest of the trivia is published. I do not see why the hon. Gentleman's programme should not be published.

Mr. Clarke

The hon. Member is using words such as "lying" and "cheating" as if there are some firmly laid down criteria which it is illegal not to follow. What I am saying is that they do not follow the criteria which the Minister says they follow when making their decisions. If he wants to know what they comply with, will he study paragraph 9 of the criteria laid down by the Government? It says: There are circumstances in which company profits and losses are not a wholly accurate measure of resource costs and benefits, because there are costs … and benefits … which accrue to the community as a whole and not to the individual enterprise. In these situations there are grounds for setting out to redress that divergence between money costs and benefits and social costs and benefits, where by taxation, planning controls or subsidies. I am saying that the criteria include meaningless verbiage of that kind which allows the Minister and anybody else at his discretion to do what he chooses.

Mr. Rooker

Hansard will show that the hon. Gentleman admitted that firms were fraudulently claiming the grants. If that is not lying and cheating to get their grubby little hands on taxpayers' money, I do not know what is.

I know that the hon. Gentleman will come to regret the language that he used. That is why he is trying to wriggle out of it. I hope that my Labour colleagues in this debate will push home this point. The hon. Gentleman has offered us a hook on which we can hang him and the rest of the Tory Party.

11.27 p.m.

Mr. Nick Budgen (Wolverhampton, South-West)

My hon. Friend the Member for Rushcliffe (Mr. Clark) is well able to look after himself in answering the allegations which have so falsely been made against him.

I want to deal with the Minister's allegation that the Opposition are being niggardly in talking so meanly about a little matter of £250 million. It has been said that we should let this go through "on the nod". What is £250 million between friends? It is only something that the taxpayer can cough up. But Opposition Members believe that in dealing with the taxpayers' money, a little care should be given to these matters. It is interesting to examine some of the things that have happened since we last discussed the disbursement of the taxpayers' money in very large sums.

On 10th April last we discussed support for industry, and more particularly investment in British Leyland, against the whole context of the money that was being spewed out by the National Enterprise Board. It was said by the Secretary of State for Industry that in every respect the Government were being most careful with the taxpayers' money. Yet in the month or so that has followed we find that in two important respects the way in which the Secretary of State presented his case has been confounded by the facts.

I noted his reference to the foundry industry, because it so happens that I recently inherited a few shares in a foundry. [HON. MEMBERS: "Oh".] There is nothing wrong with that, so far as I know. They are only a few shares and, unhappily, they do not yield much income. I learned from my holding in that foundry that those in the foundry industry regarded the ferrous foundry scheme with considerable amusement and contempt, because there was gross overcapacity in that industry. While they were collecting the cash off the Government, they were anxious to say how useful the scheme was, but all they were doing was in some instances preventing firms going out of business which should have gone out of business, thus reducing the capacity of the industry, or in other instances providing cheap money which could have come from ordinary private sources but for the fact that the taxpayer was making it available.

Before the British Leyland debate, I heard a lot of concern expressed in the West Midlands that British Leyland might acquire its own foundries, but, of course, that matter was very well dealt with by the Secretary of State during the debate, on 10th April, when he said: 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. But what do we find in today's Financial Times? British Leyland is undertaking its own investment programme in foundries at a cost of £27 million. So much for the Secretary of State's assertions and so much for the fears that he was trying to allay in the West Midlands foundry industry.

Mr. Adley

I merely wish to confirm that my hon. Friend is correct. I was invited to meet the trade unionists at Wellworthy Engineering, the largest employers in my constituency, and they pleaded with me to make sure that the Government did not allow British Leyland to go into the components business because they did not want to see their worthwhile jobs in a profitable private enterprise company swamped by public money and publicly subsidised companies such as British Leyland.

Mr. Budgen

I am grateful to my hon. Friend. I have no doubt that he will send his informants a copy of the back page of today's Financial Times.

Mr. Adley

And my hon. Friend's speech.

Mr. Budgen

I am grateful to my hon. Friend. The second indication of the sloppy way in which the Government are handing out taxpayers' money can be shown in the answer to a question I asked during the debate last month. I asked the Secretary of State why there could not be a more modest objective for the NEB and why successful firms such as Ferranti could not be sold. He replied: I do not know whether the hon. Gentleman was in the House earlier when this question was raised. I think that I was, but let it be assumed against me that I did not properly take in the earlier remarks. Perhaps I was sleeping, stupid, or whatever, but I invite the House to listen to these words of the Secretary of State: I made it plain that none of the NEB's profitable companies, particularly those making up British Leyland, are 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."—[Official Report, 10th April 1978; Vol. 947, cc. 100, 1009.] But what do I read in The Times of 6th May, just a month after that splendid and clear-cut assertion of the Secretary of State that no part of the NEB portfolio was for sale? Under the heading: Ferranti ready for Stock Exchange listing there is a story that reads: Merchant bankers Barings, who are working on the return of electronics group Ferranti to the Stock Market have not yet decided whether to advise a listing in july. Work is well advanced on the introduction of 1,333,333 shares to be offered by the National Enterprise Board, which now owns 62.5 per cent of Ferranti. It is known that Barings have been advising Ferranti for some time, but key details have still to be settled. Yet the Secretary of State had the effrontery to tell the House that no part of the NEB portfolio was for sale or was contemplated as being for sale. He said that any such sale would discourage existing management. Are the Opposition not right to say that a little care, a little truth and a little precision is required when taxpayers' money is being dished out?

11.30 p.m.

Mr. Ted Leadbitter (Hartlepool)

I wish only to put to the House what I consider to be a small but important, pertinent matter of fact.

The hon. Member for Rushcliffe (Mr. Clarke), unfortunately, made a regrettable statement. He said that in the case of all the companies which he had visited the industrialist who had gained financial support under Section 8 had clearly and distinctly said that if he had not had the money the schemes would still have gone on. One of the conditions which must be met in writing in order to qualify for assistance under Section 8 is that the industrialist must say that without the aid the schemes would not go on.

It is clear that there is an allegation of misrepresentation, to say the least, or of fraud. Therefore, I must ask, not the hon. Gentleman but the Minister, whether this important matter will be taken up through the usual channels so that the House may be satisfied about it.

Mr. Alan Williams

My hon. Friend has asked me a question and I shall mention it in my reply, but I draw to his attention the fact that an imputation has been made, by implication, against a firm in his constituency. Tioxide, in Hartlepool, has indicated that it is willing to say publicly that it conforms to all the guidelines. I wonder what my hon. Friend's view is about the fact that a firm in his constituency which has received Government support has been maligned by a member of the Opposition Front Bench.

Mr. Kilroy-Silk

Does my hon. Friend also appreciate that the attitude of the hon. Member for Rushcliffe (Mr Clarke) demonstrates the traditional double standards of the Tories on this issue? They will complain about social security scroungers, with whom none of us has sympathy and whom we want prosecuted, but the hon. Gentleman tonight has clearly announced that he knows of several industrialists who have told him that they have perpetrated fraud with taxpayers' money involving several million pounds, and yet he laughs. He is either a liar—he does not have the evidence—

Mr. Deputy Speaker (Mr. Oscar Murton)

Order. I hope that the hon. Gentleman was not accusing the hon. Member for Rushcliffe (Mr Clarke) of being a liar. The hon. Gentleman will confirm to me that he was not using that expression in connection with the hon. Member.

Mr. Kilroy-Silk

The hon. Gentleman either has the evidence or he is an accomplice. He is either a liar or he is an accomplice.

Mr. Deputy Speaker

Order. I have warned the hon. Gentlemen that if he is using that expression in connection with the hon. Member for Rushcliffe, he must withdraw it.

Mr. Sedgemore

He is an accomplice to crime.

Mr. Kilroy-Silk

I am perfectly happy to withdraw the imputation that the hon. Gentleman is a liar. He is therefore an accomplice—

Mr. Sedgemore

—to crime.

Mr. Kenneth Clarke


Mr. Leadbitter

No. I shall not give way to the hon. Gentleman, because there are ways in the House in which these matters can be settled. They can be settled by means of the custom that if a statement has been made which is seen in the light of discussion not to be true the hon. Member concerned is given the opportunity to correct it.

Mr. Ian Gow (Eastbourne)

On a point of order, Mr. Deputy Speaker.

The hon. Member for Luton, West (Mr. Sedgemore) accused my hon. Friend the Member for Rushcliffe (Mr. Clarke) of being an accomplice to crime. Is not that out of order?

Mr. Deputy Speaker

No remark must be made which casts any imputation on the honour of an hon. Member. I hope that the hon. Gentleman did not in fact use that expression, because the Chair did not hear it. [HON. MEMBERS: "He did."] The hon. Gentleman must withdraw any comment which has any imputation on the honour of any other hon. Member.

Mr. Kilroy-Silk

Further to that point of order, Mr. Deputy Speaker—

Mr. Deputy Speaker

Order. I am asking the hon. Member for Luton, West (Mr. Sedgemore) to withdraw any such remark.

Mr. Kilroy-Silk

It was I, not my hon. Friend the Member for Luton, West (Mr. Sedgemore), who made the allegation, Mr. Deputy Speaker. The hon. Member for Rushcliffe clearly made the allegation against himself when he said that he knew of many industrialists who had told him that they had taken taxpayers' money and they did not need that money. They had therefore lied to the Department of Industry in purporting to fulfil the criteria, and the hon. Member either does not have the evidence, in which case he is lying, or he is an accomplice to the criminal acts of others.

Mr. Deputy Speaker

Order. The hon. Member is compounding what I have already told him was wrong. He must make no imputation on the honour of any other hon. Members, and he must withdraw the allegations forthwith.

Mr. Kilroy-Silk

I have no wish to pursue this, Mr. Deputy Speaker, and I shall certainly withdraw both the allegations in the sure knowledge and confidence that the hon. Member for Rushcliffe made both the allegations about himself, and that they will be on the record in Hansard.

Mr. Leadbitter

I do not want to follow the level or form of discussion at this stage on the matter which has developed—

Mr. Kenneth Clarke


Mr. Leadbitter

I shall give way in a moment [HON. MEMBERS: "Give way now."] No.

Mr. Deputy Speaker

Order. The hon. Member who has the Floor cannot be pressed to give way unless or until he is prepared to do so.

Mr. Leadbitter

I have given way reasonably sufficiently on what I call—

Mr. Clarke

On a point of order, Mr. Deputy Speaker. I am grateful to you for giving me protection against the allegations by the hon. Member for Luton, West (Mr. Sedgemore), who was not here earlier, and by the hon. Member for Ormskirk (Mr. Kilroy-Silk), who did not seem to have listened to the earlier stages of the debate. But as for the hon. Member for Hartlepool (Mr. Leadbitter), am I entitled to some protection against this tremendous concoction of a speech which he is producing, all based on an interpretation of what I am supposed to have said, which I did not in fact say, when it is within the recollection of the House that I accused nobody in the firms I visited of crime or fraud. No crime or fraud has been spelt out, and therefore there is no question of my being party to any of the matters which the hon. Member for Hartlepool is describing.

Mr. Leadbitter

Apart from lowering the tone of the debate, the hon. Member knows full well what he is now doing. It is not for me to challenge the Chair, but I make the point that the hon. Member is abusing the privileges of the House, because that was not a point of order.

I want to make this clear. In my constituency there is a firm which is benefiting from aid under Section 8 of the Act. I will not stand aside and allow an industrialist to be accused in the manner in which the hon. Member accused such a person, knowing full well that the conditions upon which that industrialist gets aid under the Act are set down in writing and he makes the claim that if he does not get the aid the schemes will not go on. That is the issue.

Mr. Clarke

On a point of order, Mr. Deputy Speaker. Is the hon. Member entitled to accuse me of accusing a firm in his constituency of crime?

Mr. Leadbitter

The hon. Gentleman should visit Hartlepool.

Mr. Clarke

I have visited Hartlepool—I do not whether the hon. Gentleman has—with the past year, but I did not visit the particular firm.

Mr. Deputy Speaker

Order. I think that a large misconception is growing in the House. We had better return to the subject of the debate.

Mr. Leadbitter

This is an important matter. No hon. Members would say that they wanted firms in their constituencies to be deprived of the aid. When we support it, we have a right to ask whether the Opposition Front Bench has sufficiently attuned itself to the needs of industry, rather than making misrepresentations about industrialists.

If it is a condition that an industrialist who receives aid under the Act must put in writing the fact that if he does not receive the money the scheme does not go ahead, anyone who says that he takes the money in spite of that, in the way that the hon. Gentleman did, is saying that such an industrialist is not fair.

I close on this point, because I want to hear what my right hon. Friend the Minister has to say. The hon. Gentleman went further and said, in effect, that because industrialists received the aid in any case there were conditions attached on incomes policy. Surely he understands that if they do not want to be tied to any conditions, if they exist, they need not take the money.

In my constituency 17 per cent. of the men are out of work and far too many young children have left school without a chance of a job. The House would be wise to support any steps taken by the Government to pump investment into industry in the regions that I help represent—Merseyside, Scotland, Wales and the North-East.

11.42 p.m.

Mr. Alan Williams

With permission, I should like to reply.

Without wishing to inflate the importance of what has happened tonight, I think that we have had an example of silliness on the part of the Opposition Front Bench, which they will probably regret later. No matter how he wriggles, the hon. Member for Rushcliffe (Mr. Clarke) said in his speech that all the firms to which he had spoken which had received assistance from Government said that their projects would have gone ahead regardless of that assistance.

That was said despite the fact that, for example, under the selective assistance scheme additionality is a clear requirement in the published rules related to the scheme. I am forced to wonder whether the hon. Gentleman realises the seriousness of making allegations that firms such as Wedgwood, Tioxide, in the constituency of my hon. Friend the Member for Hartlepool (Mr. Lead bitter), Vickers, Albright and Wilson and Ham-worthy Engineering have deliberately lied to Government and deliberately taken taxpayers' money unduly.

The hon. Gentleman has a choice. He is caught over his own barrel. If he says that every firm mentioned by me was not covered, his argument is basically invalid, because obviously the schemes have been highly effective. Therefore, if he wants to perpetuate his argument he must be able to show that in most cases the argument that he put forward is true. Let me demonstrate that it clearly is not true.

This is not a case of civil servants unversed in the ways of industry being misled by industry. The Industrial Development Unit in our Department consists of financial specialists brought from the private sector of industry to assess these projects. Under the selective investment scheme, while 66 schemes have been approved, 50 having been turned down, most of them because those concerned were not able to convince us that they met our requirements.

Mr. Kenneth Clarke


Mr. Williams

I do not intend to give way to the hon. Gentleman.

Mr. Clarke

Give way.

Mr. Williams

I have no intention of giving way, with three minutes to go. It is easy to see why industry is frightened of the Opposition. The Opposition are playing politics with a matter of extreme importance to the survival of industry and to employment.

Mr. Clarke


Mr. Williams

When they were last in Government the Opposition were completely incapable of stimulating investment. It fell year by year while they were in office. The then Prime Minister berated industry. The right hon. Member for Leeds, North-East (Sir K. Joseph) was a member of that Cabinet. He will recollect the then Prime Minister's speech. Did not the then Prime Minister say that industry had refused to respond to all the measures which a Conservative Government had introduced to stimulate investment? They were furious with industry. By the time the Tories left office they had failed to equal the level of investment attained in the year in which the previous Labour Administration had left office

Mr. Clarke


Mr. Williams

Conservative Members are making the same worrying noises they made in 1969. They are speaking against the whole principle of the grants system. Let us remember that they abolished grants, discovered their error, and, two years later, reintroduced them. In those two years they destroyed the growth in industry which had taken place under a Labour Government. They were never able to bring it to life again. This Government have been left with the task of trying to regenerate the investment which industry desperately needs and from the lack of which it suffered when the Conservatives were in office.

What are we being accused of tonight? Wasting Government money in what way?

By stimulating £1,500 million worth of investment by these schemes; by getting a £200 million positive advantage on the balance of payments from the schemes we put forward; by creating extra jobs in the sectors where schemes apply and by creating extra jobs in industries which supply those sectors. These are apparently the sins of which Conservative Members accuse us. The fact is that under this Government productivity is rising again. The Opposition do not like that and do not want to recognise it. Investment is rising again. Private sector investment rose by 14 per cent. last year, something which Conservative Members never attained when in Government. All that they have to do is talk to people in the City and industry and find out what confidence there is in the Opposition.

Look at the share index—316 when the Tories left office, now nearly 500. Look at what happened when it appeared likely that the Government might suffer defeat—£1,000 million was wiped off the value of shares—

It being one and a half hours after the commencement of proceedings on the Motion, Mr. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted business).

The House divided: Ayes 234, Noes 211.

Division No. 222] AYES [11.48 p.m.
Abse, Leo Conlan, Bernard Ewing, Mrs Winifred (Moray)
Anderson, Donald Cook, Robin F. (Edin C) Faulds, Andrew
Archer, Rt Hon Peter Cowans, Harry Fernyhough, Rt Hon E.
Armstrong, Ernest Cox, Thomas (Tooting) Fitt, Gerard (Belfast W)
Ashley, Jack Craigen, Jim (Maryhill) Flannery, Martin
Atkins, Ronald (Preston N) Crawford, Douglas Fletcher, Ted (Darlington)
Atkinson, Norman Crawshaw, Richard Forrester, John
Bain, Mrs Margaret Cronin, John Fowler, Gerald (The Wrekin)
Barnett, Guy (Greenwich) Crowther, Stan (Rotherham) Fraser, John (Lambeth, N'w'd)
Bates, Alf Cryer, Bob Freeson, Rt Hon Reginald
Bean, R. E. Cunningham, G. (Islington S) Gilbert, Rt Hon Dr John
Beith, A. J. Cunningham, Dr J. (Whiteh) Ginsburg, David
Benn, Rt Hon Anthony Wedgwood Dalyell, Tarn Golding, John
Bennett, Andrew (Stockport N) Davidson, Arthur Gould, Bryan
Bidwell, Sydney Davies, Bryan (Enfield N) Graham, Ted
Bishop, Rt Hon Edward Davies, Ifor (Gower) Grant, John (Islington C)
Blenkinsop, Arthur Davis, Clinton (Hackney C) Grocott, Bruce
Boardman, H. Deakins, Eric Hardy, Peter
Boothroyd, Miss Betty Dell, Rt Hon Edmund Harrison, Rt Hon Walter
Bradley, Tom Doig, Peter Hart, Rt Hon Judith
Brown, Robert C. (Newcastle W) Dormand, J. D. Hattersley, Rt Hon Roy
Buchan, Norman Douglas-Mann, Bruce Hayman, Mrs Helena
Butler, Mrs Joyce (Wood Green) Duffy, A. E. P. Heffer, Eric S.
Callaghan, Jim (Middleton & P) Dunn, James A. Henderson, Douglas
Campbell, Ian Dunnett, Jack Horam, John
Canavan, Dennis Dunwoody, Mrs Gwyneth Howell, Rt Hon Denis (B'ham, Sm H)
Carmichael, Neil Eadie, Alex Howells, Geraint (Cardigan)
Cartwright, John Edge, Geoff Hoyle, Doug (Nelson)
Clemitson, Ivor Ellis, John (Brigg & Scun) Huckfield, Les
Cocks, Rt Hon Michael (Bristol S) English, Michael Hughes, Rt Hon C. (Anglesey)
Cohen, Stanley Evans, Ioan (Aberdare) Hughes, Mark (Durham)
Coleman, Donald Evans, John (Newton) Hughes, Robert (Aberdeen N)
Concannon, Rt Hon John Ewing, Harry (Stirling) Hunter, Adam
Irvine, Rt Hon Sir A. (Edge Hill) Morris. Rt Hon Charles R. Spearing, Nigel
Irving, Rt Hon S. (Dartford) Morris, Rt Hon J. (Aberavon) Spriggs, Leslie
Jackson, Miss Margaret (Lincoln) Moyle, Roland Stallard, A. W.
Jeger, Mrs Lena Murray, Rt Hon Ronald King Stewart, Rt Hon Donald
Jenkins, Hugh (Putney) Newens, Stanley Stewart, Rt Hon M. (Fulham)
Johnson, Walter (Derby S) Noble, Mike Stoddart, David
Jones, Alec (Rhondda) Oakes, Gordon Stott, Roger
Jones, Barry (East Flint) Ogden, Eric Strang, Gavin
Jones, Dan (Burnley) Orbach, Maurice Strauss, Rt Hon G. R.
Judd, Frank Orme, Rt Hon Stanley Summerskill, Hon Dr Shirley
Kaufman, Gerald Ovenden, John Swain, Thomas
Kerr, Russell Palmer, Arthur Thomas, Jeffrey (Abertillery)
Kilroy-Silk, Robert Park, George Thomas, Ron (Bristol NW)
Lamborn, Harry Parker, John Thompson, George
Latham, Arthur (Paddington) Pavitt, Laurie Thorne, Stan (Preston South)
Leadbitter, Ted Pendry, Tom Tierney, Sydney
Lestor, Miss Joan (Eton & Slough) Phipps, Dr Colin Tilley, John (Lambeth, Central)
Lewis, Ron (Carlisle) Prescott, John Tinn, James
Lomas, Kenneth Price, C. (Lewisham W) Tomlinson, John
Loyden, Eddie Price, William (Rugby) Urwin, T. W.
Luard, Evan Radice, Giles Varley, Rt Hon Eric G.
Lyon, Alexander (York) Rees, Rt Hon Merlyn (Leeds S) Wainwright, Edwin (Dearne V)
Lyons, Edward (Bradford W) Richardson, Miss Jo Walker, Harold (Doncaster)
Mabon, Rt Hon Dr J. Dickson Roberts, Albert (Normanton) Walker, Terry (Kingswood)
McCartney, Hugh Roberts, Gwilym (Cannock) Watkins, David
McDonald, Dr Oonagh Robinson, Geoffrey Watkinson, John
McElhone, Frank Roderick, Caerwyn Watt, Hamish
MacFarquhar, Roderick Rodgers, George (Chorley) Wellbeloved, James
McGuire, Michael (Ince) Rodgers, Rt Hon William (Stockton) Welsh, Andrew
MacKenzie, Rt Hon Gregor Rooker, J. W. White, Frank R. (Bury)
Maclennan, Robert Roper, John White, James (Pollok)
Madden, Max Rose, Paul B. Whitehead, Phillip
Magee, Bryan Ross, Stephen (Isle of Wight) Whitlock, William
Mahon, Simon Rowlands, Ted Williams, Rt Hon Alan (Swansea W)
Mallalieu, J. P. W. Ryman, John Williams, Alan Lee (Hornch'ch)
Marks, Kenneth Sandelson, Neville Wilson, William (Coventry SE)
Marshall, Dr Edmund (Goole) Sedgemore, Brian Wise, Mrs Audrey
Marshall, Jim (Leicester S) Sever, John Woodall, Alec
Maynard, Miss Joan Shaw, Arnold (Ilford South) Woof, Robert
Mellish, Rt Hon Robert Sheldon, Rt Hon Robert Wrigglesworth, Ian
Mikardo, Ian Shore, Rt Hon Peter Young, David (Bolton E)
Millan, Rt Hon Bruce Silkin, Rt Hon John (Deptford)
Miller, Dr M. S. (E Kilbride) Silkin, Rt Hon S. C. (Dulwich) TELLERS FOR THE AYES:
Mitchell, Austin Silverman, Julius Mr. Joseph Harper and
Mitchell, R. C. (Soton, Itchen) Skinner, Dennis Mr. James Hamilton.
Moorman, Eric Smith, John (N Lanarkshire)
Morris, Alfred (Wythenshawe) Snape, Peter
Adley, Robert Critchley, Julian Hampson, Dr Keith
Aitken, Jonathan Davies, Rt Hon J. (Knutsford) Hannam, John
Alison, Michael Dodsworth, Geoffrey Harrison, Col Sir Harwood (Eye)
Arnold, Tom du Cann, Rt Hon Edward Haselhurst, Alan
Atkins, Rt Hon H. (Spelthorne) Dunlop, John Hawkins, Paul
Atkinson, David (Bournemouth, East) Durant, Tony Hayhoe, Barney
Awdry, Daniel Dykes, Hugh Hicks, Robert
Banks, Robert Eden, Rt Hon Sir John Higgins, Terence L.
Bendall, Vivian (Ilford North) Edwards, Nicholas (Pembroke) Hodgson, Robin
Bennett, Sir Frederic (Torbay) Elliott, Sir William Holland, Philip
Benyon, W. Eyre, Reginald Hordern, Peter
Berry, Hon Anthony Fairbairn, Nicholas Howell, David (Guildford)
Biffen, John Fairgrieve, Russell Howell, Ralph (North Norfolk)
Biggs-Davison, John Farr, John Hunt, David (Wirral)
Blaker, Peter Finsberg, Geoffrey Hunt, John (Bromley)
Body, Richard Fisher, Sir Nigel Hurd, Douglas
Boscawen, Hon Robert Fletcher, Alex (Edinburgh N) James, David
Boyson, Dr Rhodes (Brent) Forman, Nigel Jenkin, Rt Hon P. (Wanst'd & W'df'd)
Brittan, Leon Fowler, Norman (Sutton C'f'd) Jessel, Toby
Brooke, Peter Fox, Marcus Jones, Arthur (Daventry)
Brotherton, Michael Fraser, Rt Hon H. (Stafford & St) Joseph, Rt Hon Sir Keith
Brown, Sir Edward (Bath) Fry, Peter Kaberry, Sir Donald
Buck, Antony Galbraith, Hon T. G. D. Kellett-Bowman, Mrs Elaine
Budgen, Nick Gardiner, George (Reigate) Kershaw, Anthony
Burden, F. A. Gardner, Edward (S Fylde) Kimball, Marcus
Butler, Adam (Bosworth) Godber, Rt Hon Joseph King, Evelyn (South Dorset)
Carlisle, Mark Goodhart, Philip King, Tom (Bridgwater)
Channon, Paul Goodhew, Victor Kitson, Sir Timothy
Churchill, W. S. Gorst, John Knight, Mrs Jill
Clark, Alan (Plymouth, Sutton) Gow, Ian (Eastbourne) Knox, David
Clarke, Kenneth (Rushcliffe) Gower, Sir Raymond (Barry) Latham, Michael (Melton)
Cooke, Robert (Bristol W) Grieve, Percy Lawson, Nigel
Cope, John Griffiths, Eldon Le Merchant, Spencer
Cormack, Patrick Grist, Ian Lester, Jim (Beeston)
Corrie, John Hamilton, Archibald (Epsom & Ewell) Lewis, Kenneth (Rutland)
Costain, A. P. Hamilton, Michael (Salisbury) Lloyd, Ian
Loveridge, John Nott, John Smith, Dudley (Warwick)
Luce, Richard Onslow, Cranley Smith, Timothy John (Ashfield)
McCrindle, Robert Osborn, John Speed, Keith
Macfarlane, Neil Page, John (Harrow West) Spence, John
MacGregor, John Page, Rt Hon R. Graham (Crosby) Spicer, Michael (S Worcester)
MacKay, Andrew (Stechford) Page, Richard (Workington) Sproat, Iain
Macmillan, Rt Hon M. (Farnham) Pattie, Geoffrey Stainton, Keith
McNair-Wilson, M. (Newbury) Percival, Ian Stanbrook, Ivor
McNair-Wilson, P. (New Forest) Peyton, Rt Hon John Stanley, John
Marshall, Michael (Arundel) Pink, R. Bonner Steen, Anthony (Wavertree)
Mates, Michael Powell, Rt Hon J. Enoch Stokes, John
Mather, Carol Prentice, Rt Hon Reg Stradling, Thomas, J.
Mawby, Ray Price, David (Eastleigh) Taylor, Teddy (Cathcart)
Maxwell-Hyslop, Robin Prior, Rt Hon James Tebbit, Norman
Mayhew, Patrick Raison, Timothy Temple-Morris, Peter
Meyer, Sir Anthony Rathbone, Tim Thomas, Rt Hon P. (Hendon S)
Miller, Hal (Bromsgrove) Renton, Rt Hon Sir D. (Hunts) Townsend, Cyril D.
Mills, Peter Renton, Tim (Mid-Sussex) van Straubenzee, W. R.
Miscampbell, Norman Rhodes James, R. Vaughan, Dr Gerard
Mitchell, David (Basingstoke) Rhys Williams, Sir Brandon Viggers, Peter
Moate, Roger Ridley, Hon Nicholas Wakeham, John
Molyneaux, James Roberts, Michael (Cardiff NW) Walder, David (Clitheroe)
Monro, Hector Roberts, Wyn (Conway) Walker, Rt Hon P. (Worcester)
Montgomery, Fergus Ross William (Londonderry) Warren, Kenneth
Moore, John (Croydon C) Rossi, Hugh (Hornsey) Weatherill, Bernard
Morgan, Geraint Royle, Sir Anthony Wells, John
Morgan-Giles, Rear-Admiral Sainsbury, Tim Whitelaw, Rt Hon William
Morris, Michael (Northampton S) Scott, Nicholas Whitney, Raymond (Wycombe)
Morrison, Charles (Devizes) Scott-Hopkins, James Wiggin, Jerry
Morrison, Hon Peter (Chester) Shaw, Giles (Pudsey) Wood, Rt Hon Richard
Mudd, David Shaw, Michael (Scarborough) Younger, Hon George
Neave, Airey Shelton, William (Streatham)
Nelson, Anthony Shepherd, Colin TELLERS FOR THE NOES:
Neubert, Michael Shersby, Michael Sir George Young and
Newton, Tony Silvester, Fred Lord James Douglas-Hamilton.
Normanton, Tom Sims, Roger

Question accordingly agreed to.

Resolved, That the draft Financial Assistance for industry (Increase of Limit) Order 1978, which was laid before this House on 28th April, be approved.

Forward to